With the combination of California's rent cap addendum laws and Covid rent surges, you very well could be leaving money on the table because you couldn't keep pace with the rent growth.
I have a client who leased a property in the spring of 2019 for a fair market price of $4500/month. My client enjoys the income, but isn't dying to max out the rent. As a result, my client has increased the tenants' rent, but marginally every year. The problem now is that the rent at the subject property is at least 25-40% below market post Covid and marginal rent increases. Given that my client legally can't increase the tenants' rent anywhere close to market rent, what are the options in order to not be taking "a loss"?
According to California, the options are to remodel the property, remove the property from the market by not renting it, moving a family member in to the property, or selling the property. Sometimes the best solution is to sell the property and give yourself the opportunity to start over.
This particular subject property has a fair market value of about $1,750,000. Whereas comparably valued properties generate closer to $10,000/month with no HOA, affording greater netting opportunity. This would more than double my client's income nearly overnight. Who wouldn't want to consider an overnight raise?
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