All Forum Posts by: Greg San Martin

Why would you want to do that?  Your motives/objectives may inform the answers you receive. Will you be an occupant?

I know the per unit value of a duplex is higher than the per unit value of a triplex, but during a recession, more buyers may be able to afford a higher priced triplex due to the rental income.  

The city has a new incentive to eliminate units - a vacancy tax:

Oakland's Vacant Property Tax

With TOPA practically knocking at the front door, the city is establishing another incentive to eliminate rental units of small rental property landlords:

Stop TOPA

You might be able to obtain records of those who secured permits to downsize.  Check with the city's excellent public records act staff:

The City of Oakland public records request portal

I helped a neighbor downsize from 2 to 1 in Berkeley because at that time, the city prohibited ADUs from being built on duplex or higher unit count properties (it still would be prohibited if not for the fine work of the Bay Area Council working with Senator Wieckowski to change state law).  But the point is that sometimes, changes are allowed, especially if the units are empty.  

In Berkeley, the code apparently allows conversion back to original configurations. Since the home started out originally as a single, the 2-to-1 conversion was authorized, a kitchen was removed from the second floor and a new ADU was then built to house extended family.

Your research might show that one of the 3 units was not clearly built with permits.  Regardless of whether the original expansion was legitimate (e.g., prior to permit records, due to lost records, etc.), it would be understandable to seek to formally cancel the unit given the anti-landlord legal climate in Oakland and Berkeley. 

As Oakland tax revenues for rental activities show, many small landlords are being forced out of the rental business because it has become too risky, legally, to rent a spare unit in your home. Zero in on how those folks exited the rental business for their units.

There are consultants who can advise you on such issues.  And there are probably some builders who specialize in permitted conversion.  I would guess there are exceptions to every rule so do not take the first 'no' as the best and final answer.

I have never had trouble posting links on BP.  The GD analysis adds value to this BP discussion of an important emerging California issue. 

Here is another analysis of the same legislation:

Jdsupra

Maybe this is it.

Gibsondunn

It sounds like you already are in the ballpark with market data.  There can be differences between market data and code requirements.  Rent board code requirements are often  the worst written of all code requirements.  Understanding can be difficult to achieve and even more difficult to retain over time.

My experience in California leads me to conclude that the most important knowledge you will receive will be from experts working full time within the jurisdiction of interest.  

A great way to become aware of and meet those experts is to join a regional rental housing association.  For example, in Berkeley, there is BPOA.  Across the East Bay, there is the EB RHA.  Sacramento likely has similar organizations.  Join and attend a few meetings to judge for yourself whether membership is worthwhile.

In California, depending on your jurisdiction, you must solicit opinions and advice from your LOCAL experts rather than from us who are far afield.

Can someone please explain the original intent of this language? I doubt the intent was to discourage legal adus from built. Legal adus have been around for years, so why is it taking so long for Freddie Mac to issue clarifying guidance?  

"The median listing price for Berkeley homes is $1.2 million, and they’re selling at 19 percent above listing price, Realtor.com reports."

https://patch.com/california/b...

More detail:

https://www.berkeleyside.org/2...

Read up on TOPA. You may lose the 1031 option and be forced to sell below market.  The fat sweaty guy with the gas can is locking the exit doors. Be wary of what he might do next.

I recommend subscribing to alerts from a group that mobilized to stop TOPA in Berkeley.  

StopTOPABerkeley

It bothers me that every time I even think about building a pair of rental ADUs, the City launches a new scheme to punish me if I proceed. 

The main reason real estate and rents have gone up the fastest nationwide in Berkeley over the past 20 years is because the city and rent board make more revenue when housing is unaffordable. 

TOPA is just the latest attempt to deceive the public and ensure that real estate revenues for city coffers continue to rise. Last month, we saw a 9% yoy rise in property values. 

A part of that is Covid and a part was the addition of $7,000,000,000,000 in new national budget deficit, but over time, Berkeley's incessant regulatory assault on homeowners and property rights has prevented thousands of new condos and rental ADUs from being established/built. They are using schemes like TOPA to deprive entire generations of the opportunity and right to become first time homeowners.

This sounds like a fictitious example.

The cities with the largest long term rent increases in absolute and relative terms (i.e., $ per year and % per year) are those with the strongest rent board regulations.  

Our rent boards love that they will never get blamed for the rent increases that their policies cause.  On the contrary, the more their policies cause rents to increase, the more budget they receive.  This may have changed temporarily or permanently, since 12 months ago.  

My experience is that for the past 20 years, rent control has been a financial blessing for well-informed landlords, who have had both the fastest appreciating rents and the fastest appreciating property values.  It is easier to fear than to understand things as complex as rent control.    

So, condemn rent control if you want, but take a close look at history too, and you may conclude that rent boards have made millions of landlords more successful than they otherwise would have been.  

"Business-friendly" states do not need rent control.  They just issue a boat load of building permits to keep rents from rising.  Careful what you wish for.

The always progressive San Francisco school board just voted 6 to 1 to remove the names of George Washington and Abraham Lincoln from public schools after officials deemed them and other prominent figures unworthy of the honor.

The main reason I am looking to exchange to another state is really simple - I want to continue making the best returns on my REIs.  But California politicians are a breed apart and governance is a factor in my decision. I should feel welcome to stay but I do not.

I am pretty sure that divesting $2 million from California (tax free) and spending that in another state will not have any effect on California politicians.  And I doubt 100,000 people like me are also going to divest. 

Governance is not as big of a driver for me as ROI. But I have lost trust in state and local electeds (and their constituents) in California. I want to reinvest where I do not have to increasingly worry about what nutty state and local electeds might do next to undermine or take my investments.