California Rental House

[Heath Shepard]

Investment Info:

Single-family residence buy & hold investment.

Vacation house turned long term rental. I am nervous about renting in CA due to the laws when compared to being a landlord in Texas but one of the benefits of being a real estate investor is investing in markets that you like to visit. I love Palos Verdes Estates and it has been a great investment. In the past PVE has been in the "boon docks" of LA, the country, and as a result it mainly comprised of seniors. Thanks to COVID and remote working my property values/rents have greatly increased.

What made you interested in investing in this type of deal?

The community is, for the most part, built out. In order to build something new you have to tear down the existing house. Due to the limited supply and its proximity to the beach I saw a great long-term appreciation play. My strategy has been way more successful since COVID and people being able to work remotely since it has historically been too far to commute to other parts of LA.

How did you add value to the deal?

Complete cosmetic facelift inside and out with some remodeling of primary bathroom/ kitchen.

Lessons learned? Challenges?

CA landlord/tenant laws have been the real challenge. We had our first tenant vacate the property and he wasn't happy that we wanted to raise rent, but rents went up $500 over the past year for this house. As a result, he left a mess and there was nothing we could do about it. He was late 7 out of the 12 months on his rent and there was nothing we could do about it. CA laws are a stark contrast from those in Texas.