San Diego Apartment Investors October Report 2021

Pretty much by all branches of government.  Federal, State, County, and most cities in CA are no longer restricted.  You are always gonna have Santa Monica and other hard-core enclaves from the ’70s.  But for the most part, it really is lifted. Time to give your 30 or 60-day notices and plan on 2 things.  (30-days if the tenancy is for less than one year.  60 if the tenancy is over a year.)

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First and foremost is:  Raise your rents!  With the moratorium lasting so long, the lack of affordable housing has produced more tenants now than ever before.  Rents all over the county have soared as a consequence of good old supply and demand.  Do not worry about losing a tenant. The vast majority of tenants are well aware of the high cost of rent.  We know and talk with a lot of owners/landlords.  Checking with them we can say we do not know of any tenants who have moved due to just a rent raise.

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Secondly, with vacated units, it is time to:  ‘Do Prudent and Cost Effective’ remodeling!  Once completed these units will then be put out for “Qualified Tenants” to occupy at current market rents.  In some cases, it will be twice what you have been getting on your same units before remodeling.  Updates to kitchens and bathrooms are the most expensive to do.  However, they yield the highest returns. They are highly sought after by tenants, therefore these improvements command the highest rents.

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Simple things are in order.  Fresh paint, change out all electric outlets and wall switches, put in long-lasting and energy-efficient lighting.  All of which take a bit more money upfront however, yield back dollar for dollar. They also create appeal to the new tenant.  I recently replaced all the interior doors on a unit.  So that was the cost of 3 doors on a two-bedroom, one-bath apartment.  New closet doors are not that expensive either and I always do those as well.  All the rage the last few years is the vinyl plank flooring.  There are multiple color choices.  Look for the 30 year home warranty brands that are waterproof.  Not the water-resistant brand, waterproof!  Sometimes all it takes is a fresh coat of paint to the exterior.  Recently I did that to a duplex in another state and oh my what a difference.  There were some areas that needed wood replacement.  So work was done to the eaves, doors, and shutters.  The one thing that is way inexpensive but gives a great return is the blackout drapes that are very popular.  They not only look great, but they also offer more insulation and are easy to maintain.  They never clatter in the wind, don’t get bent or broken, and can be easily cleaned or replaced.

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Some property lends itself to families due to having more bedrooms.  2 or so bedrooms are more for starter families.  They also are great for my favorite type of tenant.  My hands-down number one valued tenant is the, ‘empty nester’.  Mature adults with the kids gone.  Do look for them. They are out there and appreciate the owner who takes care of their property. The second thing is to run a credit check.  Only consider anything over the FHA minimum score of 615-620 or higher.  The third is to call, talk, and verify the references the applicant provides you.

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Chances are tons better, by following these few tips you will find very good, solid, and happy tenants. By doing these few things you will see your property values skyrocket to new levels. Remember these are the things other investors are looking for when you go to sell.  So what are you waiting for?  Out of the tragedy of the last couple of years, you are now given a gift that is just waiting for you to take!