While house prices are rising, rental rates have been steady to slightly down. Property management pro Kevin Lehman, President of Blue Horizon Management Company, created a snapshot for me of the current effect of the pandemic on rental properties.
Multi-units – Units with on-site washer/dryers are doing well. People do not want to share laundromats.
Commercial Properties – Offices are pushing the limits of remote working. Companies are dramatically reducing the workspace they need. This category is highly impacted and as business and retail habits change, investments in this category may be weakened for quite a while.
College Rentals – College students are now couch-surfing with their parents. Because of the significant hit this category is taking, this would be a good time to perform renovations which will improve the rental value. Expect this category to return to “normal” in a year or two.
Condos and Small Homes – For this category, now is the time to consider a 1031- exchange. Prices are up and this is an excellent time to sell. Buyers are capitalizing on being able to work from home and are looking to leave the big cities.
Large Single – Family Homes–Not much impact; they are as desirable as ever.
Mesa Market Report
Kevin is finding these tools useful to secure good tenants:
- Show tenants your property with 3-D virtual tours – This is now the norm for property managers in all rental markets.
- Offer free rent – For properties not moving, he recommends two weeks free rent as a promotion. Advertise the amortized rent rather than the regular rent.
- Sanitation Packages – Gift new tenants with toilet paper, paper towels, hand sanitizer, and alcohol spray.
Just Cause Eviction Ordinance
The Santa Barbara City Council is considering an Ordinance which would require landlords to pay relocation assistance of 1½ times the monthly rent to tenants who are given a no fault eviction notice. (You ask a tenant to leave—you must pay them to go.) The Ordinance would be stricter than the one imposed by the State last year, which only requires assistance of 1 months’rent. It would not apply to Single-family homes and Condos unless the property is owned by a corporation.
The new language reflects changes pushed by the landlord lobby and differs significantly from what was proposed at the last meeting. It specifies that tenant relocation assistance is to be paid per unit rather than per tenant, as had been initially suggested. Given the large number of unrelated tenants who often occupy one unit, the council members agreed that the cost of relocating all non-related adults could be exorbitant.
Likewise, the Committee dropped any extra assistance for special needs tenants—adults older than 62, tenants with children, and tenants with disabilities. There was concern that it might give landlords an incentive to discriminate against families.
The Ordinance goes before the Committee October 20. For comments to be considered, they should be emailed to acalonne@SantaBarbaraCA.gov by October 2. To see the full proposal, go to: https://bit.ly/2DBdqjM
Client Talk…
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