All Forum Posts by: Lawrence Leung

@Kathleen Hendricks I wish I could provide more useful information above all the good information and suggestions from @Account Closed but all my resources are back at the office under lock and key due to the Shelter in Place. With that being said, I do recall a few important and relevant pieces from the past. When working through the details with an attorney think about 1) Consideration for tax implications, 2) Understanding of legal and regulatory obligations and 3) Preservation of eviction rights.

1) Even when compensating with free housing (not sure if that is the recommended approach because of #3 below or perhaps a hybrid of subsidized and monetary compensation as Sue suggested) you will need proper documentation (equivalent comparable market analysis) to be able to report the operating costs for tax reporting purposes.

2) There could be legal and regulatory obligations if you are considered an employer

3) Just like hiring an employee, there is never a guarantee there is mutual satisfaction. In the event you would like to terminate employment you want to ensure your eviction rights as a landlord are preserved while adhering to employment laws. 

One parting thought... If you offer housing for free, would termination of employment allow the former employee to continue to live at the housing rent free due to just cause eviction controls per TPA (AB1482) in the absence of a rental agreement defining an agreed upon monthly rent.

@Amit M. I wouldn't say numerous, but we have had applicants see our properties virtually and eventually sign a lease and happily move in with no "buyer's remorse".  I believe the key to success is to provide full transparency and to convey as much information about the neighborhood, the building and the unit so as to ensure nothing is a surprise for the interested party.  While we can do as much as we can, there ultimately will be some onus on the interested party to do their due diligence to ensure the property they are interested in is a good fit and this should be a reminder point.

I whole heartedly agree, encourage and believe it is a must to speak to the interested party virtually via WhatsApp, FaceTime, Zoom, Hangouts or some other medium of your choice as part of your application screening process.

@Amit M. The feedback is overall very positive.  We invested in Matterport early last year to assist in driving vacancy rates down to zero for our clients and investors. We have had successes with folks from abroad relocating to SF property unseen except virtually executing lease agreements. We have a move in tomorrow, April 1st and April 10th.  Things are definitely slower for sure, but there are always people looking. IMHO how you differentiate your vacancies from others out there will be the determining factor.  Good luck out there and stay safe and healthy.

@Amit M. We have been running about 10 vacancies month over month for the past 6 or so months and I will say there was a significant drop in inquiries and interest level since the Shelter in Place mandate. For the safety of my team and our leasing agents we have pivoted our processes and are no longer offering in person showings as a pre-requisite for application. Instead, we are pushing the in person showing to the back end of the application process such that it will be a formality prior to lease execution. Instead we are emphasizing our 360 degree virtual tours and ensuring ALL questions about the neighborhood, unit and building are answered so any prospective renter will have a high level of confidence of applying and wanting to lease before seeing it in person.

On a separate, but related note, we have already seen inquiries across our portfolio from renters that are asking for concessions, issuing notices to vacate or sharing stories of job loss and anticipated difficulty for paying rent.

@Jonathan Ko  Bottom line is your "individual" needs to consult an attorney. @Kyle J. points out some very relevant information related to the Tenant Protection Act aka TPA (AB1482). But no one here is a lawyer and should not be giving legal advice.  Based on my experience, regardless of the length of the tenancy, as long as the lease term has not yet ended (i.e. transitioned to a m-t-m tenancy), the lessor has every right to not renew the lease. A lawyer can give the "individual" proper guidance on what communication he/she would need to provide to the lessee of their desire is not to renew the lease such that the "individual" does not open themselves to a wrongful eviction suit.

@Collin Chan I both agree and disagree with @Dustin Allen.  Absolutely, Housing has been deemed an essential need and therefore anything that is currently in progress will continue to be in progress, but to a point.  At any phase of construction you are going to get to a point where you will need to have an inspection whether it be for your framing, your rough-in, or your final. The problem is that in many if not most localities, the planning and building departments have all but shut down. This means that even if you wanted to start a construction project you wouldn't be able to because you are unable go through intake for review or pull permits nor can you schedule an inspector to come perform an inspection as everyone is Sheltering in Place.  I am very hopeful that this is only going to be a few weeks, but I'm much more realistic that this will be a few months.

From purely an economics POV there is/was a ton of demand out there for construction work, but very little supply for the skilled labor. It is conceivable that the demand and supply could flip such that when Cities are open for business and begin issuing permits, there will be an over abundance of contractors and skilled labor, but no appetite or demand to spend money for renovation projects because of the projected high unemployment and stock portfolios that are worth a fraction of what they once were. At a larger scale, development companies will begin to curtail their spending of $ millions on projects because the demand for purchasing homes has dropped and the median home price for selling the homes are not as lucrative as before. 

@Kaleigh Griffiths  Access to the garage and "parking rights" or permission to park on a driveway or in front of the garage are unfortunately not the same thing.  In San Francisco, a "traditional" suburban driveways are rare and are often times confused with the sidewalk portion in front of the building.  It sounds like the top tenant might be trying to use the street space in front of the garage door as an opportunity to park in a city where street parking is scarce.

Because the "driveway" is technically the sidewalk in many parts of San Francisco, it is not permissible per the SFMTA for a car to be parked on it at anytime. It is therefore possible for anyone including a pedestrian, neighbor or in this case the top tenant to call DPT and have the car cited for blocking the sidewalk.

If however, your lower level tenants are parking along the street in front of the garage, it should not be possible for the top tenant to call DPT for a complaint. The only citation that could be issued would be for a blocked driveway, but DPT does requires the individual reporting the blocked driveway to show proof of access to the building garage which is usually evidenced by opening the garage door.

Two parting thoughts for you.  First, assuming the driveway is indeed the sidewalk, as I suggested above, it is not covered by your lease agreement and the top tenant nor the lower tenants have any usage rights. Second, contrary to suggestions above to clarify or modify the lease, in SF it is against the local San Francisco Rental Ordinance to unilaterally make changes to an existing lease agreement. 

@David Poulsen  As I learned quickly after posting this in the forum, @Ariel Smith introduced me to @Sean Walton who organizes with a monthly meetup the 1st Wednesday of each month with @Eduardo Zepeda.

Sean and Eduardo are great hosts and the meetup last week was a lot of fun.  The best thing to do is go onto Meetup (even download the app) and search for real estate investing.

@John D.  This thread caught my eye while i was searching for lawyers in San Francisco.  I agree in part with @Anthony Dooley, more so with an "association" and not necessarily a property management company and/or the association of realtors.  No dis-respect to SFAR which has a good lease, but it doesn't stay as current and up to date as the one available through the SFAA.  (Full disclosure that I do run a property management company and I'm an active member of SFAA.)  San Francisco is a completely different beast when it comes to landlord and tenant law.  The Board of Supervisors constantly change the landscape and the Rental Ordinance is always evolving.  What is great about the SFAA is that their lease is routinely updated by a group of top landlord tenant attorneys to incorporate these constant changes (i.e. Kim Legislation, Marijuana, Vaping, Bed Bugs, Air Quality Standards, etc.) and its available through SFAA instead of hiring a lawyer to do the same.  Just do as @Amit M. suggested and become very versed on the SF Rental Ordinance and make sure you have the right insurance in case you end up being sued.

@Naina Tara, congratulations on taking the first step towards RE investing and financial freedom. A great strategy that would be perfect for you given what you describe is a house hack (Buying a multi-family and living there too).  Not only will you get yourself started with RE Investing regardless of whether we are at a peak or not (no one can predict when the market will turn) you can also get some home ownership tax deductions.  For example, if you had a duplex and lived in one side and rented out the other, you can use any positive cash from the rental to pay towards your loan.  The $4k in rent can instead go towards your loan as well and you get mortgage interest deductions for both the home ownership and rental portions. This is just scratching the surface of using leverage, gaining appreciation, taking advantage of depreciation while building equity and getting passive incone.

Happy to share more details and experience anytime.