Rent Control
Does anybody know how to go about raising the rent in a rent control area where the rent is below market value. All of the tenants are month to month, so there are no leases to honor. Im considering the purchase but it wont be worthwhile unless i can raise the rents to fmv, ($1,000) which is about double where it is currently at ($500). The property is in LA. Any suggestions? :-?
You need to check the local regulations.
If there is no easy way to raise the rents then make sure you offer only the price at which the current rents make the deal work. The seller is the one with the problem. Do not take it over. Buy at the level that the rents justify.
If the seller says the rents can be raised so you should pay more agree an option where you will pay X after the new rents are in place or you pay Y if after some number of months the rents are still at the lower levels. Call their bluff.
Granted there might be other investors out there who will take the gamble. Just do not volunteer to be the greater fool.
John[ Edited by active_re_investor on Date 06/23/2004 ]
do you know where would be a good place to start looking for the regulations? I checked the california department of consumer affairs site but no luck. Any ideas? By the way i like the option idea, that will most likely be my next step. thanks
There are books on landlord rights and tenant rights for California. I purchased one on tenant rights so I will be informed about adversarial tactics. This book lists which communities have rent control and eviction control ordinances and a brief description of what/where they are. I don't have the title with me, but I am sure you can find this on Amazon or in Borders.
From there you can check the internet for rent contol in the community of interest and see what recent changes have taken place or get a more detailed description of the laws.
Another thought is to go to a tenant advocacy group in the community of interest. They will surely be informed on latest rent restrictions.
If you have trouble finding the book, send me a private message and I will find the title.
Regards,
Ed