Caution: Rent doors in California are getting more difficult to manager due to the "Progressive California" political climate at the State legislature & Local community initiative levels: In this rapidly changing business environment the hard working long time Rent Door property owner needs to take long-term evasive measures to guard Your business AND personal equity from the old fashioned "Taking". We are "Small-scale (8 units), Family Retirement residential income property owners, since April, 1979 in Southern California. After years of hands-on management, I currently use a Property Manager to manage & maintain our portfolio of Family Retirement properties. As owner, I am "Respondeat Superior" for everything (resident & guest behaviors, facility failures, mold & mildew, dog-bites, etc.) that happens on the parcels that we own. At age 72 (almost 73) after two bouts with Cancer, I see two long term trends in our business that concern me: a) the Statewide drive to establish "Tenant Justice" Rent Control at the local level driven by the "Equity" & "Rent Justice" folks. This is Rent Control that can cause massive disruption / decrease in revenue and add massive new administrative fees & expenses to each Rent Door. NOTE: To support this statement, I point to what has happened in the City of Pasadena, CA since November, 2022 and the 2024 state-wide "Justice For Renters" ballot measure that is polling at a favorable 55% approval as of March, 2024. b) The 2nd long term trend is the rapid change of the "Norms & Values" that set expectations and behaviors in the population of current potential rent door residents. Their expectations & behaviors are very-much different from the Norms & Values of those who built the California Small-scale, Residential Property Rent Doors between 1946 and 2010. NOTE: This is a hard part of the discussion to pull off and I don't want to sound like an angry old man standing in his driveway & shouting at the neighborhood kids riding their bikes in the street, but attitudes, behaviors & expectations have changed with the new renter in 2024 Progressive California. In response to these and other trends, I have decided to (as effectively as possible) use current-available-tools to avoid long-term-taxes and move this California-Rent-Door-Equity to properties in other more landlord leaning States by placing my post-sale rent door property equity into Delaware Statutory Trusts (DSTs) and other IRS Section 1031 alternatives. NOTE: Naturally, there is a lot more to this decision, but it's a trend that I feel is going to stamped rent door capital out of California in the coming year. The new Progressive California reality became "crystal-clear" during the discussion for the adoption of a scaled-down rent control ordinance for an old RV-Trailer Park in the City where we own rent doors. During the Public Discussion of the proposed ordinance, the New owner of the old-run-down-blighted RV/trailer park who has been raising site-rents, upgrading facilities and moving "fire" trap Recreational Vehicles out of His park in a rather compassionate & caring manner was asked by a long-term City Council member what he did with his money from his business operations. This exchange might seem trivial and unimportant, but after having several eye-popping rent door resident situations (too many to list and I don't want You falling out of Your chair laughing) over the years, having an elected, long-time, "politician" in a small California City of 28,000...a City that can't provide sidewalks, pothole free streets, working street lights, working traffic control lights and working stormwater runoff drains, ask a young risk-taker who is trying to use the marketplace to improve a downtown property what he does with the money from his business operations, "takes-the-cake": 2024 Progressive California at it's finest! Note: This week the industry just got the "effective" letters about who is going to have their Property and Liability insurance "not renewed" by State Farm Insurance Company. If You are an owner of a clean & well maintained sixteen unit building and received a non-renewal letter sitting next to a "Justice For Renters" flyer, after all of Your hard work, moving Your legacy equity out of State might be a very good peace-of-mind move. God Bless the IRS and Section 1031!
Comments
Caution: Rent doors in California are getting more difficult to manager due to the "Progressive California" political climate at the State legislature & Local community initiative levels: In this rapidly changing business environment the hard working long time Rent Door property owner needs to take long-term evasive measures to guard Your business AND personal equity from the old fashioned "Taking". We are "Small-scale (8 units), Family Retirement residential income property owners, since April, 1979 in Southern California. After years of hands-on management, I currently use a Property Manager to manage & maintain our portfolio of Family Retirement properties. As owner, I am "Respondeat Superior" for everything (resident & guest behaviors, facility failures, mold & mildew, dog-bites, etc.) that happens on the parcels that we own. At age 72 (almost 73) after two bouts with Cancer, I see two long term trends in our business that concern me: a) the Statewide drive to establish "Tenant Justice" Rent Control at the local level driven by the "Equity" & "Rent Justice" folks. This is Rent Control that can cause massive disruption / decrease in revenue and add massive new administrative fees & expenses to each Rent Door. NOTE: To support this statement, I point to what has happened in the City of Pasadena, CA since November, 2022 and the 2024 state-wide "Justice For Renters" ballot measure that is polling at a favorable 55% approval as of March, 2024. b) The 2nd long term trend is the rapid change of the "Norms & Values" that set expectations and behaviors in the population of current potential rent door residents. Their expectations & behaviors are very-much different from the Norms & Values of those who built the California Small-scale, Residential Property Rent Doors between 1946 and 2010. NOTE: This is a hard part of the discussion to pull off and I don't want to sound like an angry old man standing in his driveway & shouting at the neighborhood kids riding their bikes in the street, but attitudes, behaviors & expectations have changed with the new renter in 2024 Progressive California. In response to these and other trends, I have decided to (as effectively as possible) use current-available-tools to avoid long-term-taxes and move this California-Rent-Door-Equity to properties in other more landlord leaning States by placing my post-sale rent door property equity into Delaware Statutory Trusts (DSTs) and other IRS Section 1031 alternatives. NOTE: Naturally, there is a lot more to this decision, but it's a trend that I feel is going to stamped rent door capital out of California in the coming year. The new Progressive California reality became "crystal-clear" during the discussion for the adoption of a scaled-down rent control ordinance for an old RV-Trailer Park in the City where we own rent doors. During the Public Discussion of the proposed ordinance, the New owner of the old-run-down-blighted RV/trailer park who has been raising site-rents, upgrading facilities and moving "fire" trap Recreational Vehicles out of His park in a rather compassionate & caring manner was asked by a long-term City Council member what he did with his money from his business operations. This exchange might seem trivial and unimportant, but after having several eye-popping rent door resident situations (too many to list and I don't want You falling out of Your chair laughing) over the years, having an elected, long-time, "politician" in a small California City of 28,000...a City that can't provide sidewalks, pothole free streets, working street lights, working traffic control lights and working stormwater runoff drains, ask a young risk-taker who is trying to use the marketplace to improve a downtown property what he does with the money from his business operations, "takes-the-cake": 2024 Progressive California at it's finest! Note: This week the industry just got the "effective" letters about who is going to have their Property and Liability insurance "not renewed" by State Farm Insurance Company. If You are an owner of a clean & well maintained sixteen unit building and received a non-renewal letter sitting next to a "Justice For Renters" flyer, after all of Your hard work, moving Your legacy equity out of State might be a very good peace-of-mind move. God Bless the IRS and Section 1031!
Post: Handing Over the Keys
Link to comment from April 5, 2024