Residential Rental Trends
COVID has affected many people and businesses both in positive and negative ways. One of the major changes in the residential rental market has occurred during this time and the side effects are still being encountered. While many laws are being changed in the rental market, especially in Los Angeles County, the outcomes are also now being manifested as a result.
The purpose of many residential rental home laws has changed due to the major economic effects of medium and large organizations being involved in real estate such as Blackrock, Zillow, Redfin, etc. When large organizations are involved in the selling and purchase of real estate, they obtain control of the market prices and set the trends. In addition, many reputable or sizable organizations have started to support and advocate for real estate REITS.
From an individual perspective, anything that helps them gain earnings is a good thing. However, little do most individuals understand that his/her own investment may be contributing to his/her future dilemma. As I have explained this to my clients and investors for many years, they understand the effects, and most of them, if not all of them, have rejected the REITS investment offers.
Whether or not a person decides to invest in a certain opportunity is an individual choice. However, the most important aspect of any investment is knowing the pros and cons. Experience and factual statistics are some of the most important aspects of any expertise versus knowledge from books. That is a drastic difference between common sense and popular trends. Often, the majority is not ideal.
Usually, things are not seen for many years until the consequences become evident. Now we are seeing the devastating losses of investors who have placed money on REITS. Blackrock, Zillow, Redfin, etc. are all now under serious financial consequences. The business of real estate has proven to still be an expert professional field.
With the rise in property taxes, home insurance, HOA fees, and repair & remodeling costs, property owners are forced to increase rent. While it might be true that some of the property owners increase rental prices drastically without doing much property maintenance, all of my property management clients have agreed to perform reasonable property maintenance for our tenants. As a result, it is not true that all property owners are greedy.
Most of the changes in rental law are geared towards discouraging organizations, entities, or owners who own many properties in the same area to prevent control of the real estate market. This is a needed and desirable intervention by the government. However, some of the laws may also produce side effects for individual investors. In the long run, a healthier and more affordable housing market would be possible if the correct measures are sustained.
In the meantime, rental property owners are now seeking more professional, knowledgeable, and experienced property managers to help them manage their investment properties. The quality of tenants is now more requested by property owners who offer better property conditions for rent.
The biggest problems in my 20 years of property management experience are the ethics, character, and behavior of renters. Just about every conflict can be traced back to the ethics and character of a person. How a property is maintained depends on the care and cooperation of tenants.
As the changes in law continue, more properties are being sold to owner-occupied buyers and fewer rental properties are available. The more issues property owners have with tenants, the more likely they are to sell the property. Thus, making rental properties more desirable and needed.
The purpose of rental properties is to accommodate both the needs of tenants as well as property owners in a mutually reasonable and fair manner. Tenants seek to have a decent property to reside in within their budget. Property owners seek to have a net gain to prepare for their retirement years. When tenants are diligently taking care of the property, that lowers the property maintenance costs, and more likely the property owners will continue to renew their lease at lower than market prices.
When tenants produce unethical, unreasonable, uncooperative, behavioral issues, the high maintenance of this tenant in terms of time, energy, and costs makes the purpose of rental property undesirable. One tenant can deplete more than 5X the amount of time dealing with them while others may be in a few minutes. I had a chance to have a heart-to-heart talk with a police officer with over 25 years of experience in his career. We both agreed that from what we have personally encountered, it has always been the tenants taking advantage of the property owners or landlords. We do have very good and reasonable tenants who are grateful to us and the property owners for how we have treated them and responded to them. They were able to save up funds to purchase a home for themselves after years of renting our properties. Other tenants never want to own a home. They would rather have one spouse not working and just attend to the children or family affairs.
In the past 20 years of my real estate career, there have been plenty of homes listed for sale with owner-occupied that did not have much markings or dents on the walls. We are talking about 10-15 years of living there and never did a new coat of paint; however, the property still looks great. We were raised that way and many of my property owners are also raised that way. Unfortunately, the laws in California do not promote as much discipline, which is causing a loose-loose rental environment for everyone. Rental prices need to be higher to compensate for these types of tenant damages that the property owners need to pay for. Imagine that 10,000 homes need to be newly painted every year, which causes great environmental pollution, a waste of money for all parties while teaching our children it is OK to not take care of other people’s property because we have the right not to (indirectly). How can we expect work ethics and morality which are the foundation of human virtue will be better? What we learn as children in the right direction from the start is now being taught deliberately to be discarded as we grow older? Isn’t it supposed to be the opposite as we mature more in life?
While the U.S. tax laws and lifestyle still offer real estate investment to be strong for legal residents. The key rests on whether the property owner can find a dependable and capable property manager to perform as a mediator between them and the tenants. The goals of property owners are simple, the number of investments needs to make sense. That means the quality of tenants is very important.
Although people may change over time, the mutual benefit concept remains the same. Each party needs to do their part as agreed. The purpose of the property manager is to seek a mutual win-win for all parties by ensuring everyone keeps their promises and respect.
Over 20 years, Alisha’s team has not encountered eviction needs. Even though no one can guarantee the conduct and attitude of a person, we perform a more diligent tenant screening process than average. At the same time, we respond to our tenants faster and more effectively than most. We also provide clear accounting records to our property owners so they can gain the highest tax benefits.
If you desire to obtain income properties or already have income properties and are seeking stress-free professional property management assistance, contact Alisha today! 949.229.5987
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