San Jose City Council Lowers Rent Control Cap to 5 Percent

In a split decision that closed out a marathon meeting, San Jose’s City Council lowered a cap on rent hikes for the first time in four decades.

The hearing, which began Tuesday and ended around 2am Wednesday morning, ended with a 6-5 vote to lower a cap on annual rent hikes from 8 to 5 percent. Council members Raul Peralez, Magdalena Carrasco, Donald Rocha, Pierluigi Oliverio and Ash Kalra opposed the move.

More than 500 people packed the council chambers and a staggering 200 signed up to speak. Landlords implored city leaders to leave the city’s rent control law alone or risk putting them at financial risk. Renters urged otherwise, saying soaring rents are literally pricing them out of their homes.

“This is an emergency,” Andrew Bigelow, a member of Silicon Valley De-Bug, told the council. “We cannot place the weight of a broken system on the impoverished. We cannot place the weight of this city on the poor.”

David Yin, a landlord and engineer, said that as an immigrant who arrived to San Jose in 1996, he had to work harder than the average person. Five years ago he bought an apartment complex, he said, which forced him to become a jack-of-all-trades to keep the place up.

“Keep in mind that all people deserve fair treatment,” he said from the podium.

During the hours of testimony, people shared personal accounts of sudden evictions and families divided by forced displacement. One man said he had to move to the Central Valley—the closest place he could afford rent—and left his son behind to finish high school.

According to the Mercury News, a real estate broker camped outside of City Hall during the meeting trying to talk landlords into selling their properties.

Local rent control applies only to units built before 1979, which makes up about one-third of the city’s apartment stock. State law prevents the city from extending rent control rules to apartments built any later. The council’s decision imposes a 5 percent cap, but it also allows landlords to bank unused increases and pass along building improvement costs up to 8 percent the following year.

The plan includes an anti-retaliation measure to protect tenants from eviction if they ask for improvements or report a problem to code violation. It also creates a rental registry to enforce the ordinance, a pilot mediation program and eliminates an option for landlords to pass off debt service to renters.

The compromise upset tenants and landlords alike. Property owners hoped the city would leave the decades-old rent control ordinance intact, while tenants wanted rent increases tied to inflation similar to several major cities.

“We were not satisfied with the result,” said Sandy Perry, an affordable housing advocate. “There were some incremental improvements, but not anywhere near what’s needed.”

Susan Price, herself a landlord, said she wants the city to not only lower the cap on rent hikes, but to adopt a requirement for “just cause” evictions.

“The city has to be bolder,” she said.

City officials will consider more changes to San Jose’s rent laws in the near future. Because this week’s meeting slogged on to such a later hour, the council deferred until May a proposal on an urgency ordinance that would temporarily freeze rent spikes.

Also up for consideration next month is a policy to curb demolition of rent-controlled apartments and another to pay relocation costs for tenants of units converted to market-rate housing.

Taking a cue from San Francisco, Councilman Manh Nguyen said the city should pass a $1 billion bond to build affordable housing. But his 11th hour memo wasn’t on the agenda, so his colleagues had to table a discussion about the idea.

Nguyen said rent control won’t fix the affordability crisis and the real solution is to build more housing. California Apartment Association (CAA), which makes up the landlord lobby, has repeated that message.

“Last night, the council found what some consider compromise, but not a solution to our housing challenges,” CAA spokesman Joshua Howard said. “If the city is serious about dealing with the housing crisis, they should do something now and do something big as Council member Manh Nguyen has proposed. Nguyen offers a community wide solution to a community wide issue.”

Tenant advocates agree, but they want a range of solutions for a city where more than half of renters pay more than a third of their salary to keep roofs over their heads.

“We all want affordable housing,” Price said. “But we can’t get that right away. In the meantime, we need rent control and better tenant protections.”

In other Bay Area cities, residents are taking rent control measures straight to voters. There's a chance this could happen in San Jose, too. But with the deadline for signature gathering almost here, that may not happen for another year.

Source: San Jose Inside, Jennifer Wadsworth
http://www.sanjoseinside.com/2016/04/20/san-jose-city-council-lowers-rent-control-cap-to-5-percent/

5 Tax Benefits of Owning a Second Home

There are tons of benefits that come with owning a second home: novelty and adventure, a place to escape and unwind, an opportunity to create memories that last a lifetime, a valuable tool to make vacation-craving friends like you a whole lot (for better or for worse).

But there’s another benefit that’s often overlooked: the tax breaks.

You already know that owning a home usually offers some tax deductions. But what if you own two? Or three? What if you’re a regular Donald Trump (back in his real estate, meat magnate heyday, of course)?

Since we know you won’t mind a little extra cash to spend while soaking in your surroundings during your next getaway, we thought we’d tell you how to reap the fruits of your second-home purchase.

1. Mortgage interest—yes, again

When it comes to owning a second home, the interest on your mortgage is deductible. The same rules that come with writing off mortgage interest for your first home apply to your second.

In fact, you can write off as much as 100% of the interest you pay on up to $1 million of debt, which includes total debt taken on to pay for both homes, as well as money spent on improving the properties. (That’s not up to $1 million for each property—just up to $1 million in total.)

2. Home improvements

Is your second home a fixer-upper? If you want to spend the off-season making improvements to your hideaway, you can deduct the interest on a home equity loan or line of credit.

But there are a couple of exceptions.

For starters, there will be a limit on the amount you can deduct if the home equity loan on your main or second home is more than $50,000 if filing single or $100,000 if married or filing jointly.

Second, the amount you can deduct has a limit if the mortgage is more than the fair market value of the home, says Gil Charney, director of The Tax Institute at H&R Block.

For example, let’s say a taxpayer has a mortgage of $220,000 and takes out a home equity loan of $65,000. The property’s fair market value is $275,000. Since the difference between the fair market value and the mortgage is $55,000, then $55,000 of the home equity loan can be deducted, not the full $65,000.

3. Property taxes

You can also deduct your second home’s property taxes, which are based on the assessed value of the home. That’s good news. Even better news? Unlike the mortgage interest tax deduction, there’s no dollar limit on the amount of real estate taxes that can be deducted on any number of homes owned by the taxpayer.

But beware: Taxpayers who can afford two homes are likely to land in a higher tax bracket—which means slimmer pickings for tax savings. For example, in 2016, a married couple whose gross income exceeds $311,300 would have limits on the types of itemized deductions they could take.

4. Renting out your home

If you rent out your second home for 14 days or less over the course of a year, that rental income is tax-free—and there’s no limit to what you can charge per day or week. Score!

But if you’re hoping to put your secondary digs on Airbnb or another rental site for more than 14 days during the year, be prepared to do some heavy math come tax time.

You’ll want to figure out the number of days you rent your home and divide that by the total number of days your home was used—whether it was you or a renter staying there. (The total number of days that the home was vacant doesn’t fall into this equation.)

For instance, let’s say you rented out your vacation home for 30 days within a year, and vacationed in your home for 90 days.

We’ll divide 30 (the days you rented it out) by 120 (the total number of days the home was used). The result: 25% of your rental-related expenses—which could range from utilities to the cost of a property manager—can be deducted. Now, if your home is losing value, that same percentage (in this example, 25%) of depreciation costs can also be deducted.

Here’s the caveat, Charney explains: Depreciation costs can be deducted only if there is rental income remaining after taking into account other deductions, such as mortgage interest, property taxes, and direct expenses tied to renting your home—like agent fees or advertising.

5. When it’s time to sell

Maybe you bought a far-off hideaway that you’re lucky to visit a couple of times a year. Or perhaps your vacation home is just a quick drive away, and you spend every possible moment there.

If it’s the latter—and you don’t already know which of your homes is your primary residence and which is the second home—now’s the time to figure it out. Distinguishing between the two can have big tax implications when it comes time to sell.

That’s because a capital gain of up to $250,000 (or $500,000 for taxpayers who are married/joint filers) on the sale of the principal residence may be excluded from taxable income.

Your principal—or primary—residence is the home you used most during the five years prior to the sale. But other factors—such as your job’s location, voter registration address, and banking location—could also come into play. Among other requirements, you must own and use that principal residence for at least two of the five years before the home is sold.

We know—that’s a lot of heavy stuff to take in. But you knew your second home would pay off in more ways than one, right? Now, hurry up and file your tax return—so you can escape to your happy place and forget about burdensome things. Like taxes.

Source: Realtor.com, Renee Morad
http://www.realtor.com/advice/finance/second-home-tax-benefits/?iid=rdc_news_hp_carousel_theLatest

Tax Tips for Rental Property Owners

It’s tax season again. If you own a rental property, your tax strategy is more complex than for the home you live in. Here are some important tax tips for rental property owners.

Rental property tax considerations each year

Here are some points to keep in mind when you file your annual return:

• Your rental property shows up on Schedule E of your tax returns, which logs rental income and expenses. The expenses include mortgage interest, property tax, maintenance, repairs, utilities, property management fees, depreciation, and all other costs associated with owning the property.
• If you pay points when you close your rental property purchase loan, you cannot fully deduct them the year they were paid like on a primary residence purchase. Instead, you must deduct points over the life of your loan.
• If your rental income exceeds expenses each year, the income is taxable just like any other income.
• If expenses exceed rental income on Schedule E — which is common because of the depreciation expense line item — you can deduct rental losses if your non-property income is up to $150,000 per year. If your non-property income is up to $100,000, you may be able to deduct rental property losses up to $25,000 annually. If you earn between $100,000 and $150,000, this potential deduction benefit is cut in half. And if you earn above $150,000, you cannot deduct rental property losses.
• If you earn too much to deduct rental property losses, the losses can accrue as an offset to capital gains taxes when you sell.
• Ask your tax adviser whether deductions or accrual of rental losses fits your tax profile.

Rental property tax considerations when you sell

When you sell a rental property, you will pay capital gains taxes on your appreciation. You must consult a tax adviser to get accurate figures, but here’s a simplified formula for estimating capital gains taxes and net profit on a sale.

Subtract purchase price, cost of improvements you made, and total selling cost (including realtor, title, and local tax fees) from sales price. The resulting number is your capital gain, and you’ll pay federal and state taxes of about 25 to 30 percent (based on your tax profile) on the capital gains.

Let’s see what this formula looks like if you bought a home eight years ago for $200,000 using 20 percent down and a 30-year fixed rate of 6 percent (the rate at the time). A quick mortgage calculator analysis tells us that your balance is now $140,435.

Suppose you made $10,000 in improvements to the home along the way, you earn less than $100,000 per year (so you didn’t accrue any rental losses to offset capital gains), and you’re now selling the property for $300,000. In a county that has a total of 7-percent selling cost (including real estate agent commission, transfer taxes, title, and settlement fees), your estimated capital gains would be about $69,000.

Using the capital gains tax formula above, you’d have about $17,250 to $20,700 in taxes due, and you’d therefore net about $117,865 to $121,315 on the sale.

How to avoid capital gains taxes on rental property

You can avoid this tax hit if your intent is to buy a new rental home immediately after you sell.

You do so with an IRS benefit called a 1031 Exchange, which is named after the IRS code number. This allows you to defer paying the capital gains taxes at closing as long as you identify a new rental property to buy (in writing) within 45 days, and close the new purchase within 180 days of closing your sale.

To get the full tax benefit, the new purchase must be of the same or greater than your sales price, and you must put every penny of net proceeds from the sale into the new purchase.

A 1031 Exchange defers rather than eliminates the tax hit in your sale.

If you plan to convert the new rental property to a primary residence at some point in the future after the exchange, the IRS has no specific rules prohibiting you from doing so. If this is your strategy long term, consult your tax adviser on capital gains tax implications before you enter into your exchange.

Source: Zillow Blog, Julian Hebron
http://www.zillow.com/blog/tax-tips-rental-property-owners-194050/

$250,000 a night hotel stay for Superbowl Sunday?!!

Super Bowl 50 is finally here in the Silicon Valley. It has been truly amazing watching the stadium and the surrounding area somewhat transform. There is allot of excitement in the air for us locals as we see not only the rest of American, but the world, focusing its eyes on Santa Clara, a key silicon valley city, for the big game. It is also nice to see added revenue coming into this valley with hotel rooms being booked up and restaurants full. Who knows, maybe some of the game day visitors may consider buying a permanent resident here? Just the Realtor in me talking.



Can I Rent an Apartment in Santa Clara Before the Super Bowl?

My desire to go to Super Bowl 50 in Santa Clara is strong. However, it’s not strong enough to pay for a hotel stay.

When I saw the Fairmont Hotel in San Jose offer a $150,000 package for a three-night stay, I shrugged my shoulders and figured market forces were hard at work. But when I saw the Fairmont in San Francisco offer a $1 million package for a four-night stay, I was stunned and left with questions: How many mints will they leave on my pillow for $250,000 a night? Are there enough mints in the world? Most important, where else could I stay in the San Francisco Bay Area?

I didn’t get an answer on the mints, but I did find five possibilities in Santa Clara. I set out to see if it was possible to score an apartment close to Levi’s Stadium before Sunday’s kickoff. While signing a last-minute lease to bunk down for one big weekend might be cuckoo, it’s no more crazy than spending seven figures to stay at a hotel 45 miles away.

I started at the Estancia at Santa Clara, which is only about a mile away from the stadium, according to leasing consultant Claudio Cordero. A brisk 20-minute walk on game day sounds great. Cordero said I could move in immediately to a one-bedroom unit with a private garage for $2,494 a month. Sweet!

But that comes with a 12-month lease. I explained to Cordero that I needed a place for a shorter term. He offered great news: There’s also an option for a three-month lease at $2,994 a month. So for a little less than nine grand (plus security deposit), I’d have a party palace for 12 weekends beyond the Super Bowl. Take that, Fairmont!

Cordero did warn me that subletting isn’t allowed at the Estancia, so I wouldn’t be able to cash in on the days when I wouldn’t be at my personal Super Bowl HQ. He also added that I could move in “ASAP” to my third-floor unit at the “simple and elegant” complex.

Sticking close to the stadium, I spoke with Alexis Calvillo at River Terrace. Also about a mile from the Super Bowl site, the complex is running at about 97% occupancy. Calvillo said I could move in today to a one-bedroom on a three-month lease at $3,771 a month. A bit pricier than the Estancia, River Terrace promises a “Mediterranean-styled swimming pool and rejuvenating hydro-massage spa” for residents. No subletting is available, but it’s a fine choice if you don’t mind spending $11,313 for a walkable spot to the Super Bowl.

Venturing farther afield, I looked at apartments in the Village Green complex, about six miles from Levi’s. A long walk to be sure, but totally worth it if I could score a deal. Nancy Sandberg, senior resident manager, said the location is “not walkable” to the Super Bowl. When I asked if you could see the stadium from the apartment, she helpfully added “not unless you got up in an airplane.” Sandberg said only two units are available out of the 98 in the building, and both of those won’t be ready until at least Feb. 10.

Sad to say, I was tackled for a loss at the Village Green. I tried two more apartment complexes—neither of which is walkable to Levi’s—and found workable options at each location.

At the Flora Vista apartments, property manager Amanda Blackketter said she had a one-bedroom unit available. It would be $2,150 per month for a six-month lease and about a 15-minute drive to the stadium (sans traffic!). Almost thirteen large, but it’s available for immediate move-in. Blackketter added that while the stadium wasn’t within walking distance, the neighborhood around the complex is great for strolling—she said the building has a walk score of 87.

At the Lawrence Road apartments, community manager Adel Robles said she wouldn’t suggest trying to walk to the game from her location. She did have units available immediately, but added that an applicant would need to get a credit check, which could take three days. That would be cutting it close. If you don’t mind sweating it out, a one-bedroom unit is $1,895 and available only on a 12-month lease. I couldn’t see myself locking into a year at $22,740 for a unit without in-room laundry, but the monthly cost was the cheapest of the options I found.

While I wouldn’t recommend last-minute apartment rentals as a solution to a Super problem, it is possible to find a place to stay in Santa Clara for the big game. Now where’s my mint?

Source: Realtor.com, Erik Gunther
http://www.realtor.com/news/trends/santa-clara-apartment-rentals-can-it-be-done/

Airbnb hosts are having a hard time gouging guests for the Super Bowl

Apparently, there are too many people here in the Silicon Valley that are trying to take advantage and over charge people looking for a place to stay for the Super Bowl. There greed is backfiring on them it looks like.


Airbnb envisions everyone’s home as the hotel room of the future — a cheap and unique place to crash in almost every country in the world at any time. But in places where hotels are booked solid, Airbnb is becoming a victim of its own success. For Super Bowl 50, the short-term rental service is being flooded with eager hosts trying to turn a short weekend for the country’s most-watched television event into a gold mine. The bad news: it’s not going to work.

There are simply too many rooms and not enough guests. "You get a flood of people listing their places and nobody looks at it," says Ian McHenry, a co-founder of research firm Beyond Pricing, which sells rental hosts a service to help calculate how much they should charge. "There’s way too much supply in the market." Of the nearly 10,000 currently active Airbnb listings in the Bay Area this weekend, around 60 percent are still available, according to the San Jose Mercury News.

McHenry says it’s part of a common cycle with mammoth events like the Super Bowl. NFL owners vote, nearly three years prior to kickoff, on a location in the US, this time picking the small city of Santa Clara about 45 miles south of San Francisco. The game, always the first Sunday in February, immediately vacuums up more than half of all hotel rooms in the area over the course of the next 24 months, with the NFL booking up blocks upon blocks for players, management, and guests, according to the Super Bowl Host Committee.

Any free hotel space left for that week is either kept off the market or the hotels raise the price of a room north of $1,000 a night. News of the hotel crunch then makes it way into headlines around the country, which causes local residents to put their places up on short-term rental services like Airbnb hoping to make a killing.

It’s an especially thorny issue for San Francisco, whose influx of tech workers has pushed average apartment rates up more than 50 percent since 2010. As a result, San Francisco and the surrounding Bay Area has been transformed into a region of early-adopters and the hottest launch locale for the giants of the on-demand economy, including Airbnb and Uber. If any destination has become accustomed to outrageous accommodation prices, it’s San Francisco. This time, however, the cycle has backfired, McHenry adds.

Super Bowl 50 isn’t like San Diego Comic-Con or the SXSW in Austin. Those events are centered in relatively concentrated areas of large cities, with a high demand for walking-distance accommodations that result in sky-high Airbnb rental rates. The largest football game of the year, on the other hand, is located in neither of the two largest cities in the Bay Area, San Francisco and San Jose, nor is it featuring a local team.

Instead, visitors are finding themselves spread out across the entire 7,000-square-mile region, which has an estimated 100,000 hotel rooms, McHenry says. Throw in Airbnb — not to mention several smaller competitors like HomeAway and VRBO — and there’s more than enough space without having to drop thousands of dollars a night. And if you're spending $3,500 on a Super Bowl ticket, why bother getting something subpar when you can rent a luxury hotel room?

One look at listings on Airbnb’s San Francisco hub for the weekend of February 5th is evidence of the delusion: $1,999 a night to rent an one-bedroom condo in downtown; $2,500 a night for a one-bedroom apartment near historic Alamo Square with full concierge and transportation services provided; a luxury three-bedroom house in the residential Diamond Heights neighborhood for $1,375 a night.

Not only are these listings available just days before the Super Bowl kicks off, they’re also likely to stay vacant. Many listings are hovering around or below the $441-a-night average, which comes in lower than most city hotels, but not by much. Meanwhile, the average Bay Area rate today for a Super Bowl weekend rental is even lower at $451 a night. "We see people shooting for the stars, trying to lease their crummy one-bedroom in the Mission [district] for $1,000 a night," McHenry says. "They’re not getting booked."

As an Airbnb host, you’re not very likely to rent your room or house at all unless you’re asking a price only marginally higher than the normal average. Only those with luxury properties located in Silicon Valley or a full house for rent just a few miles from Levi’s Stadium are guaranteed to pocket a significant amount of cash this weekend. "The $10 million mansion in Los Gatos," McHenry suggests. The NFL is always "looking for unique venues for hosting clients and unique places to stay, so a lot of these higher-end homes people are opening up serve them."

Airbnb isn’t discouraged, as lower prices prove its service works better as a hotel alternative instead of a get-rich-quick scheme for homeowners. The company says more than 15,000 people have chosen to use the service for the Super Bowl, and it expects the total impact of its guests to generate $21 million for the Bay Area not including accommodations.

McHenry sees the Airbnb glut as evidence the on-demand economy works. "We like to call it the flexible supply economy," he says. "Events like the Super Bowl and other events that create this surge of demand for services is really well met by these ones where you can spin up transportation and accommodation. You can do it much more easily now."

Source: The Verge, Nick Statt
http://www.theverge.com/2016/2/5/10924094/airbnb-super-bowl-50-too-many-rooms-san-francisco

San Jose businesses and Airbnb hosts aim to cash in when Super Bowl throngs arrive

Local businesses expect to see an uptick in activity when tourists arrive for the Super Bowl in a couple of weeks.

And along with Airbnb hosts, the Willow Glen Business Association hopes to snag a piece of the action.

The group has organized a campaign that will focus on promoting merchants through select social media sites and other websites where visitors are likely to search for things to do in the area leading up to the Feb. 7 game, according to a press release from the group.

It also has teamed up with the city of San Jose, which agreed to promote and give away its "WG Experience" packages. The packages will be available at Super Bowl City, a transformed Plaza de Cesar Chavez Park with a mini football field, beer garden, game areas and a cafe. The packages include gift certificates and special coupons for goods and services in Willow Glen.

The city's economic development department expects the amount of revenue from parking, hotel, airport and sales taxes will total three to four times more than usual for this time of year.

Willow Glen Business Association executive director Valerie Merklin said there is no way to project revenue specifically for Willow Glen businesses, but the organization is optimistic.

"We are definitely hoping to attract many of the out-of-town visitors to Willow to shop, dine and relax here," Merklin wrote in an email.

Willow Glen resident Rebecca Morgan, an Airbnb "super host," said so far no one has booked with her for Super Bowl week, but that isn't unusual because many fans don't book their lodging until they know whether their team is playing in the big game. She expects to receive more inquiries as the date draws closer, especially because of the extremely limited lodging at standard hotels.

"The hotels are sold out pretty much, so they really don't have many options unless they want to commute from Monterey or Tracy," Morgan said. "I think what people who are looking to book Airbnb will do is they'll search San Jose and as they see what's available they'll find us."

Morgan said she believes Willow Glen will be an attractive draw for Super Bowl tourists because of its proximity to downtown San Jose and local offerings.

"We're a hidden treasure a lot of people don't know about, so if they come and explore our offerings, they'll be happy, they'll be excited," Morgan said. "It's a fabulous place, it's got all the charm of downtown, the boutiques and restaurants and cool places," she added.

As for helpful tips for visitors, Morgan said that they should expect to leave early to account for traffic delays.

"When someone does book then I will encourage them to take VTA; otherwise traffic is going to be a zoo," she said. "We want to make it easy for them to get there from Willow Glen."

Source: Mercury News, Julia Baum
http://www.mercurynews.com/san-jose-neighborhoods/ci_29411068/san-jose-local-businesses-and-airbnb-hosts-aim

What I Didn’t Know When My Landlord Kicked Me Out

In real estate, things often don’t turn out the way you’d expect. In this new series, we’re going to take a look at how people’s real-life experiences differed from their expectations. First up, a tale from the world of renting.

Confession: When I was younger, I got kicked out of my apartment by possibly the worst landlord ever. Four months after moving in, I found myself standing on the front lawn at 9 a.m., neighbors staring, fighting with my landlord at top-decibel levels.

Spoiler: The landlord won. I promised to be out by the end of the week.

It sounds like an episode of some trashy (and not particularly fun) reality TV show, but this was real real life, folks. I fled in three days, leaving behind my security deposit, prepaid cleaning fee, pet deposit, and a full month’s rent.

Looking back, I often wonder what I did wrong and how I could have avoided getting fired from my lease (or at least gotten some money back). So I asked an expert to break down my case.

Most lease terminations don’t happen in a day. To understand what happened (and where I started messing up), we have to start at the beginning, the day I signed the lease.

The scenario: When I moved in, I had a puppy, which was destined to rapidly grow into a big, slobbering adult dog. I told the landlord about the pooch, but when it came time to sign the lease, there was no mention of the pet. When I questioned this, the landlord said it was a standard lease form and not to worry. I did worry, but I also chickened out and signed. As you’ll see below, this small thing became a not-so-small flashpoint.

Experts say: I never should have moved in without a pet agreement.

“First of all, you should have requested [the pet] be memorialized into the lease,” says Casey Schwab, co-founder of ResolutionTable.com, an online mediation service for tenant and landlord disputes. “Absent that, an email or text to your landlord about the pet would have supported the theory that your landlord consented.”

The scenario: About a month after moving in, my landlord started snooping. Neighbors would tell me they’d seen him looking in the windows. Creepy! I wrote down the dates and times in some vague attempt to cover myself.  Then one night I heard barking while I was in the shower. Wrapped in a towel, I came out to see my landlord standing inside my apartment! I knew his presence was illegal, so I asked him to leave and then dropped the issue, fearing he would make my life miserable in the apartment if I pushed.

Experts say: I should have manned up. “After the first whiff that your landlord was entering your apartment or spying on you, you should have notified him in writing of the violation,” Schwab says.

The scenario: Not long after asking my landlord to leave, things started to go south fast. My landlord started showing up a lot, saying the neighbors were suddenly complaining about the dog. When I didn’t take the bait and fight back, the landlord said I’d have to keep the dog outside, chained up.

Experts say: As a tenant, you should document everything, Schwab says. Even if the pet wasn’t on the lease, the landlord was acknowledging that he knew I had a pet, and I could have used that in my defense later.

The scenario: Things really hit the fan one morning after my landlord arrived to find that my dog was not chained outside (like I was really going to do that). He banged on the door, shouting like a crazy person. He said things. My mother, who happened to be in town, said things. The neighbor who came out to see what the fuss was said things. I mostly stared in horror until I found myself agreeing to move in three days.

Experts say: “The front lawn brawl is really never a good move,” Schwab says. I would have been better off to nod, pretend to agree, and get inside as soon as possible. “But the moment he left, you should have written down everything you could remember—from start to finish—that your landlord could have possibly done wrong,” he says.

The scenario: I planned to move as agreed. I spent two straight days looking for an apartment while the devil—sorry, the landlord—texted me hateful comments and childish threats. I ignored them, found another place, and moved out.

Experts say: “Those texts were IOUs that you never cashed. The potential of a judge or mediator seeing these texts would have scared any rational landlord into returning your rent and security deposit,” Schwab says.

The scenario: After paying for movers and taking time off work, I was financially strapped and just brave enough to ask for my deposit back. I even cleaned the apartment I was getting kicked out of! But the landlord said no, and I never tried to follow up. I was afraid that I didn’t have the grounds to file suit or seek professional help, since I’d been asked to leave early.

Expert say: Leaving a lease early doesn’t always mean you’re not entitled to your security deposit. According to Schwab, I had the right to sue my landlord for all kinds of things, including invasion of privacy and harassment. And even though I didn’t get my money back, the landlord should have provided a detailed invoice of what was deducted from the security deposit and why. When I didn’t get my deposit—or a deduction notice—back, I should have written a stern letter stating the reasons the landlord was at fault and demanded that my deposit be returned, Schwab says.

From there, I could have filed a suit against my landlord or reached out to a lawyer for mitigation. Instead I folded like a house of cards. Live and learn, right?

If you find yourself straining to deal with your landlord, don’t do the same. Take notes, take pictures, take control. And when the time comes, get your money (and peace of mind) back!

Source: Realtor.com, Angela Colley
http://www.realtor.com/advice/rent/what-i-didnt-know-when-landlord-kicked-me-out/?iid=rdc_news_hp_carousel_theLatest

5 Tips for Renting in a Pricey Market

As you know I am a Realtor and I will of course encourage people to BUY a home instead of renting. I won't go into the benefits of owning here in this blog post, but I do know that for some, renting is the best or only option for them. If you're one of these people, you may find the blow post from the Zillow blog helpful. It gives some helpful tips for renting in hot rental markets like San Francisco and the Silicon Valley where I work.


Recent data shows that U.S. renters can now expect to pay more than the suggested 30 percent of their income on their monthly housing payment. With vacancies decreasing and the growing popularity of renting in booming tech cities such as San Francisco, Seattle and Denver, finding a rental can be particularly hard hitting on the wallet.

Whether you’re dead set on living in your dream city or just landed a job in an area with sky-high rents, here are some tips for finding a home in a pricey market:

Be prepared to jump quickly

If you’re renting in an expensive market, that usually means a low number of vacancies. Fewer vacancies creates more competition for the units that are available. When you see something you like, be prepared to call or email the property management or landlord immediately. You should also keep your application paperwork — recent paystubs or a letter confirming that you’ve accepted employment, bank statements, contact info for current and past landlords — on hand to ensure that you’re ready to act quickly when you find a place you love.

Expect to compromise

When you picture your dream apartment, you might envision hardwood floors, a fireplace, two spacious bedrooms and of course, the ability to bring Fido with you so you can explore your new city together. While this type of place does exist, it may come at a pretty penny (or if it does exist in your price range, it’s gone about two hours after the ad is posted).

Don’t get discouraged. Know what’s most important to you in your home and then stick with that. Is location more important than aesthetics? Or can you not live without a charming vintage place to call your own? If you answered yes to the second question, you might have to prepare yourself for a long commute from the suburbs. Also, having a pet may automatically limit your options, as landlords can be picky in a tight market.

Consider sharing the burden

While you may have been able to live alone in a less expensive city, that may not be the case in an expensive market. Finding a roommate to share costs will lessen the burden. If you are not comfortable with house sharing, then be prepared to live smaller. Be creative when it comes to storage and buy multipurpose furniture.

Anticipate additional costs

Landlords in expensive rental markets typically expect a deposit plus the first month’s rent before you even move. Moving to a large city like New York often means paying a broker’s fee, which you pay at the lease signing for the broker’s help with finding an apartment. While apartment hunting in a less expensive market may just require a quick online search, navigating the New York City rental market can often be overwhelming and more expensive if you go it on your own. According to StreetEasy, broker’s fees are typically around 12-15 percent of the annual rent, which can get pretty expensive when it comes to Manhattan or Brooklyn rent prices.

Know the fair housing laws

Renting in an expensive market can unfortunately lend itself to scams and less-than-law-abiding landlords. While this isn’t the case most of the time, be sure to know your rights as a renter. For example, if you have a disability that requires a service animal, then a building’s no-pet policy doesn’t apply to you. Also, unless a building is specifically set aside for the use of senior citizens, a landlord cannot discriminate against anyone with children. Check your specific state laws on the rules for application fees and security deposits to protect yourself.

Source: Zillow Blog, Jamie Birdwell-Branson
http://www.zillow.com/blog/renting-in-a-pricey-market-186244/


Related: 
'Million Dollar Shack' documentary looks at Bay Area's insane housing market
8 U.S. housing markets where the rent is just too high

Investment Property ROI: Why going beyond your network of friends is critical

The recovering residential housing market continues to offer lucrative investment opportunities for first time and experienced investors looking to fix and flip a house. However, a new challenge is emerging out of the recovery: a shrinking tolerance for mistakes. The single largest mistake beginner real estate investors make today is trying to do it all themselves or relying too heavily on friends and family to execute on the real estate investment.

Sometimes a friend may have a knack for what color to refinish the hardwood floors, or who to use for repairing a roof, but rarely do these close acquaintances come to the table with the focus on return on investment (ROI) necessary to be successful today. First time investors often worry that going outside their circle of friends and family to find a vendor partner to run property rehabilitation might cut into profits. This wasn't as much of an issue when the fix and flip market exploded during the economic downturn and profit was nearly guaranteed. Investors who purchased properties in 2007 or 2008 were making money and gaining valuable experience -- the market was hot and purchase prices reasonable so novice investors could have made any number of mistakes and still realized great returns on their investments.

Assessing an Ever-Changing Market

Property values in many regions of the country have recovered and fewer distressed properties are making it to the market so the market is less forgiving. Those who were investing in the downturn learned their lesson and what mistakes not to repeat when the margins were far wider than they are today. Investors who are now counting their fix and flip successes in the double digits resoundingly say an investor must be able to make an accurate assessment of the property's value and calculate a realistic cost for the rehabilitation -- and execute to achieve the desired margin.  When it comes to investing, working with the right vendor partners -- from appraisers to contractors to suppliers -- was the hardest lesson learned.

There's no easy way; investors have to be ready to work and understand and mitigate risks across the investment lifecycle. They also need to know that their insulated network of family and friends may be free or ready to do a project at a discount -- but they may not be the best people to turn to. Many investors think the more work they can do themselves the more ROI they'll see. Evaluating new vendors takes time -- but it can be time well spent if it makes an investment much more profitable by avoiding lost time and revenue from the mistakes less experienced investors and their friends are likely to make.

Third party experts can provide immediate pay-off by utilizing proven best practices and proper planning which can go a long way towards avoiding big mistakes. Appraisers can help determine as-is and after repair values and a general contractor can ensure you are receiving a proper assessment of rehab costs.  Investors can use this information to determine whether the property has the potential to achieve the returns they are seeking before buying.

Once it is determined that the end product can achieve the desired ROI, a knowledgeable and reliable team of professional partners are critical for keeping a project on track to actually deliver those returns.  These include an array of service providers, such as valuation companies, real estate agents, materials suppliers and most important, a general contractor attuned to the local market.

General Contractors: The Key to Achieving ROI

The single greatest lesson successful real estate investors have learned is how to hire one of the most important vendors: the general contractor. To do this, an investor must look outside their network to evaluate contractors and find the right fit. The investor's cousin who is handy with a hammer may not be the right choice. Hiring an experienced, professional contractor at the outset ensures their experience in the market is going to help improve the bottom line when it comes time to sell or rent the property.

Choosing a contractor begins with a background check to identify if they have had a recent bankruptcy or foreclosure events, any fraudulent or criminal activity on record, and is financially solvent and capable of seeing your project through completion. The investor should ask for a minimum of 5 references and call each and every one of them. Let me repeat: yes, 5, and yes, call everyone one of them. Keep in mind that the references supplied by vendors are almost always likely to be positive, so as you narrow the list, be sure to go see some of their work in person.

When rehabbing a property the investor also needs to know they are hiring a renovator, not a builder. A novice investor should have someone running their project that has performed rehabs on similar properties. They want a contractor who knows the neighborhood. This is important as they will know the finishes that are consistent with the surrounding homes and won't recommend granite countertops when this would be the only house on the street with that expensive upgrade. Additionally, they should know the local climate enough to know there may be particular issues, such as mold. This may seem obvious, but investors moving from the Sun Belt to the Rust Belt -- following markets primed for fixing and flipping -- are not uncommon and unfortunately they are not aware of risks inherent in the new market as their knowledge doesn't always transfer seamlessly.

At the end of a project, when the property is sold, the lessons learned with a network of skilled vendors on the team will have  prepared the investor for their next project -- not sitting back reviewing the laundry list of mistakes and who to hire to fix them. By hiring the right experts, from appraisers to contractors to suppliers, investors can find success and then share it with friends and family as they choose -- a much better outcome.

Source: RealtyTimes, Thomas O'Sullivan
http://realtytimes.com/consumeradvice/buyersadvice1/item/39050-20151009-investment-property-roi-why-going-beyond-your-network-of-friends-is-critical

Should You Rent Your House to Others?

With rental prices rising, you may be wondering if now's the time to become a landlord. There are advantages to renting your current home while you purchase another to live in.

The advantage to renting your home is that you're likely paying a homestead mortgage interest rate, which will make it easier to make a profit than if you purchased rental property with a mortgage at a higher interest rate. As you've owned your home, it's likely appreciated in value, allowing your home to compete well in the rental market so you can use profits to put back into the home to keep it rentable.

Assuming you're current on your mortgage, have the credit scores to buy another home, and have saved enough cash for a down payment, now may be the ideal time to add a rental investment to your portfolio.

Real estate has always served as a hedge against inflation and against other investments, so the first thing to do is find out how rents compare to home prices in your area. Your real estate professional can provide you with market comparables that show you how much homes are renting for per square foot and how quickly they rent, as well as for what prices comparable homes are selling.

If the rental income is enough to cover your mortgage, you're in good shape, but there are other expenses to consider, such as income taxes, advertising, listing and management fees, and maintenance.

For income tax purposes, your current mortgage isn't considered a cost of doing business that you can deduct like office supplies or equipment purchases. You'll pay taxes on this gross amount, less repairs and management fees, if any. On the bright side, if you sell the property within five years and you've occupied the home two of those five years, you'll likely pay no capital gains at all up to $250,000 for an individual or $500,000 for a couple.

To qualify for a mortgage on another home, your ender follows a typical multiple home formula. Even though you may have your home rented, plan to deduct approximately 20% of rental income from your "investment." Why? Most homes have a period where they are not rented while they're on the market, which means no rental income. Your lender wants to make sure you can handle periods when your home isn't rented.

When you turn your home into a rental, it's no longer a homestead, but an enterprise. Tax laws require you to make a profit within three years of launching an enterprise, or otherwise you won't be able to take deductions associated with it. Also, expect to pay more in property taxes as you will also lose the homestead deduction rate, since you'll be applying for the homestead deduction on your new home.

On the other hand, one of the best ways to build equity is to have someone else pay your mortgage for you. The longer you own your home and the longer it's rented, the more the amortization tables turn in your favor. Every loan payment is made of principal and interest. The longer you own your home, the larger the percentage that goes toward reducing principal.

Based on the purchase price of your home, you can deduct "depreciation" from your income every year you rent it, but this amount decreases with time. You can also deduct some maintenance and improvement expenses which are not available to homesteaders. See your tax professional for more information.

There are other pros and cons of becoming a landlord. You'll be dealing with people who don't respect your home as much as you do and could cause damages. They may skip out without paying the final month's rent. You'll have two homes to maintain, and could get broken plumbing or appliance calls in the middle of the night. On the bright side, renters of single-family homes tend to be older, more responsible and remain occupants longer. Also many losses are tax-deductible to landlords.

Ask your real estate professional or someone else that you know who owns rental property for more insights. They'll be able to share real-life property management situations and costs that may help you to decide if this is the right step for you.

Source: RealtyTimes, Blanche Evans
http://realtytimes.com/consumeradvice/homeownersadvice1/item/38854-20151002-should-you-rent-your-home-to-others-htm

San Jose considers stronger rent control law for next year

What do you get when you have a region with a booming job market and not enough available housing? A hot housing market and out of control rents. And when you have high enough rents, people will get outraged and put pressure on city leaders to do something about it. That's what is happening in San Jose, the heart of the silicon valley, and now they are considering strengthening their existing rent control ordinance by (among other things) lowering the allowable rent increase to 3% a year, down from 8% a year. Understandably many landlords are upset about this and claim this will lead to differed maintenance and blight will follow.

For us non landlords, I totally understand the renters perspective and their need for rent control. There are allot of people in this valley, that are also vital to the economy here, but don't have the high paying job in the tech sector but still need that roof over their head for them and their family. 

On the other hand I don't agree with rent control. The market should settle the issue with getting rent under control, not local bureaucrats making themselves look good to get votes. The market will bring rents back into balance but it will take time. Check out the great video from Preger Universtiy by Nicole Gelinas of the Manhattan Institute on Why Rent Control Hurts Renters.


San Jose considers stronger rent control law for next year

SAN JOSE -- As Silicon Valley's soaring rents continue to squeeze out the working class and developers push to build more market-rate apartments, city leaders on Tuesday will discuss a controversial proposal to beef up San Jose's rent control law by January.

The city's current ordinance, adopted in 1979, caps annual allowable rent increases at 8 percent, the rate of inflation in the 1970s. But San Jose has never adjusted that amount, even though the annual Consumer Price Index for the area has increased an average of 3 percent since 1983.

"This allowable increase is among the highest of any jurisdiction in California with a rent ordinance," said Jacky Morales-Ferrand in her memo to the City Council. "As such, the allowed rate is nearly equal to the market rate rent increases in the last five years."

Now, a plan presented to the City Council on Tuesday proposes lowering the 8 percent annual allowable rent increases and adding a new provision requiring property owners to disclose all rents charged to tenants to prevent new renters from being overcharged.

As other Bay Area cities have done, San Jose is also looking at establishing a "just cause" ordinance to ensure renters are not evicted without cause to bring in new tenants to pay higher rents.

Although San Jose's ordinance does not allow landlords to increase rents beyond 8 percent after the eviction of a tenant without cause, advocates and city officials agree the provision is impossible to enforce. That's why city officials are recommending the new provision of having landlords report all rents charged to tenants.

The proposal to expand San Jose's rent control and bolster tenant protections first was brought to the City Council by Councilman Raul Peralez in May. The council ranked the idea as its second-highest priority the following month.

But one thing not included in the plan headed to City Council on Tuesday is expanding rent control to cover more units, an idea mentioned in Peralez's original proposal.

"We believe there were legal challenges to expanding it," Morales-Ferrand said Monday.

Currently, the city's rent control ordinance covers properties with three or more units that were constructed before 1979. That's only 43,000 of the 122,000 renter-occupied dwellings in San Jose -- about 35 percent -- and the local ordinance excludes duplexes.

And even with its current rent control law, San Jose's rents have skyrocketed nearly 54 percent in the past five years, city officials said. In 2010, the average rent in San Jose was $1,451 a month, but by this year, it swelled to an unprecedented $2,227 a month. By contrast, wages have remained stagnant with the median income rising only 11 percent from 2011 to 2015.

While San Jose leaders acknowledge the painful plight of renters, they're also tasked with balancing the rights of landlords and property owners. The city held numerous meetings with stakeholders on both sides. During a meeting with the Tri-County Apartment Association, property owners said lowering allowable rent increases reduces their ability to improve the buildings and could lead to blight.

A memo from Vice Mayor Rose Herrera and Councilman Johnny Khamis urged the council to assemble a task force comprising renters and landlords to discuss those types of challenges. They also asked city staff to explore establishing income eligibility criteria for rent-controlled units.

One sore spot for the council members is establishing an ordinance to prohibit tenant discrimination based on source of income. Rental rights advocates say renters using Section 8 vouchers and other subsidies experience discrimination from landlords, but a memo from five council members recommended waiting to pass a law against it.

Mayor Sam Liccardo, along with Councilwoman Magdalena Carrasco and Councilmen Chappie Jones, Raul Peralez and Don Rocha, proposed waiting until the city of Santa Monica settles a lawsuit on a similar anti-discrimination ordinance.

Source: Mercury News, Ramona Giwargis
http://www.mercurynews.com/bay-area-news/ci_28734596/san-jose-considers-new-rent-control-law-next

Guess where has the highest rent in the country?

Yet another article (see link below) talking about markets with high priced rents and San Jose California, the heart of the Silicon Valley where I work as a Realtor, has be identified as having the highest rent in the country with a median monthly rent of $3,376. I know that high paying jobs are more or less plentiful here, the economy is doing great overall and this area usually has great weather, but as someone once said; for every action there is an equal and opposite reaction.

As you can imagine, it's a great time to be a property owner in this valley because you can charge exorbitant rent amounts, but right now it absolutely sucks to be a renter. But people can only take being gouged for so much before they revolt and start putting more and more pressure on local leaders and demand they do something about it. That's where rent control comes in. For the record I don't agree with rent control, BUT I can totally see were the frustration comes from because there are many in this valley that don't make the $97K median income. Where are those lower income families supposed to live but are still vital to prosperity of this valley as the tech worker making that high income? Property owners need consider the consequences of charging the maximum amount for rent JUST BECAUSE THEY CAN, because the people will demand our politicians enact rent control - just because they can.

Of course as a Realtor I'd be remiss if I didn't point out how futile it is to be paying rent with pretty much no tax benefits and no hope of building equity to enrich yourself someday instead of your landlord. If you can afford to buy a home, it almost always makes sense to do so instead of renting.



America's most expensive rental markets



RELATED:
VIDEO: Why Rent Control Hurts Renters

Boomers Competing With Millennials for U.S. Urban Rental Housing

The rental market here in the Silicon Valley is already through the roof and dog eat dog, but in the coming years, according to a new report, the rental market here as well as other major markets is only going to get worse because it gonna be the young folks competing with the the old folks for apartments.




Mike Abelson calls it his “man cave.”

After his wife passed away, the 65-year-old sold his house and began renting a 1,400-square foot apartment eight miles away in Bethesda, Maryland. The trial attorney now uses his downtime to enjoy warm summer evenings on his terrace.

“I pay a pretty steep rent, but it’s worth it,” Abelson said. “I don’t pay property taxes, I don’t pay for maintenance, plumbing or electrical. I don’t have to pay for the grass cutting. It’s just easier than being a homeowner.”

The number of renters who are 65 or older will reach 12.2 million by 2030, more than double the level in 2010, according to research by the Urban Institute in Washington. While the millennial generation born after 1980 has driven demand for apartments in recent years, baby boomers -- those born from 1946 to 1964 -- will be the next wave, pushing up rents and spurring construction of more multifamily housing.

Real estate developers such as Bozzuto Group, Abelson’s management company, and Alliance Residential Company are building projects where multiple generations can coexist. Should the supply of rental properties fail to keep up, however, younger people will be competing for housing with the burgeoning population of older Americans.

“It’s a combination of their sheer size and that they’re entering the age range where they increasingly downsize,” Jordan Rappaport, a senior economist at the Federal Reserve Bank of Kansas City, who has also studied the subject, said in a telephone interview. As a result, “it will put upward pressure on rents for all types” of multifamily homes, he said.

Growth Ahead

Rappaport’s research found that adults in their 50s and 60s accounted for almost all of the net increase in multifamily occupancy from 2000 to 2013. Once members of the baby boom generation start entering their 70s next year and downsize, “multifamily home construction is likely to continue to grow at a healthy rate through the end of the decade,” he wrote in a report published last month.

Already, rental vacancy rates are hovering near 21-year lows. That’s pushing the national median rental price for all types of homes to $1,367 a month as of May, up 14 percent from four years ago, according to data from Seattle-based Zillow, a real-estate website.

Work began in June on the most buildings with five or more units since 1987, Commerce Department figures show. They represented about 41 percent of total housing starts, up from 16 percent when the economic expansion began in June 2009.

Business Expansion

Lennar Corp., a Miami-based builder primarily focused on single-family home construction, formed a $1.1 billion joint venture that will develop multifamily communities in 25 U.S. metropolitan markets.

Alliance Residential is designing buildings with smaller, more affordable units on ground floors to attract young adults, while creating more spacious apartments on upper levels, said Ian Swiergol, managing director of the developer’s division covering New Mexico, Arizona and Utah. The bigger units feature wine refrigerators and touch-button window screens that appeal to baby boomers with more wealth.

In one extreme example, a 28-year-old man ended up living in the same community as his 90 year-old grandmother, said Swiergol, who is based in Phoenix.

At Bozzuto, which manages some 51,000 units in cities including Washington, Chicago and Atlanta, about 10 percent of renters in 2014 were at least 60 years old, up from 8 percent in 2012. The Greenbelt, Maryland-based company expects the share to continue to grow, said President Toby Bozzuto.

Seizing Opportunities

“Something’s happening,” Bozzuto said in an interview, adding that the company is looking to add rental properties catering to residents 55 and older. “A good business person tries to put themselves in front of opportunity.”

Rents have already been picking up, rising 3.5 percent in the 12 months through June, matching the biggest increase since 2008, Labor Department data show. By comparison, consumer prices excluding food and fuel advanced 1.8 percent in the same period.
Rents are putting a floor under broader inflation, which Federal Reserve policy makers have said they need to be reasonably sure will approach their goal in the medium term before deciding to raise their benchmark interest rate for the first time since 2006.

One downside is that seniors on fixed incomes who have to, rather than choose to, rent will be hurt if supply doesn’t keep pace with the projected increase in demand, said Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute. Generation X adults -- born from 1965 to 1980 -- may also introduce another wrinkle, as those who lost their homes in the housing crisis remain in rentals.

Growing Demand

“It’s not unreasonable to think that some seniors are going to get hurt disproportionately,” she said. “There’s going to be just a huge surge in the demand for rental housing, and there’s not enough.”

Amy Schectman sees this first-hand as the chief executive officer of Jewish Community Housing for the Elderly. The non-profit provides subsidized rental units for older adults in Brighton, Massachusetts, and the waitlist starts at two years for studio apartments, she said. For a two-bedroom, “you might be looking at seven to eight years.”

“We’re already seeing huge demand,” Schectman said. “And it’s only going to grow.”

Source: Bloomberg Business, Victoria Stilwell
http://www.bloomberg.com/news/articles/2015-07-21/boomers-competing-with-millennials-for-u-s-urban-rental-housing

San Francisco among the highest rents in the country

This article doesn't surprise me. It's a well know fact of life for people living in San Francisco that rent is through the roof and there doesn't appear to be any relief in sight. And the Silicon Valley where I live and work as a Realtor is no better. San Jose, the largest and most populous city in this valley, has one of the highest rents in the country. 

It's a not so great time to be a renter, but a awesome time to be a landlord/multifamily property owner.


Picture source: Trulia

Study Shows San Francisco Housing Rents Are Fastest-Growing Among Metro Areas in Country

The national multifamily rent average continues to break records, and San Francisco stands out as the fastest-growing city in 2015.

Rent prices in San Francisco reported an 11.6 percent year-over-year growth, according to a June report by Yardi Matrix, a unit of Santa Barbara-based real estate software vendor Yardi, which came in third behind Portland and Denver.

As of April, the company recorded a 2.8 percent year-over-year job growth in San Francisco. During this time, Yardi also recorded a similar growth in housing units, as a percent of total available stock. However, the company’s 11.1 percent forecast rent growth in the city was exceeded by an actual, 6-month growth of nearly 12 percent.
“What’s happened is San Francisco has undergone a sort of resurgence of urban living that’s much different than [it was] historically,” said Jack Kern, director of research and publications at Yardi. “I’m not surprised it exceeds what it’s anticipating.”

With Silicon Valley’s rent situation not much more forgiving, many major office campuses are relocating back into urban areas, Kern said. High-profile tech companies such as Google and LinkedIn have moved some of their campuses to downtown San Francisco and have reaped increases in employment numbers. The resulting influx of often-younger employees, hungry for the technology, business and research-and-development treasure trove in San Francisco, has changed the housing market quite a bit.

“Companies are very good with [knowing] what kinds of jobs work out with recruiting certain employees in urban and suburban areas,” Kern said. “It reflects in where companies move opportunities.”

As companies move into the second half of the year, growth will surge even more dramatically, Kern predicted. That’s because as business proves itself successful early on, as it has, companies are more inclined to increase hiring in the area. Kern said this will snowball into increased demand for apartments, higher occupancy rates and higher activity in retail and nightlife.

Kern lauded San Francisco’s success in promoting livability as a major city. Its current “urban renaissance,” he said, includes sustainable development as well as even a somewhat suburban quality of life, offering local employees amenities such as a nearby gym or grocery. The result is a job-heavy area that allows workers to live in a safe, environmentally conscious neighborhood within reasonable distance of their office, he said.

Incidentally, San Francisco’s rising rent growth is converging among all asset classes —renters by choice, who can afford to own a home but prefer renting, and renters by necessity, who are unable to afford to purchase a home. The report shows that in this city, either demographic usually prefers the flexibility with simply renting. It has become unrealistic to buy a home, with ownership responsibilities included, Kern said.

“What changed is the average profile of a renter is someone who is older than a typical, younger renter, has a highly mobile kind of job and earns a higher wage or average income than you typically see,” Kern said. “I think we’re going to see the same source of renters going forward.”

As the Bay Area’s housing supply continues to be squeezed, an apartment in San Francisco grows more desirable for all income levels. Going forward the city should continue to see an increase in renters by choice as both housing demand and employment grows.

Kern added that surrounding neighborhoods, such as Daly City and Oakland, also have become very attractive. Although San Francisco is feeling the strain of development pressure, there are still options nearby that perhaps have yet to see their prime.

Source: The Registry, Alice Yin
http://news.theregistrysf.com/study-shows-san-francisco-housing-rents-are-fastest-growing-among-metro-areas-in-country/

Don't believe the hype! Rent Control is a BAD IDEA!

It seems that many landlords here in the Silicon Valley are taking advantage of the robust and vibrant job market and its generally higher incomes by increasing their rents too. In San Jose, the largest and the most populous city in the Silicon Valley, rents are up 13% as of March of this year with an average rent of $2,230. So it comes as no surprise that many renters are upset and some, particularly in San Jose, are screaming for rent control. It is a touchy, hot-button issue here and everywhere it has been implemented such as San Francisco and New York City. And many economist agree that rent control is bad for renters and does little to provide more low cost housing to those on making less than the median income and fixed incomes like senior citizens.

Anyhow, I found a great video that Very clearly explains the the ins and outs of rent control and why it is a bad idea. Use it the next time you have an ignorant co-worker or family member who is arguing with you about why a city should have it.

Related: 

Renters, apartment owner square off over San Jose rent control
Spike in San Jose Housing Costs Spurs Council Rent Control Plans

Bay Area housing crisis may cause NIMBY attitudes to wane

Great article from the Mercury News that more or less sums up the housing crisis here in the Bay Area. The lack of affordable housing is a big problem here, but is building small, "crackerjack box" size units for the low and middle income crowd the solution? 

An argument that is made by one of the people quoted in the article is that the lack of housing could bring about economic collapse here in bay area and the Silicon Valley because there won't be enough housing for all the employees that the major employers (such as Google, Apple, Facebook, etc) need for fill their positions. 

So, having put that out there, let's think this through; housing here in the valley is expensive (renting or buying), so if there is not enough housing, there is not enough employees for the employers here to hire, so the employers move operations elsewhere, which means less jobs here, so with less of a population that can afford the high cost of housing. . . . housing costs go down! Right?

Don't get me wrong, I don't want major employers to leave this valley, and remember, I am a Realtor. I get paid on commission so the more expensive the property, the more money I make! However I am a human being so I also believe in my heart that everyone deserves quality housing that is affordable, and maybe letting basic market forces play out will bring prices down instead of making local political leaders stick their fingers in the market and therefore making the housing situation worse.


Housing woes in the Bay Area have become so severe that two out of three residents now believe it's tougher to find a place to live, and at least half are ready to embrace higher-density housing in their neighborhoods to help tackle the problem, a poll released Thursday shows.

The poll by the Bay Area Council found that 67 percent of residents in the nine-county region believe finding a place to live is more difficult now than it was a year ago, and 50 percent support more housing, even if it means their city might become more packed with residents.

"The economy in the Bay Area could be hurt by the lack of affordable housing," said Tracey Grose, vice president of the Bay Area Council's Economic Institute. "It will be harder for employers in the Bay Area to recruit people. We are already seeing some evidence of that."

What's more, 76 percent of residents want policy makers and developers to direct their efforts toward the creation of certain types of housing. Specifically, respondents want the focus on housing for low- and middle-income people.

It's another sign that some Bay Area residents are willing to jettison their long-held anti-growth sentiments that are often dubbed "not in my backyard," or NIMBY.

"It's good that residents are willing to embrace higher density," said Christopher Thornberg, a founding partner with Beacon Economics. "That should have been happening a while ago."

Higher-density housing development was supported by 56 percent of Santa Clara County residents, 55 percent of Alameda County residents and 53 percent of San Francisco residents, according to the poll.

Asked about whether they would accept housing in their own neighborhoods, an affirmative response came from 61 percent of San Francisco residents, 59 percent in Alameda County and 58 percent in Santa Clara County.

"Water isn't the only thing that is in short supply in the Bay Area," said Jim Wunderman, president of the Bay Area Council. "Our region is growing, our economy is humming, but the housing shortage could be our Achilles heel."

Wunderman called for the housing problems to receive the same decisive action that's being undertaken statewide to combat the drought.

"We need a bold regional response to our historic housing crisis," Wunderman said.

San Francisco was also seen as the area that is most in need of affordable housing, according to the poll.

"This whole problem is going to get very bad very quickly," Thornberg said.

A growing number of Bay Area residents are expressing specific solutions to deal with the region's housing ailments.

About 65 percent of residents say they support reductions in fees and regulations for new housing. That's up from 61 percent in the same survey a year ago.

"There is a danger that the housing crisis will undercut our innovation ecosystem," Grose said.


Source: San Jose Mercury News, George Avalos
http://www.mercurynews.com/business/ci_28378843/housing-crisis-may-cause-nimby-attitudes-wane

Renters Face Steep Costs in Job Havens

San Jose, right at the heart of Silicon Valley has the most unaffordable rental market in the nation according  to a report by Madvalorem. Just another reason to buy a home rather than continue to get robbed by a greedy landlord. 


Some of the fastest growing job markets are also becoming some of the least affordable with rental costs, according to a new report by Madvalorem, a real estate database for property searches. High demand is leading rental costs to soar.

Madvalorem, in analyzing Census and other data, provides the following snapshot of rental costs among the top hiring job markets:

1. San Jose, Calif.
Median rent: $2,570
Income to rent: 37.69%

2. San Francisco, Calif.
Median rent: $3,715
Income to rent: 58.97%

3. Raleigh-Durham, N.C.
Median rent: $1,051
Income to rent: 23.16%

4. Washington, D.C.
Median rent: $2,254
Income to rent: 41.09%

5. Seattle, Wash.
Median rent: $1,791
Income to rent: 32.92%

6. Boston, Mass.
Median rent: $2,900
Income to rent: 64.92%

7. Austin, Texas
Median rent: $1,463
Income to rent: 32.54%

8. Baltimore, Md.
Median rent: $1,600
Income to rent: 46.39%

9. Denver, Colo.
Median rent: $1,595
Income to rent: 38.04%

10. Salt Lake City, Utah
Median rent: $999
Income to rent: 26.14%


Source: RealtorMag Online
http://realtormag.realtor.org/daily-news/2015/06/15/renters-face-steep-costs-in-job-havens?om_rid=AAFmZk&om_mid=_BVfxYmB9CqZN0o&om_ntype=RMODaily

Rent control coming to an apartment near you

I knew this was coming. Not only is the real estate market white hot here in the Silicon Valley, but so is the rental market. With an average rent in this valley currently at $2,230, there are many in this area crying foul and are now demanding the City San Jose do something about it. This past Wednesday both renters and landlords alike met at city council for a heated debate. It seems the city council is not looking to make a decision just yet, but when they do their decision could have long term impact on the future of affordable housing here in the valley.



Renters, apartment owner square off over San Jose rent control

Legal Tax Deductions For Rental Properties

Legal Tax Deductions For Rental Properties

Are you a rental property owner? If so, it’s great isn’t it?  You receive income from the rents, also known as other people’s money (OPM), and you realize capital appreciation from the equity gains in the value of the property – a rising tide raises all boats.  In fact using OPM is a great strategy for paying for your child’s college education, and providing a passive income stream for yourself in your retirement.  The key is buying and holding onto an investment property as soon as possible and taking full advantage of the IRC allowable deductions and expenses.  Becoming educated about this investment strategy is easy, fun, and should be taught to your children.

Deductions Are Your Friends In The Rental Property Business

I’m sure you also know that many of the expenses that you incur that are rationally related to your rental property are tax deductions against any income that you earn.  But did you know that you may qualify for a greater tax advantage than 95% of passive real estate investors?  If you spend more than one-half of your time working your rental property business, including development, construction, acquisition, or management, and spend 750 hours a year in the real estate operations you can qualify for the Internal Revenue Service “Real Estate Professional” status.  This is a big tax bonus that many people don’t realize exists.  If you have “Real Estate Professional” status your losses, including depreciation against your rental properties, can be deducted against your ordinary income, not just your rental income.  If you have multiple rental properties this can be a huge tax savings as rental properties are allowed to be depreciated over a 27-1/2 year period.  There are many people who are leaving a lot of money on the table each year because they are not familiar with this “Real Estate Professional” status.

Improvements Are Not Repairs

There is a world of difference between the term “improvement” and the term “repair.”  The IRS takes great exception to people who attempt to expense a kitchen remodel or a new roof on their rental property.  Both of these projects would be considered an “improvement” and would have to be deducted over the lifespan of the component.

Repairs on the other hand are small projects that keep the rental property operating smoothly – like a leaky kitchen faucet that gets replaced, or a broken toilet flange, or a failed smoke alarm.  These repairs are expenses which can be deducted in the tax year for which they were made.

Travel expenses can be expensible deductions as well if you are making a trip to maintain the property, or have a discussion with the tenant, or to collect a rent check.  However, if the transportation expense was borne due to some planned improvement like a bathroom remodel then the travel expense would not be expensible and would be allowed to be depreciated with the improvement.

Common Expenses That You Shouldn’t Forget

There are numerous legitimate expenses for rental property owners.  They include mortgage interest, insurance expense, property taxes, gardening maintenance, legal fees, property management fees, leasing expenses, advertising expenses, damages to the property, office supplies to run your property business (if applicable), and bank fees to name the common ones.

Professional Property Managers Keep Records And You Should To

If you hire a competent professional property manager to run your rental property business they will keep good records for you as they are required to by the law.  Professional property managers will provide you with timely monthly statements which include income, expenses, invoices, and notes.  Also, you should receive a detailed Profit and Loss statement in early January of the following year.  If you don’t receive detailed statements like this you should seek to hire another property manager.

If you manage the property by yourself you should be keeping these records (and copies or scanned files) of every document that is created related to the rental property business. This is crucial for two reasons: 1) tax audit preparation, and 2) litigation preparation.

Professional Property Management By Real Estate Attorney

If you are fortunate enough to find a professional property management group that has a real estate attorney on staff that would be a great value.  The legal expertise alone provides a value added service which 99% of property managers can’t match.   Silicon Valley Property Management Group (SVPMG) is a full service property management company that manages, develops, and sells real property on the Peninsula and specifically Palo Alto.  SVPMG has a full-time real estate attorney on staff and can provide risk mitigation along with typical property management services.

Source: Silicon Valley Property Management Group, Dave Roberson

http://siliconvalleypropertymanagementgroup.com/tax-deductions-palo-alto-property-management/