Categories
Los Angeles Multifamily Rent Control

2025 LA Multifamily Regulatory Recap

2025 may have been one of the most active years with regard to regulatory housing measures passed in the Southern California region. In case you have not been keeping up, below is a brief summary – most of which occurred in the 2nd half of the year:
 

  • December 2025 – Los Angeles Rent Stabilization Ordinance (RSO) Formula Changes: Starting July 1, 2026, the annual allowable rent increase will be calculated based on 90% of the Consumer Price Index, along with the elimination of the additional 1% increase previously permitted for covering utilities such as gas and/or electricity.  Read More Here.
     
  • December 2025 – Los Angeles County Emergency Rent Relief Program: LA County launched a temporary Emergency Rent Relief Program providing grants of up to six months of past-due rent for tenants affected by wildfires, immigration enforcement, and other emergencies. Read More Here.
     
  • November 2025 – Santa Monica Implemented Rental Registration: Santa Monica adopted a mandatory rental registration requirement for all rental units effective January 1, 2026. Read More Here.
     
  • November 2025 – Pomona Enacted Permanent Rent Stabilization Ordinance: Pomona enacted permanent rent stabilization setting a fixed 5% annual cap not tied to inflation. Read More Here.
     
  • October 2025 – Burbank Proposed Rent Caps and Tenant Protections: Burbank directed staff to advance ordinances imposing a 4% “soft cap” on rent increases with relocation fees triggered if higher increases are pursued.  Read More Here.
     
  • October 2025 – Transit-Oriented Development Expansion (SB 79): SB 79 will streamline approvals, limit local zoning constraints, and require affordability components, potentially enabling substantial new housing development near transit corridors. Read More Here.
     
  • October 2025 – Los Angeles County ICE Emergency Declaration: LA County declared an ICE-related emergency, granting itself expanded authority applicable across all cities in the county. Read More Here.
     
  • October 2025 – Statewide Appliance Requirement (AB 628): California law will require landlords to provide a working stove and refrigerator in most rental units beginning January 1, 2026.  Read More Here.
     
  • July 2025 – Los Angeles Banned Evictions for Substantial Remodels:  City ofLos Angeles eliminated “substantial remodel” as a basis for no-fault eviction under the Just Cause Ordinance.  Read More Here.
Categories
Los Angeles Multifamily

Just Closed | 12400 Mitchell Avenue. Mar Vista, CA

A well-located 7-Unit property in Mar Vista sells to new entrant to the LA multifamily market.

Just successfully closed our listing located at 12400 Mitchell Avenue – a 7-unit multifamily property located in the heart of Mar Vista which is one of West Los Angeles’s most desirable and supply-constrained rental submarkets.

This sale marks the end of long-term family ownership, underscoring the continued generational transition we are seeing across these types of properties. The property was brought to market through a competitive marketing campaign that generated multiple qualified offers from a wide range of investors.

The Listing and Sale Process

  • Our marketing strategy focused on exposing the property to a broad buyer pool, and we attracted interest from a wide variety of purchaser types – including legacy family owners, local operators, and 1031 exchange Buyers. The combination of strong fundamentals, excellent Westside location, and overall basis allowed us to generate tremendous interest in the listing.
  • Ultimately, the property was acquired by a new entrant to the Los Angeles multifamily market, demonstrating that investor appetite remains strong for well-located assets with tangible value-add opportunities.

Submarket Insight | Mar Vista

  • Despite a higher-rate environment, Westside submarkets like Mar Vista continue to outperform due to their low vacancy rates, affluent tenant base, limited new supply and proximity to neighboring areas like West LA and Venice. Investors remain active in pursuing smaller assets with long-term upside potential — particularly those offering the ability to reset rents through natural turnover.


Final Sale Metrics

  • Final Sale Price: $1,700,000
  • Price per Unit: $242,000/Unit
  • Price per SF: $337/SF
  • GRM: 11.4x
  • Cap Rate: 5.1%
  • 6 Offers Generated through the listing process
Categories
Los Angeles Multifamily

Just Closed | 1118 S. Fairfax Avenue in the Heart of Carthay

16-Unit Value Add Multifamily Property Sells to an All Cash 1031 Exchange Buyer

The Area – Carthay Square, Los Angeles

  • Fairfax has long been synonymous with LA’s cultural heartbeat — connecting West Adams to Mid-City to West Hollywood, lined with classic Art Deco buildings, mom-and-pop eateries, and some of the city’s most recognizable creative landmarks.

  • Owning multifamily real estate on Fairfax means being part of a neighborhood with history, personality, and enduring demand from tenants who want to be at the center of it all.

The Landscape for LA Rent Controlled Apartments

  • In today’s market, selling value-add rent-controlled apartments takes more than just pricing and patience — it takes a thoughtful strategy.

  • With interest rates higher and operational costs climbing, buyers are becoming more selective, particularly when it comes to R.S.O. (Rent Stabilization Ordinance) assets that require significant capital improvements and expenditures.

  • Today’s Buyers are less willing to roll the dice on achieving 30% upside on value-add acquisitions with low rents. Many investors are underwriting more conservatively – seeking positive leverage and cash flow Day 1.

The Marketing and Sale Process

  • Despite the challenging environment, our team generated five competitive offers through a targeted marketing campaign emphasizing the property’s location, character, and upside potential.

  • By leveraging our extensive investor network and local expertise, we were able to create real momentum around the listing — ultimately leading to a successful all-cash closing with a 1031 exchange buyer who recognized the long-term value of the asset.


The Final Transaction Metrics

Below are the final deal metrics for 1118 S. Fairfax Avenue. Los Angeles, CA 90019:

  • $3,060,000 Final Sale Price
  • $191,000 per Unit
  • $234 per SF
  • 10x GRM
  • All-Cash 1031 Exchange Purchaser
  • Non-Contingent Transaction
  • 21 Day Total Escrow Period
Categories
Los Angeles Multifamily

Recently Closed | 1256 N. Kingsley Drive in East Hollywood, CA

12-Unit Apartment Building Sells to one of LA’s most active purchasers.

We are pleased to announce the successful closing of 1256 N. Kingsley Drive, a multifamily property located in the heart of East Hollywood — an increasingly dynamic pocket of Los Angeles that continues to attract both investors and residents seeking strong fundamentals and urban convenience.

Well-Located in East Hollywood

This transaction highlights the continued demand for well-located assets even amid higher interest rates and a selective capital environment. Our team represented the seller, a long-term owner looking to capitalize on record embedded value, and navigated a competitive marketing process that drew multiple qualified offers.

ADU Potential with the use of SB 1211

The property attracted attention for its ADU and redevelopment potential, walkable location, and upside in rents while maintaining a stable tenant base. Despite shifting market conditions, our marketing strategy emphasized storytelling and local investor reach, generating consistent activity throughout the campaign.

Submarket Insight

East Hollywood remains one of L.A.’s most resilient submarkets, benefiting from steady renter demand driven by proximity to healthcare, entertainment, and education corridors and modest rent levels compared to adjacent neighborhoods like Los Feliz and Silver Lake.

We are seeing increasing investor interest in mid-size assets offering long-term repositioning potential. Even as construction slows citywide, existing rent-stabilized buildings in emerging neighborhoods like East Hollywood continue to trade actively – a sign that operators are adjusting to new pricing realities while positioning for future appreciation.

Categories
Los Angeles Multifamily

LA Apartment Construction is Down BIG. Here’s Why.

Roger Vincent of the LA Times points out the main reasons LA Apartment developers are on the sidelines in his piece published on 10/1/2025.

LA Apartment Construction Has Plummeted

  • Apartment development in Los Angeles has fallen nearly 30% in three years, with fewer than 19,000 units under construction — the lowest level in over a decade (per CoStar).

  • Developers say projects no longer pencil out, requiring $4,000–$5,000 monthly rents just to break even.

Developers and Investors Pull Back

  • Even with strong rental demand and low vacancy rates, many developers have stopped buying or breaking ground.

  • Institutional investors (pension funds, insurers, etc.) are redirecting capital to other cities, citing unpredictable rules and shrinking profit margins.

Policy, Costs, and Regulation to Blame

  • Builders cite Measure ULA (transfer tax), COVID-era eviction limits, and fears of new policies as major deterrents.

  • A proposed $32.35/hour construction minimum wage plus a $7.65/hour healthcare credit could further inflate costs.

  • Material prices have surged due to tariffs (iron +9%, copper +14%) and labor shortages worsened by immigration crackdowns — a critical blow since 61% of California construction workers are immigrants (26% undocumented).

Long-Term Decline in Housing Production

  • Annual housing creation has fallen for decades — from 70,000+ units in the 1950s to under 15,000 in the 2010s — leaving the region with an aging, unaffordable housing stock.

  • Over the past six years, 152,000 units were built in L.A. County, but only 10% were affordable to low-income households.

  • Building permits in the L.A.–Long Beach–Anaheim metro are down 68% from 2020 — the second-steepest decline in the nation (after San Jose).

Consequences for Renters

  • With construction uneconomical, supply will tighten, rents will rise, and workers will move farther out, lengthening commutes.

  • Los Angeles faces a deepening housing shortage as high costs, policy uncertainty, and investor flight make new apartment construction financially unworkable — even amid overwhelming demand for rental housing.
Categories
Los Angeles Multifamily

Recently Closed | 32 Unit Koreatown Bricker + Adjacent Duplex

3701 9th Street. Los Angeles, CA 90019

3701 9th Street (32 Units) and 863 S. St. Andrews Place (Duplex) sold to a well-established LA Apartment Investor.

Two Side-by-Side Properties

We recently closed 3701 9th Street & 863 S. St. Andrews Place: a two-property multifamily sale transaction consisting of a 32-Unit apartment building and an adjacent duplex located in the highly sought-after Koreatown neighborhood of Los Angeles on the corner of 9th Street and St. Andrews Place.

Narrow Pool of Investors

There were a few challenges presented with the marketing of this opportunity. Market dynamics aside, the buyer pool for Brick buildings in Los Angeles is very narrow to begin with. Most of these properties are either approaching (or have surpassed) the 100-year old mark making them prone to expensive Cap Ex repairs and overall difficulty to insure.

The second challenge was selling both of these properties together to one Buyer. The purchasers for the 32-unit brick building wanted nothing to do with the adjacent duplex – and vice versa.

A Well-Established Long Term Buyer

The purchaser, a well-established Los Angeles apartment investor, saw the strategic value of controlling two contiguous assets in a supply-constrained submarket. By acquiring these properties together, the buyer has the opportunity to enhance operational efficiencies and position the both for both steady income and future growth.

The Final Closing Metrics


– $4,270,000 Total Sale Price
– $125,588 Blended Price per Unit
– $140 Blended Price per SF
– 8.6x Blended GRM

Please contact Everett Wong for further details on this transaction.

Categories
Los Angeles Multifamily

Recently Closed | 1320 S. Carmelina Avenue | 9 Units in West LA

We are pleased to announce the successful sale of 1320 S. Carmelina Avenue, a well-located multifamily asset in the heart of the West Los Angeles submarket.

Favorable Metrics: All things considered, solid metrics were achieved for the Seller given today’s market dynamics. We were able to consummate the transaction at a 13.7x Gross Rent Multiplier (GRM) and a 4.0% capitalization rate – metrics which reflect the property’s desirable location and stability in a market characterized by volatile interest rates and tighter lending conditions.

Blue Chip West LA Location: Situated just south of Wilshire Boulevard and west of Bundy Drive, the property benefits from proximity to major employment centers, transit, shopping, and some of the Westside’s most attractive neighborhoods. West LA continues to command premium investor interest, and this sale underscores the confidence in the submarket’s long-term fundamentals.

Purchased for Long Term Appreciation: The Buyer—a private investor—was primarily focused on capital preservation and long-term appreciation, recognizing the enduring value of core Westside real estate. With limited supply, strong renter demand, this acquisition was a strategic move to anchor capital in a blue-chip location.

The Outcome: In today’s uncertain market, where many investors remain on the sidelines, this closing stands out as a compelling example of how well-located, income-producing real estate continues to trade when appropriately priced and professionally marketed.


The Final Deal Metrics

Below are the final deal metrics for 1320 S. Carmelina Avenue. Los Angeles, CA 90025:

  • $2,650,000 Sale Price
  • 9 Units
  • $294,444 price per unit
  • $385 per SF
  • 13.7 GRM
  • 4.0% cap rate
Categories
Los Angeles Multifamily

Just Closed: 3636 Keystone Avenue | 10 Units in Palms

We’re pleased to announce the successful closing of 3636 Keystone Avenue, a 10-unit multifamily property located in the highly desirable Palms neighborhood of Los Angeles. This marks the first of four transactions in a broader portfolio sale on behalf of a long-time private investor who has chosen to exit the Los Angeles market entirely.

Regulatory Fatigue Persists in LA Multifamily: The Seller, a long-term generational holder, cited regulatory fatigue as one of the key drivers in their decision to divest. Amid a growing patchwork of local and state mandates — from rent control expansions to seismic retrofit ordinances — managing multifamily real estate in Los Angeles has become increasingly burdensome. With the regulatory environment only trending more complex, the Seller made a strategic decision to unwind their portfolio and reallocate capital.

Navigating a Challenged Private Capital Market: This transaction took place against a backdrop of volatility in the private capital markets. Elevated interest rates continue to squeeze returns and challenge buyer underwriting. Adding to the turbulence was the renewed trade friction caused by the impact of tarrifs, which sent ripples through the U.S. Treasury market — creating uncertainty around cost of capital and further complicating deal dynamics.

Multiple Offers Generated: Despite these headwinds, we were able to generate multiple offers by highlighting the asset’s core location, steady income, and long-term upside potential. The eventual buyer — a newer entrant into the Los Angeles multifamily market — saw 3636 Keystone as a prime opportunity to plant a flag in one of the city’s most dynamic and resilient rental submarkets.

Looking Ahead: With three additional properties from the same portfolio currently in process, our team remains focused on delivering execution amid a complex market. Whether you are looking to expand your holdings, exit strategically, or simply understand how to navigate today’s market dynamics, we’re here to help you get there.


The Final Deal Metrics

Below are the final deal metrics for 3636 Keystone Avenue. Los Angeles, CA 90034:

  • $3,028,000 Sale Price
  • 10 Units
  • $302,800 price per unit
  • $344 per SF
  • 11.0 GRM
  • 5.7% cap rate

Categories
Los Angeles Multifamily Los Angeles Rent Freeze

LA City Council to Vote on Rent Freeze Resulting From the 2025 LA Fires

On Wednesday, January 29th, 2025 the L.A. City Council will vote on a revised rent freeze and eviction moratorium introduced by Council Members Eunisses Hernandez, Hugo Soto-Martinez, and Adrin Nazarian – which will have tremendous impacts on rental housing providers and renters alike.

The motion, amending motion, and communication from the Los Angeles Housing Department (LAHD) address actions related to tenant protections following the January 2025 fires. Key recommendations include:

  1. Eviction Protections: Prohibit certain evictions for tenants experiencing economic or medical hardship due to the fires, including:
    • Evictions for non-payment of rent
    • No-fault evictions (except for government orders to vacate)
    • Evictions for unauthorized occupants, pets, or nuisance related to displaced tenants

  2. Rent Increase Pause: Implement a pause on rent increases for all residential units until January 31, 2026, and suspend specific provisions related to rent increases for additional occupants.

  3. Reports on Price Gouging: The City will provide monthly reports on rental price gouging complaints, investigations, enforcement actions, and recommendations for improvement during and six months after the local emergency.

  4. Temporary Legal Services: Authorize LAHD to contract with Partners in Diversity to hire temporary paralegals for tenant protection enforcement.

  5. Amended Motion: Add a requirement for LAHD to present a process to verify protected tenants within seven days.


UPDATE: WEDNESDAY, 1/29/25
Results from The LA City Council Meeting

  • The LA City Rent Freeze and Eviction Moratorium was sent to vote by the LA City council this morning (Wed, 1/29/25). The City Council decided to send the proposal back to the Housing and Homelessness Committee for further research and deliberation.

  • Some speculate that there will be a compromise, removing the rent freeze from the equation, while keeping the eviction moratorium in place.
Categories
AB 246 AB 246 California Los Angeles Renter Protections Rent Control

California’s AB 246: New Rent Freeze Measure Proposed Amid Emergency Fire Conditions

California’s AB 246 is a new piece of legislation aimed at protecting tenants and controlling rental price hikes during states of emergency. As of today (1.20.25), it is currently making its way through the CA state legislature.

The bill introduces temporary restrictions on rent increases for residential properties in Los Angeles County, effective during the ongoing emergency declared by the Governor due to the Palisades Fire and windstorm conditions, starting January 7, 2025. Here’s a summary of the key points:

Rent Increase Restrictions

  • AB 246 prohibits landlords in Los Angeles County from increasing rental rates above what was charged on January 7, 2025, for properties impacted by the emergency.
  • This restriction applies to all residential properties and remains in place for 12 months after the emergency is declared over. Violations of this rule can lead to civil penalties of up to $10,000, enforced by the district attorney.

Price Gouging and Enforcement

  • The bill also addresses price gouging by prohibiting substantial price increases for essential goods and services during a state of emergency.
  • Similar to other disaster-related price control laws, it limits price hikes to 10% above pre-emergency prices for items like food, medical supplies, and housing. The district attorney will have the authority to prosecute violations.

Eviction Protections

  • Additionally, AB 246 strengthens eviction protections during a state of emergency. It is unlawful to evict tenants for rent increases that exceed the limitations set by the bill or if the evicted unit is re-rented at a higher rate.
  • The legislation is designed to prevent landlords from using emergencies as an excuse to unfairly raise rents or evict tenants, taking advantage of vulnerable residents.

Sunset Clause

  • AB 246 is a temporary measure. It will remain in effect until 12 months after the emergency ends, at which point the law will be repealed. However, it provides significant protections to tenants during a time of crisis, preventing exploitation while the region recovers.


This bill is part of broader efforts to regulate rental practices during times of crisis, ensuring that emergency situations do not lead to unfair economic burdens on residents. Landlords in Los Angeles should be aware of these new restrictions and consult with legal professionals to ensure compliance. To read the full bill, please click here.

Categories
Los Angeles Multifamily

Just Closed | 1400 S. Wilton Place. Arlington Heights, Los Angeles

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1920’s 8-Unit Apartment Building Sells to Local Developer

We recently sold 1400 S. Wilton Place which was a classic value-add apartment building located in Arlington Heights near the intersection of Pico and Arlington.

Changing Market Dynamics: This sale is an illustrative example of the changing market dynamics of The LA Multifamily market within the past 2-3 years. We first listed this property in 2021 when the cost of borrowing significantly lower than current conditions. During that time, we generated 9 offers with a few at asking price. The Sellers ultimately did not transact for personal reasons. Flash forward to 2024 where we were in the thick of an elevated interest rate environment and there were significantly fewer buyers in the market.

The Heightened Regulatory Environment: LA is arguably the most regulated rental market in the country for landlords and much of the Seller’s motivation had to do with the heightened and continuous regulatory measures pertaining to LA rent controlled apartment buildings.

The Basis Buy: The purchaser, who owns and operates apartment buildings throughout Los Angeles, was most interested in the low Price per Square Foot basis of $180/SF which is ~20% less than other similar multifamily properties trading in the area.

The Final Deal Metrics


Below are the final deal metrics for 1400 S. Wilton Place:

  • $1,915,000 Sale Price
  • 8 Units
  • $239,375 price per unit
  • $180 per SF
  • 11.0 GRM
  • 5.3% cap rate

We are currently evaluating similar Los Angeles individual properties and portfolios for local owners. If you would like more information on how we may assist, please reach out to me at ewong@greysteel.com

Categories
Los Angeles Multifamily Rent Control

The 2024 LA Apartment Regulatory Recap

2024 was an active year with regard to the LA Apartment regulatory environment, filled with both wins and losses for apartment owners.

The one thing that remains certain is that the regulatory landscape surrounding rental housing in California continues to evolve, with challenges and opportunities arising from recent legislation.

Below is a brief recap of a few major outcomes which transpired in 2024:
 

  • Proposition 33 Was Defeated (Win) -The 2024 election saw the defeat ofProposition 33 which would have expanded rent control in California, and likely would have led to the possibility of Vacancy Control (ie your ability to raise rents in-between tenancies).
     
  • Proposition 34 Passed (Win) – The passage of Prop 34 mandates that The AIDS Healthcare Foundation (the organization behind Prop 33) will be forced to allocate 98% of its revenue directly towards patient care, impairing its financial ability to support rent control initiatives such as Prop 33 in the future.
     
  • LA County Approved Lower Annual Rent Hikes (Loss) -The LA County Board of Supervisors approved lower annual rent increases for many tenants in unincorporated areas.  Rent increases will be limited for units already under rent control to 60% of the annual change in the consumer price index with a ceiling of 3%.
     
  • SB 1211 Passed Allowing for Greater ADU Density (Win) – SB 1211 passed in 2024 creating more flexibility to add ADUs at multifamily properties by raising the cap on detached ADUs from 2 units to 8 units, so long as the ADUs do not outnumber the units in the main building.
     
  • Max Section 8 Rents Lowered in Los Angeles (Loss) – Local housing authorities such as HACLA reduced the amount of Fair Market Rents being offered to housing providers participating in the Section 8 voucher program by as much as 10% to 12%.
     
  • New Compliance for Non-RSO Properties (Loss) – The LA City Council passed a sweeping compliance program affecting non-RSO property owners in the city of LA. Owners of properties not covered by the Rent Stabilization Ordinance (RSO) – including multifamily buildings constructed after 1978, single-family homes, condominiums, accessory dwelling units (ADUs), and Junior ADUs – must now register their rental units and display certification, aligning with standards previously set for RSO properties. 


As always, we will continue to monitor the regulatory landscape and ensure that you have the most accurate and up-to-date information on how these changes may affect your multifamily investments.  Please do not hesitate to reach out if you have any questions or need further clarification on any of these developments.

Categories
Los Angeles Multifamily

Just Closed – Prime West LA 9-Unit Near Wilshire/Bundy

1237 Amherst Avenue sells to a local apartment investor in an All Cash Transaction.

Through a challenging market with sales volume down from the highs of 2021/2022, as well as pending ballot measures (Proposition 33) hanging in the balance, we were able to close a “Bread-and-Butter” apartment transaction located at 1237 Amherst Avenue in prime West Los Angeles.

General Feedback From the Market

The general feedback from the diverse pool of prospective purchasers was typical for a West LA transaction such as this one, highlighted in few bullet points below:

  • “Love the Location”: Some investors chase yield at the expense of location – while other investors chase location at the expense of yield. 1237 Amherst is an example of the latter – situated on a quiet side street near the iconic intersection of Wilshire Blvd and Bundy Drive in prime West Los Angeles. This is arguably one of the most well-established and highly sought-after rental submarkets for young ‘Westside’ professionals.

  • “Excellent Rents, But Where is the Upside?”: The property was performing well with an average rent of ~$2,500/month. The near-stabilized rents achieved by the Seller ruled out the traditional ‘value-add’ investors who generally seek properties with lower rents and higher upside. 1237 Amherst was geared more towards an investor seeking a cash-flowing asset in an A+ location, who for the most part would be parking money for appreciation over the long term.

  • “Let’s See What Happens with Prop 33”: Over the past few months, many investors remained on the sidelines anxiously awaiting the results of Prop 33 which could have introduced the concept of Vacancy Control (ie the government regulating rents in-between tenancies). We were able to successfully consummate this transaction while the fate of Prop 33 lingered in the balance. Prop 33 has since been defeated by California voters.

Healthy Buyer Interest with Multiple Offers Generated


Through the marketing process, we attracted attention from some of the most active buyers in the West LA market – both large and small.

  • All Cash Transaction | 20 day Total Escrow: With the uneasiness of the capital markets still pervasive, the purchaser closed all cash with a lightening fast 20 day total Escrow period from start to finish.

  • The terminal buyer was a smaller operator who owned a few apartment buildings in the immediate vicinity.


The Final Deal Metrics

Below are the final deal metrics for 1237 Amherst Avenue:

  • $3,426,000 Sale Price
  • 9 Units
  • $380,667 price per unit
  • $492 per SF
  • 12.8 GRM
  • 4.7% cap rate

We are currently evaluating similar Los Angeles individual properties and portfolios for local owners. If you would like more information on how we may assist, please reach out to me at ewong@greysteel.com



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Categories
Proposition 33 Proposition 34 Rent Control

Possible Scenarios for Proposition 33 and Proposition 34

As Californians head towards the ballot boxes this November 2024, apartment owners are rightfully concerned about the potential impacts on their investment properties and management strategies with regard to Proposition 33 and Proposition 34.

In short, Proposition 33 aims to expand rent control measures in California, while Proposition 34 aims to weaken the source of these rent control measures, which is the AIDS Healthcare Foundation’s ability to financially back them. Below, are the four potential scenarios which could unfold.

Possible Scenarios:
 

  • Scenario 1: Prop 33 Passes, Prop 34 Does Not Pass -Probably the worst-case scenario for CA landlords.  If Proposition 33 passes, rent control will be expanded in California likely leading to increased regulatory constraints on rent increases for many apartment owners, including the possible implementation of Vacancy Control.  And with Proposition 34 defeated, the AIDS Healthcare Foundation will continue to have funding available to support future rent control initiatives down the line.
     
  • Scenario 2:  Prop 33 Does Not Pass, Prop 34 Passes – Best Case Scenario for CA landlords.  In this case, Prop 33’s defeat would mean that existing rent control measures remain status quo, without expansion.  And with Proposition 34 passed, the AIDS Healthcare Foundation would be forced to allocate 98% of its revenue directly towards patient care, potentially diminishing its ability to support rent control initiatives such as Prop 33 in the future.
     
  • Scenario 3: Both Prop 33 and Prop 34 Pass:  A good look for the future, but the damage would already be done.  As mentioned above, with Proposition 33 passed, it would introduce expanded rent control measures, however it may likely be the last as the AIDS Healthcare Foundation’s mandated re-allocation of funding in accordance with Prop 34 would hinder their ability to support further rent control initiatives.
     
  • Scenario 4: Neither Prop 33, Nor Prop 34 Pass:  In the event that neither proposition passes, the current rent control measures will remain in place without expansion and apartment owners will continue to operate under existing rent control laws. The AIDS Healthcare Foundation will retain its funding and resources, allowing it to pursue rent control initiatives in the future.


Conclusion:
 

The outcomes of Propositions 33 and 34 hold significant implications for apartment owners in California. Each potential scenario above presents unique challenges underscoring the importance of understanding these propositions and their potential impacts on the housing market and property operations. Apartment owners should stay informed and prepared to adapt their strategies in response to the ballot results in November.

Categories
Accessory Dwelling Units Los Angeles Multifamily

SB 1211 Could be a Game-changer for ADUs

Governor Gavin Newsom recently signed a new legislative package to strengthen California’s laws addressing the housing and homelessness crisis. Among them, was SB 1211 which may be a game-changer for investors seeking to build detached Accessory Dwelling Units (ADUs). Here are the Details:


The Details of SB 1211:
 

  • Updates to Existing Law: SB 1211 updates an existing ADU law to create more flexibility around how ADUs can be built alongside existing multifamily housing.
     
  • SB 1211 to Increase Allowable ADU Density:  Under SB 1211, the number of detached ADUs allowed to be built on properties with apartments, condos, or townhouses would quadruple, from two to eight.
     
  • No Parking Replacement: If a property owner decides to replace a carport or driveway with an ADU, they would not be required to replace that parking.
     

Addressing CAs Worsening Housing Shortage:
 

  • The Numbers Behind California’s Housing Shortage:  California needs to build an estimated 2.5 million homes by 2030 to keep up with demand, according to the California Department of Housing and Community Development. But the state only averages about 100,000 new homes per year, including only 10,000 affordable units.
     
  • ADU Construction on the Rise:  A decade ago, California was permitting only about 800 ADUs per year. Now, thanks to a series of new laws designed to jumpstart the state’s ADU market, the state is building about 25,000 new ADUs each year, meaning that twenty-five percent of all new housing built in California each year are ADUs.  SB 1211 may help to increase that number.
Categories
Los Angeles Luxury Apartments Los Angeles Multifamily

An Inside Look at Beaudry DTLA

Brookfield’s brand new 785 Unit Masterpiece, Beaudry, is a new permanent fixture to LA’s skyline.

A lot has been said about Downtown LA real estate recently – and to be honest most of the chatter skews negative. Many will point to the ever present homelessness crisis permeating the area, or the struggling office market which has been hit hard by maturing loans and falling tenant demand.

What is talked about less however, is the plethora of Class-A high-rise apartment buildings which have been built over the past couple of years. Many of these are considered to be among the most luxurious apartment towers in the city when it comes to living spaces and amenities.

A few weeks ago, I had the opportunity to tour one of Downtown LA’s newest and highly-amenitized apartment buildings, Beaudry. And even though I am not in the market for luxury rental housing, I must admit that at the end of the tour, I had one of those ‘where-do-I-sign’ moments. Beaudry is easily one of the finest Class-A apartment buildings in Los Angeles – a true stunner on the inside and outside.

Some quick stats about Beaudry:

– 64 Stories
– 785 Units
– 880,000 Square Feet (Approximately)
– Parking for up to 831 Vehicles
– Delivered to LA apartment market in the Spring of 2023
– It is the tallest residential apartment building West of the Mississippi
– Virtually every amenity you can imagine

Listen to the brief Podcast below which explores Beaudry’s amenities, units as well as the current dynamics of Downtown Los Angeles Real Estate:

Categories
Los Angeles Multifamily Rent Control

LA County To Provide Free Tenant Legal Counsel

On Tuesday, July 16, 2024 the Los Angeles County Board of Supervisors approved the Tenant Right to Counsel Ordinance, which will provide free legal representation to eligible tenants facing eviction in unincorporated Los Angeles County beginning in January of 2025.

  • Who it Protects:  Effective January 1, 2025, the Tenant Right to Counsel Ordinance will codify a program that provides legal representation to eligible tenants who have received an unlawful detainer in unincorporated Los Angeles County and whose household income is equal to or less than 80 percent of the area median income.
     
  • Notices to be Provided to Tenants:  Under the Tenant Right to Counsel Ordinance, landlords will be required to provide tenants with notice of County’s eviction defense program in English and any other frequently spoken languages when they serve a tenant a notice of termination of tenancy. Additionally, the notice must be posted on rental properties in an accessible area and any available onsite management office.
     
  • Legal Representation to be Provided:  By unanimously approving the Tenant Right to Counsel Ordinance, the Board of Supervisors will grant the Dept. of Consumer and Business Affairs (DCBA) the authority to provide access to justice and guaranteed legal representation to vulnerable LA County tenants facing eviction.
Categories
Los Angeles Multifamily Rent Control

Update to Los Angeles City Allowable Rent Increase (July 2024 – June 2025)

In a move aimed at providing continued stability and relief for tenants, the City of Los Angeles has announced the extension of its 4% max rent increase for rent-controlled apartment units.

This decision follows last year’s reduction from an initially proposed 7% increase to a more moderate 4%, after a nearly four year rent freeze.

The extension of the 4% rent increase cap, effective from July 1, 2024, through June 30, 2025, underscores the city’s commitment to safeguarding tenants amidst ongoing economic challenges. This measure, outlined by the LA Housing Department, ensures that landlords cannot increase rents beyond the specified limit, unless otherwise amended by the City Council.

Last year’s reduction from a proposed 7% to a 4% increase was a response to concerns raised by tenant advocacy groups and community members regarding the affordability of housing in the city. Recognizing the economic strain faced by many renters, especially in the wake of the COVID-19 pandemic, the City Council took proactive steps to mitigate financial burdens and ensure housing stability.

Additionally, as is traditional, the recent announcement highlights specific provisions regarding additional increases for gas and electric utilities provided by landlords. An additional 1% for gas and 1% for electric service can be added if landlords furnish these utilities to tenants, subject to the overall 4% cap.

It’s important to note that landlords are required by state law to provide a 30-day advance written notice for rent increases of less than 10%, ensuring transparency and allowing tenants ample time to adjust to any changes in their rental payments.

As Los Angeles continues to grapple with housing affordability challenges, the extension of the 4% rent increase cap represents a crucial step in promoting housing stability.

Categories
Los Angeles Multifamily Rent Control

An Update on CA and Los Angeles Multifamily Regulations

The regulatory environment for California Multifamily Owners continues to remain onerous for landlords. Below is an update on various laws and regulations that will impact multifamily properties both in the city of Los Angeles and across the state of California.


The Update:

  • Security Deposits Limited to 1 Month:  Renters in California can no longer be asked for a security deposit larger than one month’s rent for leases signed on or after July 1, 2024 thanks to AB-12. Already existing leases will not be affected by this new law.  There is an exception in the bill for small landlords, who can charge up to the value of two months’ rent, if the owner is a natural person (or LLC consisting only of natural persons) and they own a max of two rental dwellings that contain no more than a total of 4 units.

  • Tenant Background Checks May Be Outlawed in Los Angeles: A proposed LA City ordinance would prohibit landlords from inquiring about an applicant’s criminal history or requiring an applicant to disclose criminal history when an applicant is applying for an apartment or other types of housing. Additionally, the proposed city law would prevent landlords from using such information, if received, to outright deny an applicant – and would impose fines on landlords for discriminating based on a tenant’s record.
     
  • Mandatory Air Conditioning for Tenants:   LA County Supervisors Lindsey Horvath and Hilda Solis are seeking to establish a legal maximum indoor temperature for rental housing.  No firm limit has been decided upon yet and with plans still in early stages, it is not yet clear what exact cooling devices would be required when temperatures rise above the max.
     
  • Mandatory Acceptance of Household Pets:  AB 2216 is still making its way through the California Legislature.  The bill will require landlords to have reasonable justification(s) for not allowing a pet in a rental unit and only allows landlords to ask about pet ownership after a tenant’s application has been approved.
     
  • The Justice for Renters Act:  This is the big one which will be on California ballots in November.  The Justice for Renters Act aims to repeal the Costa-Hawkins Act of 1995, which would enable local governments to impose rent control on single-family homes and newer apartments.  It would also eliminate the state’s ban on vacancy control, which would allow cities and counties to regulate rents in between tenancies.
     
  • Updates to Measure ULA (aka The Mansion Tax):  There have been updates made to the Mansion Tax since the tax took effect last year.  The City has increased thresholds effective for LA City real estate transactions closing after June 30, 2024. The new thresholds for the Mansion Tax will be $5,150,000 and $10,300,000 (which is up from $5M and $10M respectively). This means that transactions above $5,150,000 but under $10,300,000 will be assessed a 4% tax.  Transactions $10,300,000 and up will be assessed a 5.5% tax.
Categories
Los Angeles Multifamily

Navigating Squatters’ Rights in California

There has been a lot of chatter in the market recently about Squatters. Navigating the complexities of landlord-tenant laws, especially regarding squatters, can be a daunting task for property owners in California. Squatting, while illegal in principle, presents unique legal challenges as squatters are afforded certain rights under California statutes.


How Squatters Can Gain Adverse Possession

To make a successful claim for adverse possession in California, a squatter must meet the following requirements: Occupy the property for at least five consecutive years, cultivate or improve the land or property, pay all state, county, or municipal taxes throughout their occupation (CCP § 318, 325). Often, California squatters will be required to provide evidence that they have cultivated or improved the land. This includes cultivating in an agricultural sense as well as building onto or making improvements to the property itself.

Squatters in California must also meet five general requirements:

  • Hostile possession: Occupying the property without permission
  • Actual possession: Physically residing on the property
  • Exclusive possession: Excluding all others from the property
  • Continuous possession: Residing on the property for the entire 5-year period
  • Open and Notorious Possession: Using the property openly without hiding occupancy

If these requirements are met, the squatter can file a lawsuit to claim legal ownership of the property.

What are Squatter’s Rights in California?

  • Squatters do not have any rights allowing them to legally occupy an unused residential building or land in California. Property owners can evict squatters with proper notice.

  • Adverse possession claims however allow squatters to gain legal ownership of property in California. But it requires meeting all the specific elements as mentioned above. Additionally, the squatter must pay property taxes during those 5 years to make a viable claim.

  • Sometimes property owners will allow someone to use or occupy the property with an oral “at-will” agreement. This creates a tenant “at will” arrangement without a formal lease. These tenants at will aren’t squatters with adverse possession rights since their occupancy is permitted.

With the housing crisis ongoing, more and more unhoused people are resorting to unlawful squatting in abandoned rental properties. It’s not unusual to find squatters taking up residence in foreclosed homes, buildings left vacant following evictions, development projects or rentals where tenants have moved out but the owner fails to monitor the property. It is important as a property owner to constantly monitor your property and continue to be vigilant in protecting your property rights.

Source: James L. Arrasmith