Orange County

AOA News and Buyers Guide • Orange County • April 2022 • (714) 539-6000 58 By Mercedes Shaffer Could Your Rental Property Investment Be Hurting You Financially? With an ever-changing legal and economic landscape, it might be time to rethink your real estate investment strategy. If you’ve been in the apartment business for a while, you know that it’s usually more profitable to own a four-plex than it is to own four rental homes. The income tends to be a lot better relative to the price, and the upkeep is easier and more cost-effective. However, recent changes in state and local laws that limit a property owner’s ability to run their own multifam- ily rental properties has made it much more difficult to maintain a gainful business. In the face of this new reality, it makes sense to reevaluate your strategy. Exemption From Rent Control Because of statewide rent control laws, one recent advan- tage to single family rental homes and condos is that they are typi- cally exempt from these laws, and thereby give a housing provider the ability to keep rents at market value. If you own a single-family rental home, so long as you don’t hold title as a corporation, LLC or as a REIT, your rental home and condo are exempt from AB 1482, which caps rents at 5% plus change in the CPI for all multifamily real estate in Califor- nia. Some cities, such as Santa Ana, have even more stringent rent control laws that cap rents at 80% of the percent change in CPI, with a maximum allow- able annual rent increase of 3% for multifamily rentals. These past few years have seen rent prices increasing be- tween 10-25%, so owners of single-family rental homes have the advantage of being able to raise the rent according to cur- rent market conditions rather than be forced to go below market by state rent control laws. Since 2020, it’s worth noting, “emergency” rules are in place in reaction to COVID-19 that do not allow housing providers to raise the rent more than 10% on any rental property, and some areas, such as LA county, are forbid - den to raise rent at all until one year after the state of emer - gency is declared over. This is an unfair restriction that singles out the housing provider industry, • New Paving • Sidewalks & Curbs • Resurfacing & Repair • Petromat Overlays • Seal Coating & Striping • Crack Filling Free Estimates Payment Plans Available Great Quality & Customer Service Ask for Richard 760-784-5500 Fax: 951-342-3106 Serving All of Southern California Since 1975 GeneralEngineeringContractor [email protected] FREE ESTIMATES WELDING Fences - Gates - Railings Step Replacement - General Repairs Ray Roohani’s Welding 714-717-6515 855-OC-WELDER (629-3533) Our country has approximately 80 million Millennials who are at the prime age for buying their first home. The Millennials represent the largest home-buying population in history, yet most Millennials are choosing to rent instead.