Subscribe to Our Blog

Subscribe to Email Updates

Featured Post

Recent Posts

Interview with Paul Getty on the Tenant Protection Act of 2019 (AB 1482)- Part 2

This is the second post in a series of interviews with Paul Getty, founder and CEO of First Guardian Group in which we sat down to explore his insights on California’s new Tenant Protection Act of 2019, known as California AB1482, and how he believes the legislation will impact investment property owners.

Q. Paul, what are some of the key provisions in AB 1482?

A. First, it’s worth noting up front that the provisions in AB1482 are not all that bad upon first view. For example, the limitation on a rent cap is fairly generous. It basically says you can have an annual rent increase of 5% plus the CPI inflation rate – the Consumer Price Index – which is a published rate you can find online. The provision states the combination of those two cannot exceed 10% per year. So, on the face of it that sounds quite generous, but here’s the problem.

Many landlords whom we work with, particularly those we refer to as “mom & pop” landlords, are quite fair and reasonable with their tenants. They don’t want to raise rents on a frequent basis, because they’re fearful if they do, they may lose a good long-term tenant, and then have to deal with a potential bad tenant who moves in and presents a lot of headaches they don’t currently have. It’s not uncommon for landlords to lay low and not raise rents except for every few years. The problem with that now occurs when the landlord wants to sell the property. Since the value of the property is subject to the amount of rent that’s earned, and the landlord hasn’t raised rents in four or five years, then even a 10% allowable increase may not match current market rates and the value of the property upon sale will likely be far less than it could have been.

Another provision in AB1482 that is a significant concern of landlords has to do with what’s called, “just cause eviction.” This is a concept which limits the landlord’s ability to remove tenants. With this legislation, there are now a whole series of “do’s and don’ts” that landlords have to be very careful to follow, including providing written notification to all their tenants beginning in early 2020 that tenants have certain rights and that only under certain restricted conditions can they be evicted from property.

Altogether, it’s estimated the provisions in AB1482 will apply to approximately 8 million renters in California, which is sizable percentage.

Q. Are there any property types excluded from the act?

A. Yes, there are. A good number of the landlords we work with own single-family properties or single-family homes which they have bought and are now renting out. Fortunately for them, the single-family properties are excluded from AB1482 unless the ownership structure is a corporation or another type of entity that is different from an individual.

But, if landlords have a duplex, or quad-plex or any other type of property that has more than one unit, they will be subject to the requirements of AB1482.

In our next post, we’ll look closer at the AB1482 provision around eviction.

If you have any questions, please feel free to reach out to Paul directly at 866-398-1031 schedule some time on Paul’s calendar here

New call-to-action

Paul Getty

Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $3 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student, and senior housing. Paul’s transaction experience includes buy and sell side representation, sourcing and structuring of debt and equity, workouts, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions. Paul also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals. Prior to founding First Guardian Group/FGG1031, Paul was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 35 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion-dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M. Paul holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered financial representative with LightPath Capital Inc, member FINRA /SIPC. Paul is a noted speaker, author, and actively lectures on investments, sales, and management related topics. He is author of The 12 Magic Slides, Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors, and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.

Your Comments :