Thoughts on Rent Controlled Areas in Los Angeles (Los Feliz)

[Franklin Marquette]

Hey all,

I am new to the forum and new to real estate. Currently looking at a ~$1.35MM duplex in the Los Feliz / Silverlake area. This area is pretty hot right now in my opinion given it is transitioning, but all of it is rent-controlled for older buildings. The duplex was built in 1936 so does fall under the rent control provisions. However, I will be moving into the property and doing a substantial renovation so can evict and reset rents to market.

My concern is not the short term risk of rent control as I have ways around that (mentioned above). It is more about whether I should be concerned about the long term. I am not that concerned right now given I think there will always be mechanisms in place to avoid it (move into one of the units as an owner, move a family member in, do another renovation, etc) but want to make sure I am not making a big mistake here.

Thanks all!

Franklin

[Rick Albert]

It's not that simple.

1) You are going to have to pay relocation fees. It all depends on the circumstances as to how much.

2) Even then, tenants in Los Angeles have free legal services. This may take months at best to get them out.

3) In the long run, economist has done studies that shows rent controlled markets show massive increase in rents. 

People have done very well in rent controlled markets, but it isn't for everyone. I recommend doing massive due diligence if you are taking on the risk of trying remove a tenant and move in. Things have changed since COVID.