Welcome back to the three-part series: A Beginner’s Guide to Multifamily Investing. If you haven’t already, read Part 1: How to Buy a Multifamily Rental Property.
Why would you want to increase the value of your small multifamily investment property after you emptied your pockets just to purchase it?
First and foremost, you may be able to increase the rent and/or your property value, either of which will further increase your total borrowing power. With value-add investment, you have the option to implement any of the following strategies at a leisurely pace to improve your property incrementally over time. The associated expense is simply the cost of opportunity.
1. Make Repairs and Improvements
If you have an outdated property that needs cosmetic work or modernization, if you revive the property, it is likely that you could dramatically increase the rent. The rental income from outdated units will land somewhere between modern rates and those from its original era. But an upgraded unit can fetch market rates.
My own strategy is predicated largely on acquiring historic rental properties that need to be improved and then bringing them to the top tier of my local market rents.
2. Increase the Rentable Square Footage
If there are common areas in your property, it is very difficult to capture their true value in rent. Whether you give the key to the hallway closet to a tenant or open that space directly into one of the units, increasing the square footage of personal area will also allow you to increase your rentable square footage and total rental income.
3. Subdivide or Combine Units
This strategy can add value if a property is not the right size or configuration to suit the demographic makeup of its market.
If you have a 3,000 sq ft unit, you might consider splitting it into two 1,500 sq ft units. They will be easier to rent because the total monthly cost will be significantly lower to each tenant and will subsequently reach a larger segment of the population. This will decrease vacancy and may also increase your Gross Scheduled Income.
4. Decrease Expenses
Accounting, advertising, insurance, lawn maintenance, legal fees, licenses, property management, repairs, and maintenance all add up. Anything that you can do to decrease any of these expenses without sacrificing the quality of the property is all money in your pocket.
5. Pass Expenses to the Tenants
Because gas, water, and electricity are all consumable resources that can be used variably by tenants, it is appropriate to have them pay as much of their utility expense as the market will bear in your area.
If the infrastructure of your property is not already metered separately, consider doing so. There is an entire industry built around sub-metering behind your master meter to help allocate expenses to your tenants fairly.
6. Decrease Property Taxes
Property taxes fuel the public improvements that make your market a desirable place to live; you want to pay your taxes to keep this cycle flowing, but you don’t want to pay more than your share. If you are able to convince your local appraisal district to lower its book value of your property on the tax rolls, it will noticeably decrease your overall property tax expense.
Evaluate the properties surrounding your house that are similar to craft an argument that illustrates to the authorities how they have over-assessed your property in relation to your neighbors’ properties.
7. Tap Additional Sources of Income
There are a number of strategies to develop secondary sources of income from your rental property. Premium paid parking is an excellent example, as one of your tenants will certainly want to reserve the lone carport in your fourplex for their most treasured automobile. Invariably, shared resources in small multifamily properties are underused or abused if they are not valued fairly.
8. Raise Rent
If your rental rates are significantly below the rest of the market, you may be able to simply increase the rent at the next available opportunity. Even a 3% annual inflationary increase will add up over the years.
In the upcoming and final article of A Beginner’s Guide to Multifamily Investing, we will explore how you can multiply your rental property income over time by recycling equity and leverage.
Credit to Ben Bowman
Ben Bowman is an Architect, real estate agent, investor, and author at AssetsandArchitects
Understanding the basics of a home’s component parts has always been in the real estate agent’s wheelhouse. As internet-connected technologies become part of the package, don’t fall behind the curve.
For the last century, homebuilders and manufacturers have been envisioning ways to make homes smarter, more efficient, and more maintenance-free. But as the Internet of Things (IoT) meets up with smartphone-wielding buyers, the buzz about smart homes is becoming deafening. How do you keep up without getting bogged down in hype? Keep your focus on three things—the definition, the devices, and the data—and on how each of those is changing the home and the transaction.
THE DEFINITION: What is a smart home?
The term “smart house” was coined in the 1980s by the National Association of Home Builders to refer to a home with integrated telephones, lighting, audio, and security. Such systems required special wiring and typically cost tens of thousands of dollars. But the concept has evolved with the proliferation of inexpensive devices that can be operated via smartphone and can make data accessible online. Now, one real estate franchise is trying to bring about some common understanding of what it means to call a house a smart home.
In May, Coldwell Banker Real Estate LLC joined forces with consumer technology news source CNet to define a smart home as “equipped with network-connected products . . . connected via Wi-Fi, Bluetooth, or similar protocols for controlling, automating and optimizing functions” of the home. Their definition stipulates that the home has internet access, a smart security or temperature system, and at least two other smart features, such as appliances, entertainment devices, heating or cooling equipment, lighting, landscaping elements, air quality monitors, or thermostats.
Danny Hertzberg works on the front lines of smart-home living: the luxury market, where such features have moved “from an impressive amenity to an expected element,” he says. Hertzberg, a sales associate with Coldwell Banker Residential Brokerage in Miami Beach, Fla., and a member of real estate team The Jills, says his franchise’s effort to define a “smart home” is an important step toward eliminating casual or misleading uses of the term.
“It’s false advertising to have a Nest [thermostat] and call it a smart home. You can’t call the whole property a smart home or a smart condo and just have one element,” he says. “We need a nationwide consensus on the marketing terms. Otherwise people will be disappointed.” Or worse, they’ll feel duped.
THE DEVICES: What’s happening in smart-home technology?
In the high-end Miami market where Hertzberg works, he’s noticed home owners who are thinking about listing their homes are proactively installing smart-home systems, believing they’ll be at a disadvantage without them.
And with builders now installing smart devices in new construction, it’s only a matter of time before the trend reaches older homes and lower-priced listings, with sellers positioning these devices as points of differentiation. It helps that many smart-home devices can be had for a nominal cost—a few hundred dollars or less. Among the low-cost offerings are the Belkin WeMo switch, which plugs into an outlet and enables you to control lighting through a smartphone or motion sensor; the Amazon Echo, an interactive speaker that lets you use voice commands to access music, news, and more; and, of course, the Nest thermostat, which offers access from your phone and promises to learn your heating and cooling preferences.
Products like Nest have built-in data sharing tools to help potential buyers see themselves in a home, says Matt Flegal, a spokesperson for Palo Alto, Calif.–based Nest. Buyers who are considering a listing with a Nest thermostat, for example, can see the current owner’s app dashboard or the monthly usage email Nest sends to home owners. Although utility companies now offer online access to energy usage information, Nest brings control and usage data together in one package. “It’s a simple thing to do to make a house show better,” Flegal says.
When you’re vying for a listing equipped with smart-home features, Hertzberg suggests having a discussion about which features will convey and how those features improve the current owners’ lifestyle. “Understand why they installed a feature and what they love about it,” he says. For example, maybe they always left the lights on, so smart lighting has been a money-saving solution. Or maybe they entertain frequently, and smart speakers have enhanced the experience.
“As good as you think you are at copywriting, the owners sometimes have these diamonds,” Hertzberg says.
Understanding how smart technology works can make a difference. Hertzberg has seen the unfortunate result of showings where colleagues failed to learn how a system works. “The listing agent comes into the home and doesn’t know how to operate the system,” he says, adding that it’s a real turnoff for buyers. “Even to turn the lights on, they have to call somebody.”
The best way to get to know smart-home technology? Install it at home, Hertzberg suggests.
THE DATA:What’s the value of all that data collection?
One attraction of Wi-Fi–connected thermostats is that they enable home owners to track and optimize their energy usage. That data, combined with other available information, can be a boon for real estate agents.
For first-time buyers, in particular, the cost of ownership isn’t always readily apparent. “Energy costs are often the largest cost for the consumer after the mortgage,” says Hunter Albright, senior vice president of new markets for Tendril, a company with offices in Colorado and Western Europe that aggregates smart home technology data for consumers and real estate professionals. Tendril gathers around 300 data points about a property, most from publicly available sources and provides a system for helping consumers optimize their homes to be more energy–efficient. “It’s just more education for the home buyer,” says Albright. “It’s giving people a richer picture of that home.”
“Before a client is a home owner, you can use the [Tendril] tool to get an average of the energy costs,” says Ryan Carter, managing broker of 8z Real Estate in Denver. With tweaks based on possible upgrades and the potential owner’s energy needs, “the system can offer an idea of what a buyer might be looking at.”
Tendril sends 8z’s past clients a bimonthly email about energy efficiency and upgrade ideas. The email offers practical information, such as what makes a home suitable for solar panels or how an energy upgrade may pay off over time. The emails aren’t meant to replace brokers’ contact management systems but to augment them, Albright says. The personalized communications aim to show consumers that they made a smart decision.
Another company working to simplify home owners’ energy decisions is HomeSelfe, a division of Long Beach, Calif.–based Energy DataMetrics. The company’s home energy assessment app walks owners through their home for a snapshot of their home’s energy consumption. “Our free mobile app has you answer a few simple questions about your home and then sends an instant report that provides a picture of your home’s energy use and a personalized path to lowering utility bills,” says cofounder Ameeta Jain. HomeSelfe is one of eight companies currently in the National Association of REALTORS®’ REach accelerator program (narreach.com), which provides mentorship, education, and exposure for companies innovating in the real estate space.
Autopopulating Listings
For now, the data being collected by smart-home devices isn’t being curated for use in listing information. Although many MLSs have fields where listing agents can add information about energy savings, they’re not set up to feed in information from smart-home devices—yet. Chad Curry, managing director of NAR’s Center for REALTOR® Technology, says it’s just a matter of time. The Center recently established CRT Labs to help REALTORS® understand and have a voice in the development of smart-home technology.
Organized real estate’s role isn’t yet certain. But CRT’s participation in the U.S. Department of Energy’s Home Energy Information Exchange Accelerator is one cause for optimism. The accelerator is a three-year collaboration between the public and private sectors, with the goal of making home energy information more accessible. “With what we’re doing and the way we’re seeing MLSs respond, I think we’ll have this in two to three years,” Curry says. “Our vision is that none of this stuff would be entered by the real estate professional. It would be automatically updated by the house, and we think that’s possible.”
The Caveats
Will all this new data open up a host of new disclosure concerns? Yes and no. Say sellers have a moisture-sensitive smart device on their basement floor to measure water levels. It could give them hard data about the precise amounts of dampness and flooding that might have happened over the course of their ownership. But NAR Associate General Counsel Ralph Holmen points out that the greater availability of data won’t alter the basic calculation about disclosures. “These devices don’t really change the approach,” he says. The responsibility of the listing agent is the same; if you know it, disclose it.
But Holmen notes that brokers and agents must understand the data being collected. “The broker has an obligation to find out more about what the data shows and what that means for buyers,” he says. “He can’t turn a blind eye to things that might be a problem, even if the owner doesn’t say there’s been flooding.”
Privacy is another major concern. There have already been headlines about smart-home devices exposing private information about unwitting home owners. Some may worry that simple data, such as when electricity is being used, could help thieves determine when a home might be empty and vulnerable. Curry acknowledges these issues and notes that NAR is working with Underwriters Laboratories’ Cyber Security Assurance Program to address software weaknesses and review security controls.
Home owners who are reluctant to share energy and environmental data and other information about their home may soften over time as they see the convenience provided by these devices. “Rather than thinking of it as something you’ll have to disclose,” Curry says, “think of it as a way to improve owners’ quality of life.”
Credit to Meg White
Meg White is the managing editor of REALTOR® Magazine.
The sales price of neighboring homes is only one part of the equation. Be sure that sellers understand the other factors that affect how their home compares to their neighbors’.
Location within the neighborhood.
If your seller’s home is in a part of the neighborhood that borders a highway, train tracks, or an industrial area, it’ll likely fetch a lower price. Make sure you pull comps of other homes in similar locations to compare and explain pricing differences to sellers.
The home’s lot.
Take into account that hilly terrain can affect the usability of each home’s lot and bring your seller’s price down. You can have two one-acre lots next to each other, and one can be fully usable while the other is only half usable because of steep slopes, says Todd Gibbons of William Pitt Sotheby’s International.
Renovations.
Home owners who have done home-improvement projects typically get a higher price for their property. You should know which properties in the neighborhood have undergone renovations and how much they sold for so you can suggest to your seller what projects they should do if they want to boost their home’s sale price.
New construction.
In some markets, the cost of land has dropped, making building a new home less expensive and, thus, more affordable for buyers. Sellers need to understand how competition from the new-home segment could affect their listing price. For example, in the suburbs of Chicago, where Michael LaFido of Marketing Luxury Group does business, building a house similar in size to an existing structure costs 20 percent less today than before the recession. Pull comps from builders in your area to show sellers the potential impact on their home’s value.
The difference between listing price and sales price.
Many sellers will go online to see listing prices for other homes on the market in their neighborhood and ask you to price their house accordingly. You need to explain that listing prices reflect what sellers are asking, not what buyers are willing to pay. That’s why sold inventory is more reliable for determining the realistic price of your seller’s home than the asking price of properties currently on the market.
Sources: Maria Azuaje, Berkshire Hathaway Homeservices Florida Properties Group, Miami; Ann Marie Clements, AHWD, e-PRO®, Keller Williams Capitol Properties, Rockville, Md.; Michael LaFido, Marketing Luxury Group, Chicago; Todd Gibbons, William Pitt Sotheby’s International, Westport, Conn.
Credit to John N. Frank
John N. Frank is former managing editor for REALTOR® Magazine.
Consumers love the convenience and time-saving aspect of a one-stop shopping experience. Just look at what grocery stores are beginning to incorporate under their roofs: hair salons, coffee shops, banks, and vision centers.
That concept of getting everything done in one place is growing among real estate agencies. More brokers are including in-house mortgage companies, and some offer title and closing services, too. Those who have done it say it helps the bottom line, gives agents someone close by to ask about lending issues, and provides customers with the experience of getting everything done faster and more efficiently.
Enhanced Communication for All
Caroline Ruhl, president of Ruhl&Ruhl, REALTORS®, in Davenport, Iowa, says having in-house loan officers has been a game changer. Her office has offered the enhanced options for more than a dozen years and, she says, it’s resulted in better service for clients and smoother transactions for agents.
“Communication is better and easier for all parties,” she says. “When we first introduced loan officers to my offices, the time from pending to closing was reduced by 50 percent.”
The loan officers make sure all buyers are preapproved before Ruhl’s agents start showing them properties. They even go so far as to preapprove sellers who plan to buy after their current home closes before listing their properties. This proactive step means listing agents are seeing fewer deals falling apart because of finance-related seller contingencies getting in the way.
The Real Estate Settlement Procedures Act requires that Ruhl keep the two companies completely separate. Regulations include creating separate signs and marketing materials, says Jane Schneider, president of Ruhl Mortgage. Plus, last October, the Consumer Financial Protection Bureau addressed RESPA compliance and marketing services, which made things even more complicated.
“The regulations are cumbersome, and the risk is high if you don’t do everything correctly. Compliance is costly and time-consuming,” Ruhl adds.
Her company does a lot of business with agents and clients not associated with Ruhl&Ruhl. She was concerned about whether agents at competing companies would work with Ruhl Mortgage. But that hasn’t been a problem. Even when a real estate agent moves to another real estate company, the agent continues to refer their clients to her mortgage company because it offers a good client experience, she says.
Schneider states that about 30 percent of Ruhl&Ruhl clients select their mortgage company. “Everyone gets to select who they want. But some find the value of being able to talk to the agent and lender in the same building,” she adds.
Though they are separate entities, branding still matters. Changing the name a few years from 1862 Mortgage — the year Ruhl&Ruhl was established — to Ruhl Mortgage has helped clients understand the connection, Schneider says.
Staying Competitive
John Collopy, broker-owner of RE/MAX Results, headquartered in Eden Prairie, Minn., just opened his own mortgage company in April. He has been in the real estate business more than 30 years and oversees nearly 1,000 sales agents.
Collopy decided to take the step now due to recent interpretations of RESPA. The arrangement and marketing plan he previously had with loan officers from another company housed in his real estate offices wasn’t going to be acceptable. There cannot be joint marketing agreements between any real estate company and in-house mortgage company. He also owns a title insurance company, Home Title, which he opened in 1992, and a closing company.
“There is no law or issue against owning these companies; rather, the issue is when these companies provide marketing dollars or co-market with real estate agents. We always need to do what’s best for the consumer,” he says.
Before opening the mortgage company, Collopy did a lot of due diligence, and followed the model of a fellow RE/MAX broker who has taken the same path in the past.
“The risk in raising capital was significant, but in order to be a competitive, growth-oriented company, we believe we needed to have this component,” Collopy says. He also likes the fact that everything is in one place. “I like having the control over the transaction if there is an issue that needs to be addressed in any of the areas,” he says. “Instead of pointing my finger if something goes wrong, I can make a clear decision.”
Collopy is bringing the high level of customer service he emphasizes at his brokerage into the mortgage side of the business. His loan officers offer a large menu of finance products. “We are going to be competitive or better than the competition on pricing,” he says.
Easing Stress For Buyers and Agents Alike
Real estate clients are busy with so many aspects of their lives that they often just want someone to take care of them, says Gary Kenline, senior vice president at Hunt Real Estate ERA in the Buffalo-Niagara area of New York. His company has been offering services through Hunt Mortgage for seven years.
Overall, about 40 percent of their real estate clients use Hunt Mortgage for their home financing. In some of their offices, that number is as high as 60 percent.
“With online mortgage companies such as Quicken Loans and tons of other ones that advertise, the competition is tough,” he says. “But having our own mortgage company inside our real estate offices has worked very well.”
An in-house mortgage company also benefits agents, Kenline says. They’re able to walk down the hall and talk to the loan officer each day to get updates on clients’ loans.
For those thinking about adding a mortgage company to their real estate agencies, Collopy reiterates that it can be a long and complicated process. “It’s a very competitive business, but nothing is easy that is worth doing,” he says.
Credit to Lee Nelson
Lee Nelson is a freelance journalist from the Chicago area. She has written for Yahoo! Homes, TravelNursing.org, MyMortgageInsider.com, and ChicagoStyle Weddings Magazine. She also writes a bi-monthly blog on Unigo.com.
This article summarizes some key California rental laws applicable to residential rental units.
We’ve used the Official State Statutes and other online sources cited below to research this information and it should be a good starting point in learning about the law.
With that said, our summary is not intended to be exhaustive or a substitute for qualified legal advice. Laws and statutes are always subject to change, and may even vary from county to county or city to city.
You are responsible for performing your own research and complying with all laws applicable to your unique situation.
If you have legal questions or concerns, we recommend consulting with the appropriate government agencies and/or a qualified lawyer in your area. Your local or state bar association may have a referral service that can help you find a lawyer with experience in landlord-tenant law.
Security Deposit Maximum: Two months’ rent for unfurnished dwellings; 3 months’ rent if furnished dwellings. (Civ. Code §§ 1950.5 and 1940.5g)
Security Deposit Interest: No state-wide statute, but 15 (or so) localities have rent control ordinances that require you to pay interest, including Los Angeles. (reference)
Separate Security Deposit Bank Account: No Statute
Pet Deposits and Additional Non-Refundable Fees: Not Allowed (Civ. Code §§ 1950.5m)
For cleaning the rental unit when the tenant moves out, but only to make the unit as clean as it was when the tenant first moved in;
For repair of damages, other than normal wear and tear, caused by the tenant or the tenant’s guests; and
If the lease or rental agreement allows it, for the cost of restoring or replacing furniture, furnishings, or other items of personal property (including keys), other than because of normal wear and tear.
Require Written Description/Itemized List of Damages and Charges: Yes. Receipts and documentation not needed to accompany the itemized list of repairs if repairs and cleaning cost less than $126. (Civ. Code §§ 1950.5g 4A)
Record Keeping of Deposit Withholdings: No Statute
Failure to Comply: A bad faith claim or retention by a landlord may subject the landlord to statutory damages of up to twice the amount of the security, in addition to actual damages. (Civ. Code §§ 1950.5(l))
Lease, Rent & Fees:
Rent is Due: Unless there is a contract to the contrary, and the lease is for less than one year, rent is due at the end of the month. Most leases state that rent is due at the beginning of the month. (Civ. Code §§ 1947) and (Civ. Code §§ 1962)
Payment Methods: Landlord must allow at least one form of payment that is neither cash nor electronic funds transfer, unless tenant has had an insuffienct funds payment, or stopped payment on a money order. Then the landlord can require payments to be paid in cash. (Civ. Code §§ 1947.3(1-2))
Rent Increase Notice: 30 days if rent increase is less than 10 percent of the lowest amount of rent charged during the last 12 months. 60 days if rent increase is more than 10 percent of the lowest amount of rent charged during the last 12 months. (Civ. Code §§ 827(b)(2-3))
Late Fees: Allowed, but they must be “reasonable” and obey rent control laws, and are only enforceable if specified in the lease. (handbook)
Application Fees: The maximum fee is adjusted each year based on changes in the Consumer Price Index since January 1, 1998. In 2012, the maximum allowable fee is $44.51 (Civ. Code §§ 1950.6(b)). Use Cozy to avoid charging application fees because the tenant pays for the credit report directly.
Prepaid Rent: Landlord is allowed to collect one month’s pre-paid rent (first month’s rent) plus two or three months’ security deposit. (handbook)
Returned Check Fees: Equal to the actual bank fee. Or landlord can charge a flat “service” fee which is $25 for the first occurrence, and $35 for each occurrence thereafter (handbook). I recommend using Cozy to collect rent online to nearly eradicate late payments.
Tenant Allowed to Withhold Rent for Failure to Provide Essential Services (Water, Heat, etc.): Yes, because the property is under the “implied warranty of habitability.” (handbook)
Tenant Allowed to Repair and Deduct Rent: Yes, but not more than the cost of one month’s rent, and tenant cannot use this remedy more than twice in a 12-month period. (Civ. Code §§ 1942)
Landlord Allowed to Recover Court and Attorney’s Fees: Yes (Civ. Code §§ 789.3d)
Landlord Must Make a Reasonable Attempt to Mitigate Damages to Lessee, including an Attempt to Rerent: Yes (Civ. Code §§ 1951.2)
Notices and Entry:
Notice to Terminate Tenancy – Fixed End Date in Lease: No notice is needed as the lease simply expires. I recommend giving 60 days notice anyway.
Notice to Terminate Any Periodic Lease of a Year or More – If ALL tenants have lived there longer than a year, the landlord is required to give 60 days notice. (handbook)
Notice to Terminate a Periodic Lease – Month-to-Month: Landlord is required to give 30 days notice. Tenant is required to give 30 days notice. (Civ. Code §§ 1946)
Notice to Terminate a Periodic Lease – Week-to-week: Landlord is required to give 30 days notice. Tenant is required to give seven days notice. (handbook)
Notice to Terminate Lease due to Sale of Property: For periodic tenancies only (example: month-to-month), 30 days notice if ALL of the following are true: (Civ. Code §§ 1946.1) (handbook)
The landlord has contracted to sell the rental unit to another person who intends to occupy it for at least a year after the tenancy ends.
The landlord must have opened escrow with a licensed escrow agent or real estate broker, and
The landlord must have given 30-day notice no later than 120 days after opening escrow, and
The landlord must not previously have given you a 30-day or 60-day notice, and
The rental unit must be one that can be sold separately from any other dwelling unit. (For example, a house or a condominium can be sold separately from another dwelling unit.)
Note: A landlord can only end a periodic tenancy when a property or unit is sold, and not a fixed-term tenancy that has not yet expired.
Eviction Notice for Lease Violation: Three days to remedy lease violation or landlord can file eviction (Civ. Procedure Code §§ 1161(3)). Landlord can also terminate the lease for subletting without permission or illegal activity on the premise. (Civ. Procedure Code §§ 1161(4))
Landlord Must Accept First Qualified Applicant – The 2012 Fair Housing Handbook of California says on page 24, “The landlord should take the time to check out the information and make a selection based on the first qualified applicant(s),” although there is no statute to support this. It’s recommended but not law.
Copy of Lease: Provide a copy of the rental agreement or lease to the tenant within 15 days of its execution by the tenant. (Civ. Code §§ 1962(4))
Utilities: Landlord must disclose if utilities that service tenant’s unit also service other areas (such as common foyers), and disclose the manner in which costs will be fairly divided up. (Civ. Code §§ 1940.9) Landlord must also provide a formula for dividing up utilities when utilities are split among multiple tenants.
San Francisco Utilities: Landlords must provide heat that can maintain a room temperature of 68 degrees. This level of heat must be provided for at least 13 hours, specifically from 5-11 AM and 3-10 PM.
Move-In Condition: Landlord is not required to provide a Move-In Condition Checklist for the Tenants to complete. However, it is recommended and extremely helpful should you ever go to court over physical damages to the dwelling.
Mold: Landlord must disclose, prior to lease signing, knowledge of any mold in the dwelling that exceeds safety limits or poses a health concern. Landlord must distribute a State Department of Health Services consumer handbook once it is developed and approved. (Health & Safety Code §§ 26147 and Civ. Code §§ 1941.7)
Demolishment: If a landlord or agent has applied for a permit to demolish a rental unit, the landlord must provide written notice to prospective tenants before accepting any money. (Civ. Code §§ 1940.6)
Ordnances: Landlord must disclose the locations of former ordnances (weapons and artillery)in the neighborhood. (Civ. Code §§ 1940.7)
Sexual Offenders: Landlords are required to include the following language in the lease: “Notice: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meganslaw.ca.gov. Depending on an offender’s criminal history, this information will include either the address at which the offender resides or the community of residence and zip code in which he or she resides.” (Civ. Code §§ 2079.10a)
Pests Disclosures: At lease signing, Landlord must disclose any pests control contracts or disclosures received by pest control companies. If the premise is being treated for pests, landlord must disclose the pesticides used and their active ingredients, and any warnings associated with them. (Civ. Code §§ 1940.8, and Business and Professional Code §§ 8538)
Smoking: If the landlord limits or prohibits smoking, landlord must include a clause that specifies the areas on or in the premise where smoking is prohibited. (Civ. Code §§ 1947.5)
Proof of Domestic Violence Status: Landlord is entitled to proof/documentation of domestic violence status of the tenant if the tenant claims they are a victim. (Civ. Code §§ 1941.5, 1941.6, 1941.7)
Locks: Landlords must change the locks if requested by a domestic violence victim and proof of court order is given. (Civ. Code §§ 1941.5 and 1941.6)
Special Treatment: A victim may terminate a lease with 14 days notice and proof of victim status. (Civ. Code §§ 1946.7(d)) A landlord cannot end or refuse to renew a tenancy based upon the fact that tenant or a member of tenant’s household is a victim of a documented act of domestic violence, sexual assault, or stalking. (Civ. Procedure Code §§ 1161.3)
Abandoned Property: The rules are lengthy and specific, please read Civ. Code §§ 1965, 1980 to 1991.
Retaliation: Landlord must not terminate a lease, increase rent, decrease services, cause a lessee to quit involuntarily, or bring an action to recover possession to a tenant who has filed an official complaint to a Government Authority, been involved in a tenant’s organization, or exercised a legal right. Courts will assume “retaliation” by landlord if negative action is taken on the tenant within 180 days (six months) after any of the prior tenant actions. (Civ. Code §§ 1942.5) It will also be considered retaliation if the landlord acts negatively within six months after any of the following:
Using the repair and deduct remedy, or telling the landlord that the tenant will use the repair and deduct remedy.
Complaining about the condition of the rental unit to the landlord, or to an appropriate public agency after giving the landlord notice.
Filing a lawsuit or beginning arbitration based on the condition of the rental unit.
Causing an appropriate public agency to inspect the rental unit or to issue a citation to the landlord.
Business License required: No state-wide statute, but local cities and counties may have regulations and requirements. Check with your local governing authority.
Credit to Lucas Hall
Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.
Is that chocolate ice cream, or something the previous tenant’s baby left behind? Ah yes, the joys of renting a unit with carpet.
While landlords are responsible for ensuring that their rental units are safe and inhabitable, it’s difficult to argue that a dirty carpet is dangerous or makes a house unlivable.
But what exactly is meant by a “unlivable“, and how do cleaning carpet stains fit in?
Aren’t carpet stains considered “normal wear and tear”?
If you, as a renter, are confused about your rights, you’re not alone. This is a common problem, and one that can cause to you live in less than ideal living conditions. Livable conditions typically refer to necessities, such as having a roof over your head, hot water, and heat during the winter.
But you might, for example, be asked to live with a drip in the bathroom or an unsightly stain in the carpet.
Although those problems are pretty minor and are unlikely to be a reason for you to leave your rental property, those irritants can make a living situation unpleasant.
Who Made it Dirty?
Did you, the renter, spill red wine, or drop your spaghetti dinner onto the carpet? If so, then you’ll likely be responsible to fix/clean it.
Even though most of America eats dinner in front of their TV, food spills are never “normal wear and tear”. That’s why we have dining rooms, and if you choose to each on the couch, you do so at your own risk.
…though common, food spills are never “normal wear”
Was the stain there when you moved-in? If so, then the landlord certainly can’t hold you responsible for it – but he also might not have to clean it.
Be sure to document the condition of the property, including the stain, when you move in so there are no issues later. And while it might be unsightly, the landlord still doesn’t have to fix it unless it’s causing a health issue.
Here’s a related podcast episode:
Lucas Hall
How Much Can a Landlord Charge for Carpet Damage? How Much Can a Landlord Charge for Carpet Damage?
Know the Laws for Cleaning, Maintenance, and Repairs
A stain in the carpet, or generally dirty carpets, do not make a rental unit uninhabitable (obviously); therefore, the rules surrounding whether a landlord has to clean a carpet can seem hazy.
Cosmetic repairs are usually not legally required. But in some cases, such as issues with mold or health risks, landlords may have to make such repairs.
If the carpet stain or condition is a threat to human safety, then the landlord should intervene.
To help you determine whether your landlord is legally required to clean or repair your carpet, you could do some research to see if this is addressed in the following:
County building codes
State tenant-landlord laws
Written or oral promises that your landlord has made
Terms of your lease
If you find out that your landlord is legally required to clean the carpet every X years, or deal with the unsightly carpet stain, then the next hurdle is to actually get your landlord to do it.
Although withholding your rent or using a “repair and deduct” procedure might be allowed by law in some states, it is not advisable to do either because these methods can result in eviction.
Instead, why not try out an alternative to get your landlord to clean your carpet (or make other minor repairs)?
Here are four ideas to get your carpet clean:
1. Speak with Your Landlord
Ask your landlord about cleaning the carpet or doing another minor repair job. Your landlord might be very willing to fix the problem, especially if it prolongs the life of the carpet.
Plus, it shows that you take pride in the condition of the unit and your landlord will likely want to make things better for you.
2. Write a Repair Request
Even if you have spoken with your landlord, writing a letter or an email can be helpful.
It gives the landlord time to think over the request. Additionally, a repair request gives you the opportunity to describe the problem and to explain why it is in the landlord’s best interest to clean the stain in the carpet.
Let them know that the stain may become worse and thus more costly to clean later.
3. Propose Mediation
If you can’t get your landlord to cooperate, you can propose a formal mediation.
This is probably one of the last resorts that you should consider with regards to cleaning carpet stains. But in some cases, contacting a mediation service can be the only way forward, especially if oral and written requests are ignored.
Mediators work with both you and your landlord to come up with a solution that you both agree is fair.
With that said, if your landlord is a slumlord, they will just ignore your request and act like you are crazy.
4. Clean Carpet Stains Yourself
If the landlord is not required by law to clean the carpet stain (which is common), and they are not willing to do so, you could try to clean the carpet stain yourself.
There are many methods to clean carpet stains; one of the most effective is by using a combination of vinegar and baking soda.
Soak the carpet stain with vinegar.
Sprinkle a little baking soda over the vinegar.
Pour vinegar on the pile of baking soda (expect a carpet volcano).
Wait until it absorbs the stain (approximately 5 minutes).
Wipe up the mixture, and vacuum.
This method should remove most carpet stains, so it is well worth a try, especially if your landlord is likely to withhold your security deposit if such stains are evident.
Credit to Jimmy Moncrief
Jimmy is a multifamily real estate investor and bank credit officer. He has written a complimentary bank negotiating guide on how to get around the 80% LTV rule.
