What types of buildings are subject to Rent Control in SAN JOSÉ

The current San Jose rent control ordinance only applies to triplexes and larger buildings that were built before Sept. 7, 1979 and excludes:
• Multifamily units built after September 1979
• Rental units located in a building containing two or fewer dwelling units
• Single family homes
• Condominiums
• Townhomes
• County property within San José’s boundaries

When can Landlord Enter the Unit : California Tenants - California Department of Consumer Affairs

California law states that a landlord can enter their rental unit:

• In an EMERGENCY
• When tenant has moved out or ABANDONED the rental unit
• To make necessary or agreed-upon REPAIRS, DECORATIONS, ALTERATIONS, or OTHER IMPROVEMENTS.
• To show the rental unit TO PROSPECTIVE tenants, PURCHASERS, or LENDERS. 
• To provide entry to CONTRACTORS or WORKERS who are to perform work on the unit.
• To conduct an initial INSPECTION before the end of tenancy
• If COURT ORDER permits the landlord to enter.
• If the tenant has a WATERBED.

Hayward Duplex For Sale $498,888. Collect rental income as your duplex appreciates in value.

Hayward Duplex For Sale $498,888.  Collect rental income as your duplex appreciates in value.

Robert Lei
REALTOR, e-PRO
Century 21 M&M and Associates
(408) 893-2410
BRE # 01716389

929 East El Camino Real Condo Investment Property Rental Earnings

Posted under: Home Buying in Sunnyvale, In My Neighborhood in Sunnyvale, Investment Properties in Sunnyvale

929 East El Camino Real Condo Investment Property Rental Earnings:

The condos on 929 East El Camino Real in Sunnyvale are conveniently located on East El Camino Real just east of Wolfe Road, near where Fremont Avenue merges onto East El Camino Real, just south of Sunken Gardens Golf Course.

Unlike most multi-story condos and townhomes, these units walk DOWN to the bedroom level.  The advantage of this arrangement is when it is time for you family to go to bed, the only people who will be above you are your own family.  If someone makes noise in the kitchen, living room, or dining room, it is your own family and/or housemate, so you can walk upstairs to tell your family member or housemate to be walk more quietly.

If the bedrooms were on the upper level of your unit, then above you would be people who live in the unit above you, not people from your own household.  You would have to go outside and knock on their door to get them to walk more quietly at bedtime.

Of course, the biggest consideration if you are considering these condos for investment is the amount of rent you can expect to earn each month from these condos.

The 3 bed 2.5 bath 1,832 sqft models right now earn approximately $3,400/month in rent.
The 3 bed 2 bath 1,440 sqft models right now earn approximately $3,000/month in rent.

To calculate the yearly income, multiply these rents x 12 months.  This is also known as the gross scheduled income.

From that, take into account the vacancy rate.  This location is very convenient -- convenient to commute to work and convenient to grocery stores, restaurants, etc -- so the vacancy rate should be under 5%. 

Multiply the Gross Scheduled Income x Vacancy Rate to arrive at Dollars Lost.
Gross Scheduled Income LESS Dollas Lost gives you Annual Rental Income.

If you gain any other income from the property, then add it to arrive at Gross Operating Income.
Subtract total annual operating expenses to get Net Operating Income.
Subtract Annual Debt Service to get Before-Tax Cash Flow.

The Before-Tax Cash Flow does not take into account your tax savings.
To arrive at your After-Tax Cash Flow, take into account the following:
--The annual interest deduction on your loan
--The annual depreciation on the improvements
--Your combined federal and state tax bracket (e.g. 38%)
   (Ask your tax professional whether all your tax losses may be claimed in the current year)

If your Before-Tax Cash Flow is negative, combine that with your depreciation to get Allowable Loss.
Multiply this Allowable Loss by your combined federal + state tax bracket to calculate Taxes Saved.
If the Taxes Saved is greater than the Before-Tax Cash Flow, then your final resulting After-Tax Cash Flow will be positive!


To calculate the Rate of Return, you'll need to first calculate the Cash Investment.
You can buy the larger unit for approximately $600,000 right now.
You can buy the smaller unit for approximately $550,000 right now.

If you get an 80% loan, then your down payment will be 20% ($120,000 for the larger unit. $110,000 for the smaller unit)  Add the expected buyer's closing costs to arrive at the Total Cash Investment.

The After-Tax Cash Flow divided by the Total Cash Investment = the After-Tax Rate of Return

As rental rates increase over the years, your rate of return will increase.
Perhaps an even bigger gain is the likely large appreciation of the property. 

The condos at 929 East El Camino Real are a viable choice as investment property.  Of course, you could also buy them to live in yourselves, so  you will be the one to enjoy its convenient location.

Compass Place Arcadia Terrace 1bed 1bath rental snapped up at $1500/month

Another reason to BUY properties is that it's getting harder to RENT.

I'm helping a well qualified renter because he's not ready to buy. A Compass Place Arcadia Terrace 1bed 1bath rental came up at $1500/month and I immediately called, but already this rental had been snapped up.

At least when you BUY a property, you are all set for 30 years. Your monthly payments stay the same for your 30 year mortgage (unlike if you rent, you don't have control if your landlord wants to raise rents)and YOU decide how long you want to stay (unlike if you rent, your landlord decides when they want to kick you out to sell.)

Selling or Buying a Short Sale Rental Property in a Rent Control Neighborhood

Be careful when you are selling or buying a short sale rental property in a rent control neighborhood.

Below is a list of California Bay Area Localities With Rent Control Ordinances:
City of Campbell
City of East Palo Alto
City of Berkeley
City of Fremont
City of Hayward
City of Oakland
City of San Leandro
City of San Jose
City of San Francisco

Before buying or selling a rental property in a city with rent control, you should consult a real estate attorney familiar with the Rent Control Board of the particular city in which the rental property is located.

For example, what happens if in the months leading up to the short sale, the tenants threaten to move out and in response the landlord drastically reduces the tenants' rent? Will this set a new monthly rental base with which the new owner must use in calculation of his future potential monthly rental rate? Or does a long history of higher market rental rates take precedence over a few short months at the drastically reduced rental rate? One real estate attorney associated with the Oakland Rent Control Board stated that as soon as the owner dropped the rent, he created a new rental rate that was subject to rent control.

The new owner would inherit the drastically lowered rent as his base and could not raise the rent for the existing tenants back to market rate. This killed off any interest from real estate investors.

In one case study, the seller did drastically lower the rent to his tenants soon after putting his investment property on the market. Did the seller unwittingly hurt his own chances of selling? Maybe that was exactly what the seller wanted. It was a short sale, and the seller might have simply been trying to collect as much rent as possible before losing his property to the bank.

To the seller faced with renters who are threatening to leave, then it might be in the seller's best self interest to lower the rent. This has two advantages in the mind of the short sale seller. #1) Better to collect some rent rather than no rent, and #2) The owner collects free rent for longer before losing his home. Making the property less attractive to buyers effectively delays the sale of the property. Since the deal no longer appeals to real estate investors, it will take longer to find a buyer. Only buyers willing to buy and live in Oakland as their primary residence will still be interested.

Every extra month of delay is extra rental income for the seller. However, when faced by an owner attempting such tactics, the banks would probably save a lot of money by simply foreclosing, booting out the tenants, and selling the property as a vacant unit. That seller is counting on his hope that a bank will not respond in this manner.

Disclaimer: I am not a real estate attorney. This discussion is just so you know what issues to think about and what questions you should ask. The bottom line is whether you are selling or buying a short sale property in a rent control neighborhood, you should consult a real estate attorney familiar with the Rent Control Board of the particular city in which the rental property is located.