Dear Landlords and Investors,
The principles of leverage, supply, demand, and ROI still push appreciation. San Diego has proven to be a wise location for your investment dollars. But, don’t become complacent. Don’t lose track of why you are investing, regardless of how successful you are. Dealing with unexpected issues can make or break your business. So of course, you’re right to want to understand how the current market affects your property values. You deserve expert guidance. Here are details on what you need to know now:
NEW SECURITY DEPOSIT LAW- CHANGES COMING
As of July 1st, 2024 AB 12 will be set into place. This will change the maximum security deposit a landlord can collect from a tenant for a rental property. Now keep in mind it doesn’t matter what you call it. A key fee, a pet deposit, or just a security deposit. AB 12 only addresses what is collected at the beginning of or during a tenancy. It doesn’t make changes to what happens to a deposit that is being returned to a tenant.
Before we cover this new law. Let’s cover what’s currently in place until June 30, 2024.
Unfurnished apartment is allowed up to 2 months rent. A furnished apartment is up to 3 months rent. If you’re renting to a service member, if they are renting an unfurnished unit, 1 month of rent can be collected. If that service member is renting a furnished apartment, up to 2 months rent can be collected. And the last thing to note is that you can not collect a deposit for a Service Animal or an emotional support animal. Technically a service animal is not a pet so you can not collect a pet deposit.
Security Deposits in California Until June 30th, 2024
Now after July 1st, 2024. AB 12 goes into effect and things will change for landlords and security deposits. As long as you are not an exempt property the maximum security deposit will be the same for a tenant. The maximum rent that can be collected is one month.
Security Deposits in California on July 1st, 2024, and after
IS IT THE BEST TIME TO BUY PROPERTY?
Yesterday evening Dad sent over an article. That may be exactly the opposite of what your real estate investor friends and advisors have been telling you. Yes, folks like your hairdresser and the doom and gloom folks on YouTube all share. Rates are approaching 8% as we type. But the savvy and well-recognized real estate tycoons are touting that NOW is the very best time to buy a house. Folks like Barbara Corcoran of ‘Shark Tank’.
https://finance.yahoo.com/news/shark-tank-star-barbara-corcoran-151922997.html
She explains that since rates have hit a 23-year high, more buyers are shying away and moving to the sidelines. Waiting things out. Creating less competition for you as a buyer. Then what we’ve seen in the past few years. Instead of 5-7 buyers for each property, maybe there are only 2-4 now.
The other thing she mentions is that the days of 2.3% rates are long gone. They will never come again in our lifetimes. Rates will come down, eventually. Which will spring load those on-the-fence buyers back into the market. And what do you think that will do to prices? Especially in San Diego. This is where Barbara says that she believes prices are going to go up by 10% or even 15%.
She isn’t the only person who shares these views. We recently closed a home for a buyer family in Rancho Bernardo. Their lender was the Private Bank sector at the local Chase office. And he told us exactly the same thing.
It’s what we are seeing every day with our buyer clients. As properties come to the market. The ones that are priced well sell quickly and typically over the asking price. Which unfortunately for the buyers out there, sets the benchmark for pricing in a particular neighborhood. And we are seeing this on both the single-family front and multi-units. So heed the advice of those who have proven success. Folks like Barbara Corcoran and Warren Buffet. Don’t be scared to step up when it’s the right opportunity for you. If you sit on the sidelines those opportunities will pass you by. IF I ONLY… THE ONE THAT GOT AWAY…
‘Be fearful when the markets get greedy. Be greedy when the markets get fearful.’
‘Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.’
–Warren Buffett
RECENT FAQ’s FROM CLIENTS LIKE YOU:
- How long do we have to, owner occupy, a 2-4 unit when buying with VA or FHA?
We are strong believers in the principle of leverage. Controlling the largest asset you can with as little skin in the game as possible. One of the best ways to get that accomplished when it comes to real estate is buying a 2-4 unit property utilizing an owner-occupant loan. This means ZERO down for a service member with VA eligibility. Or 3.5% down for an owner-occupant buyer who is a first-time buyer. (First-time buyer applies to anyone buying owner-occupied who hasn’t owned a home in the past 3 years)
If you were to go out and buy a condo or home first. And then try to purchase a 2-4 unit property, you’re looking at 20% or more down.
So folks who get it, want to figure out the ‘rules to the game’ so to speak. Back when Lyle held his monthly Buyer and Foreclosure Seminars, the running joke was that there wasn’t an occupancy police task force. Nope, no big van running around town knocking on doors to see if you actually live in the property you buy.
Instead, you must qualify for the loan program. And have the intention of moving into the property. Lenders say they would like to see anywhere from 6 months to a year of occupancy. BUT… Life happens. If you’re active duty and bought with a VA loan. What happens when you get orders to move? The same goes for an FHA buyer. What if you get a job transfer? You need to go take care of a sick loved one at their home. Or you don’t feel comfortable in the neighborhood you purchased in.
The fact is as long as you continue to make payments on time, there isn’t someone out there checking on you. So now that you know ‘the rules to the game’. Reach out to us with your specific questions. This is where things get really fun and creative. Folks who get it, start asking questions like this one below.👇 Which we’ll cover in next month’s market report.
Our kid is about to graduate college. Can I co-sign with them on a multi-unit and use an owner-occupied loan?
KEEP YOUR QUESTIONS COMING! We plan on answering your questions monthly moving forward. It’s important that you’re informed and educated about what you buy and why you’re buying it.
AND WHEN YOU’RE AT THE END OF THE GAME… READY TO RETIRE FROM LAND LORDING?
Let’s face it. Being a landlord has its ups and downs. If we had to point you in one direction it would be the Delaware Statutory Trust folks. And here’s why. With the DST, you get all the benefits of ownership. Without the hands-on day-to-day dealings of tenants and property management/maintenance. Plus it provides you with cash flow. And in a lot of instances, it’s even more than the relinquished property provided. Second of all, you’ve got professional management and bookkeeping. It’s automatically done for you. We’ve touched on DST options in the past. Don’t be shy, contact us.
Bookmark-Worthy Links
San Diego Real Estate YouTube-Weekly Videos Keep You Connected
Rentometer-House and Apartment Rental Rate Comps
HomeBot-Personalized Home Finance Tool
ALTOS Reports -Powerful Data-Driven Real-Time Zip Code Market Updates
MLS Access for Investment Property -Custom Searches For Investment Property
San Diego Apartment Investors Market Report Archives-Access Past Market Reports
IT’S TIME FOR YOU TO GET THE ROI YOU DESERVE
You’ve worked hard for what you’ve earned, and you’re right to want the best experience. Be confident you have professionals on your side. We use ROI-based marketing. Rest easy knowing we use an organized system to market your property. Employing our highly targeted and proven approach like no one else is what you deserve!
Thinking of selling your property in the next 12 months? Call us today for your strategic marketing consultation at 858-218-4511.
