Statewide rent control, in some form or fashion is coming to California. What can you do as an investment property owner to prepare for this new reality? This is not the end of laws to assist tenants and restrict owner rights; it is just the beginning. You should not wait to act, but start protecting your rights ad your investment property asset immediately:
-Get Your Rents to Market:
We meet many owners who have not increased their rents properly in years and now find themselves 20% to 30% below market rents. The reason we typically hear is the owner likes the tenant and did not want to risk losing a good tenant and then have the costs of lost rent and the cost to make the property rent ready. We know how to increase rents without losing tenants. The key is to increase rents every year incrementally in conjunction with the Consumer Price Index (CPI).
– Get the Maximum Security Deposit:
For an unfurnished unit, California law allows you to collect 2 month’s rent as the security deposit for your rental. Most owners allow the tenant just to have one month’s rent as security. Should the tenant decide not to pay last month’s rent and there are damages to your property at move-out, you may suffer financial damages. With our “Preferred Tenant Program”, if the tenant cannot (or chooses not) to pay the second month as a security deposit, we will guarantee it to you. We will charge the tenant 1% to 2% as as “Security Deposit Waiver Fee” and if at move-out there are no damages, we will rebate 50% of all fees collected. This better protects you and gives your tenant some payment options.
-Get Adequate Insurance from Your Tenant:
In all likelihood you have both liability and structure insurance for your rental. But if the tenant causes some catastrophic damage (grease fire, tub overflow, etc.) you may have to pay a deductible or file a claim which could impact the price you pay for insurance. You should make sure your tenant either has Renter’s Insurance or a liability policy in place. At Progressive, we require the tenant to have Renter’s Insurance or we charge them $12.50 a month for $100,000 policy with no deductible for which you are the beneficiary.
-Get Pets Documented:
If your tenant has a pet, and it has not been well documented for vaccinations, licenses, and the breed type, you may be liable for the damage they do to your property. We require all pet (and service or comfort animals) to be registered with PetScreening.com and depending on the score given to that pet, we charge a monthly “Pet Protection Program” fee. For this fee, we guarantee up to $1,000 in pet damages over and above the security deposit to you. If the pet is a service or comfort animal, there is no fee to screen the animal and no monthly fee, but they must go through the screening process to confirm the eligibility of that animal.
-Get Airtight Contracts:
Your rental contract must be able to hold up in court in the case of an eviction and the judge will rely on the language and enforceability of that contract. We use the California Association of Realtors lease agreement with a 14 page lease addendum drafted by us. If in the remote chance we need to evict a tenant of yours, we offer an “Owner Protection Plan”. In this plan we charge your tenant $15 a month, and if we need to evict them, we pay for the cost of eviction (up to $1,000). We will also waive our Eviction Assistance Fee ($300), saving you money.