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Insider Q&A hears of tough times for landlords
May 10th, 2008, 12:05 am · 40 Comments · posted by Mary Ann Milbourn
Stephen C. Duringer at Duringer Law Group PLC in Anaheim is a longtime attorney who specializes in landlord tenant law. He also owns residential and commercial rental properties throughout California. He is past president of the Apartment Association of Orange County and serves as a Superior Court judge pro tem. With dueling pro- and anti-rent control measures on the next state ballot, expensive rents and a slowing economy, Duringer provided this take on the state of the apartment biz …
Us: What are some of the changes you’ve seen in the apartment industry since you started?
Duringer: The rental housing industry has experienced strong and sustained growth over the past 20 years. Even with the current revaluation cycle, multifamily properties have maintained their values. Throughout the state we’ve seen troubling increases in governmental oversight of housing, expansion of rent control jurisdictions and eviction controls. These cities quickly become stagnant, eliminating market incentives and motivations for investment and improvement by owners. A drive through many parts of Los Angeles reveals dilapidated housing, graffiti, crime and infrastructure in disrepair, and is a stark reminder why we don’t want that here in Orange County. A more troubling trend is an increasingly confrontational relationship between landlords, tenants, and fair housing advocates. Litigation is rampant. Disputes, that often can be resolved with a phone call now end up in court, increasing the cost of doing business and creating a climate of distrust. Most troubling, I’m seeing the next generation of owners, the children of the current owners, not wanting to get into the business because of the adversarial and confrontational climate.
Us: You’ve said Orange County has been insulated from a lot of these trends. Why?
Duringer: Orange County recognizes the importance of a strong rental housing industry. The continued growth and vitality of OC is dependent on our ability to house our most important asset, our employees. A readily available pool of talent allows our business community to continue to thrive and to prosper. The Apartment Association of Orange County has been very effective in working with local cities in proactively eliminating the problems generally associated with rental housing. The private sector is clearly the most qualified, and has the greatest incentive, to improve and enhance the housing stock. By educating owners and managers through courses offered by the AAOC, most of the issues facing other parts of California are either non-existent or are extremely rare here in Orange County. Owners learn effective tenant screening practices that effectively keep the bad elements out of our buildings, and out of our neighborhoods. Owners and tenants generally work well together in Orange County. Code enforcement officers here in O.C., for the most part, recognize that the vast majority of owners are responsible business persons, and truly desire to maintain their properties. Although not perfect, Orange County’s rental housing community is doing a very good job.
Q: What are you hearing about the most these days from landlords?
Duringer: Some of the issues facing owners today are the ever increasing costs of doing business. Utility rates, city fees and taxes are increasing at rates greater than inflation. Many cities are considering mandatory inspection ordinances with their resultant costs and burdens on both owners and residents. The recent drama at the Fair Housing Council of Orange County is evidence of an increasingly “gotcha” enforcement mentality among certain tenant advocates. The threat of expansion of rent control throughout California is clearly a concern that many owners face. Proposition 98, a June ballot measure to designed protect private property rights and eliminate the threat of rent control in the future, is clearly the hot topic right now
Q: What advice would you give landlords and tenants?
Duringer: Communicate openly and honestly, and treat each other with respect. Rental housing and tenant relations is not a zero sum game, both owners and resident can thrive by working together. Remember a tenant without a landlord is homeless, and a landlord without a tenant is out of business.
• See what other insiders have told Insider Q&A in recent weeks …
Pimco’s El-Erian says Fed was ‘too late’; sees further real estate weakness
McCarthy Building’s Tracy MacDonald sees construction’s rebound “likely slow”
Century 21’s James Joseph says north O.C. home prices off up to 40%
Xroads’ Marc Berger sees second wave of real estate woes coming
May 10th, 2008 at 6:18 am
More rentals, more crime.
May 10th, 2008 at 8:15 am
“More rentals, more crime.”
I’m sorry, but that’s about the dumbest statement I’ve ever heard. Certain European nations are almost entirely rental households and have a tiny fraction of the crime the U.S. does. Poverty and lack of opportunity equal crime. It has nothing to do with rentals.
May 10th, 2008 at 8:33 am
Yet more reasons why Orange County is not only comparable to Los Angeles, but in many ways better.
May 10th, 2008 at 9:20 am
I am some what of an advocate of affordable housing. I have toured a few places in Orange County that because they are well managed and maintained they look just as nice if not better than a market driven community.
Infrastructure and disrepair are the resonsiblity of the landlord the problems with crime and graffitti are social economical and has little to do with rent control or affordable housing.
Look at the recent stories here about rat and roach investations at apt complex. Until recently their were some issues at the place I live now.
I have only moved a few times, I cleaned and cleaned the place I lived in, but no matter how much I did I never got my deposit back. I know of a 1/2 a dozen people who have been taken to court by the landlord over the deposit and lost. I have friends whos rent was doubled just because they wanted to get everyone out so they could convert to condos.
For every well run apartment complex, there is an absentee landlord that could care less.
The place I live now has done a good job recently, fixing the place up, they come and fix things in short order. It is a complex relationship.
It is unfair to blame the problems on tenants only or the attempts to put some controls on rent, evictions, or affordable housing.
May 10th, 2008 at 9:50 am
one of the good things about the recession-
along with forcing the price of homes down
it will force the price of rents down as well-
sorry landlords but you cant get blood out of
turnip and an unemployed tenant is the financial
equivalent of a turnip
May 10th, 2008 at 10:48 am
Captain Says……………
Rent Controll…….??
Them……… fighten words……….!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
I am a business owner of a PMC ==…….Landlord….
I would never buy in an area with rent controll……..Total BS…..
Notice the mention to the LA market and what happens when owners
have no incentive to fix up the property…….== Crime & DUMPS…!!
I put over 200K into my rental properties………..
REASON:
THE RENTS DOUBLED
Why would I put money into a property if I could not raise rents to get paid back?
This sounds like more government control…..
This is not the answer
May 10th, 2008 at 12:31 pm
Good article about OC Real Estate on MSN:
http://realestate.msn.com/Buying/Article_busweek.aspx?cp-documentid=7042488>1=35000
May 10th, 2008 at 1:04 pm
thats the ticket just put 200k in your
property then you can raise the rent
why the hell didnt I think of that lloollllllll
May 10th, 2008 at 2:31 pm
Rants = Rents
Yo Rants…
200K also got me the Belmont “Bluff heights” historic preservation award
BTW:
Bought them for 600K back in 2000
Appriased them 1.2 in 2007
And here is the kick all you renters out there will love to hate…….
They are paying for it…………….!!!!!!!!!!!!!!!!!!!!!
The property is BE = Break Even………………GOT TO LOVE THAT…..!!!
Or hate it……..aahhahahahahhahahahahhahahahhahahahhahahah
Ya I am a real loon……
Its all gravy…………………………………………………………………………………
You know what I’m saying…………………………………………………………
May 10th, 2008 at 2:49 pm
AS DURINGER SAID : “Communicating ..openly and HONESTLY ,& treating each other with respect.” ..NOT only WORKS as a LANDLORD..BUT, even WORKS …AS AN ATTORNEY, REALTOR, EMPLOYER, HUSBAND… OR …BLOGGER ! THREE THINGS IN LIFE that you should NEVER loose ?….= Hope ,Peace ..& OH …yeah ! …HONESTY !
YOU KNOW WHAT i’M SAYIN’………………….
May 10th, 2008 at 3:32 pm
Scott A
Posts like that cause one to pause…..and wonder what the A stands for.
You disappoint….you come on here arrogant as any, then you ask for our sympathy after losing your insurance sales job and now you come back as a major A- ole.
You were cautioned you once, karma has a way of humbling those needing it most. I hoped your recent humbling would have made you a better person………………….
May 10th, 2008 at 3:37 pm
In mortgage market, ‘walkaway’ homeowners may be urban myth
Bankers and housing analysts say many homeowners, owing more than their homes are worth, are defaulting on their loans even when they can afford payments. But no hard numbers back up their claims.
http://www.latimes.com/business/la-fi-walkaway11-2008may11,0,1641820.story?page=1
May 10th, 2008 at 3:53 pm
There are no tough times for my family’s four rental apartments. Respect tenants, maintain the property, do your best to screen them and keep the rents just under market. That’s been enough for us for over 10 years, 3 of our 4 apartments have been rented to the same tenants for that long. It’s not that difficult.
May 10th, 2008 at 5:03 pm
Good Job tmare,
I think that is the point. If you run a good business you wil have happy customers. If you try to gouge people and offer them nothing in return you get angry tenants.
The bottom line is people need to live, the area and condition of the places that are for rent dictate the type of tenant you will get. It is very likely, actually it is likely that the vast majority of the working poor are very good tenants who just want a clean place to live.
The government does a pretty good job of taking care of landlords that provide housing for those that cant pay market rates.
I hear horror stories on the flip side of apartments that have mold that has been painted over, or people living in illegal conversions that have no windows or heat, etc…..Like I said for every 5 great landlord there is at least one deadbeat landlord.
It should be a profitable business, but not necessarily the most profitable.
May 10th, 2008 at 5:49 pm
PDU:
I appologize formally to all…………….. if I came off arogant..
THE POINT IS………………………………………………………………………………
There is no insentive to rehab a property == dump mad cash
Into something that gives no return………………………………………….
You are a bright guy right………………………………………………………..?????
Would you put 200K into a Roth IRA or Gold or The Stock Market and…
Expect nothing in return for your investment……………………………..????
You and I both know the answer to that…………………………………………………
NO …………….. Heck NO……………No way in H!ll……………………………………
So what is the insentive to landlords to better the communtiy……..????
If……………………there is no R-O-I…..??
My commutiny / city counsel chair of 4th district / Historic Preservation Officer
Were extremely grateful for my passion and love…………..
For the Craftsman Architecture / and the Belmont community
They called me a good stuart of the home………………………………………
I think that is right on…………….we are all just passing through anyway..
How many families have enjoyed those homes over the past 100 years?
Life is just a breath………..those homes will be around far after I am gone
I will pass them on too my children in much better condition than I bought them in.
God willing
May 10th, 2008 at 7:19 pm
Flipper and fixer-up inventory coming back on the market. Tough times = people find roomates, get hitched, or just move away.
Supply (# of units) is up; demand (# of households) is dropping. Rents are headed back down!! Just look on craigslist at all the desperate landlords begging people to stop their bleeding. Newly refurbished! All the tear-downs with new granite!! The absurdity of it!!
The great OC RE unwind is underway!!
May 10th, 2008 at 7:38 pm
“In my next life I want to live my life backwards. You start out dead and get that out of the way. Then you wake up in an old people’s home feeling better every day. You get kicked out for being too healthy, go collect your pension, and then when you start work, you get a gold watch and a party on your first day. You work for 40 years until you’re young enough to enjoy your retirement. You party, drink alcohol, and are generally promiscuous, then you are ready for high school. You then go to primary school, you become a kid, you play. You have no responsibilities, you become a baby until you are born. And then you spend your last 9 months floating in luxurious spa-like conditions with centra lheating and room service on tap, larger quarters every day and then Voila! You finish off as an orgasm. I rest my case”
May 10th, 2008 at 7:42 pm
Money Pit:
I advertise on craigs list…………….
Rents up 7% year over year for the past …… present…….and future……
BTW:
Are you talking about desperate TELEG & LADERA owners……..??
No smart renter would go to a landlord in a spec-pit about to go BK….
Go to the beach areas and tell me what rents are doing……
NO FORCLOSURES………….================= Stable RENTS.
NOT ONE FORCLOSURE in my neighborhood……………………………..
ALSO:
BEACH & COLLEGE ========== MONEY PIT==== CASH COW
May 10th, 2008 at 8:24 pm
What up Scott A…rants is the resident lunatic…article poster captain of the ship. Wow, must be tough to find negative data concerning housing…he is one smart fella. Reasoning with the high school rep of the community is a waste of your time Scott A. You would have better luck turning Obama into a Republican…get ready for your taxes to sky rocket. Yes, the gov’t knows best dont they.
May 10th, 2008 at 8:31 pm
Craigslist if for fools…a broker will get you a good bit more. Not everyone looking for a place goes to craigslist…just like they all dont go to redfin, the 15 transaction closing machine…that is right…15 closings. Budgetary services attract budgetary clients. Same thing with craigslist. If you have a 2000-3000 s.f. home you are trying to rent, do yourself a favor, hire a broker and you will get top dollar and a sophisticated client to fill your pad and your pockets.
May 10th, 2008 at 8:35 pm
Craigslist comment was not directed to you ScottA…
May 10th, 2008 at 8:58 pm
Mulliganville:
I generally agree with your opinion on redfin and craigslist, but are you saying that redfin has closed 15 transactions… ever? In 2008? In May? What time frame are you referring to, and is that just in OC? Their site says over 1200 customers have bought a home with redfin… that is quite a large discrepancy. This isn’t an attack, I’m just trying to better understand your point.
Clarify?
May 10th, 2008 at 9:43 pm
Well, this is just my take on it, but it does seem that rents on SFRs are dropping. A few years ago, you could rent a decent 1800 s.f. place for $1,500. Then all this inventory went off the market to get fixed up and flipped and rents shot up to $2,200. Now, all that stuff is coming back on and rents are dropping.
7% decline more likely than 7% increase for 2008.
May 10th, 2008 at 9:56 pm
People need to remember that the median take home in this County is $2,500 a month. That gives half the people out there LESS than $833 to pay for rent. These numbers are not going up 7% a year, more like 2%.
7% decline to $2050 has already occurred. Another 7% to $1,900 is happening right now. Eventually, we’ll get back to $1,750, which is still double most towns, but hey, the weather, right?
May 10th, 2008 at 10:07 pm
hey gilligan our resident clueless moron
better watch your mouth.. I might have my
10 year body slam your weasly little ass
May 10th, 2008 at 10:43 pm
rants ,
i found a theme song for you and your fellow hit men
http://youtube.com/watch?v=Ls8mKdKYQV8
as usual we always make the escape in the end
TA TA
May 10th, 2008 at 11:08 pm
Mulli,
What happened to you?
You looked in the closet, found your old gold jacket, and became a realtor-in-your-mind all over again.
Yep. Rent that place through you. Give you 10% of the annual rent so’s you guys can survive another month.
Look out. Don’t paranoid out. The internet is coming to get you.
Some folks would rather give the 10 to the tenant — and have some control over who ends up in the home.
May 11th, 2008 at 12:04 am
Na pdu….I told you I do not do general RE here…if that changes, I will let you know. The internet did not revolutionize shopping in the malls…remember that hysteria? If anything, it did more to help the merchants than hurt them. It also did not revolutionize the auto sales industry. It will fail to revolutionize this industry as well.
Redfin is a joke of a brokerage…an info portal at best. They do not close enough transactions to affect any local brokerage numbers at all. You know it, I know it, so does Remax, KW, First Team, Coldwell Banker, etc. If anything, Redfin will help these local brokerages as people will perhaps find a home, then they will call their realtor they have a relationship with and have that person take care of business for them. RE is a relationship business. FYI–I used to sell new construction and SEVERAL builders tried to sell homes over the internet and each time it failed miserably. It is just a people business from appraisers to inspectors to lenders. An automated deal it will never be. You all may want it to be…but you will be mightily wrong.
Regarding Craigslist, in my opinion, if you are leasing a 2200-3000 s.f. home, hire a broker and they will get you more money in the long run. They will also take care of everything…from credit to verifying employment to assisting with handling of repairs. Sure, you can do it all yourself if you prefer. If I was leasing a 1600 s.f. home, perhaps I would. That being said, I have seen a broker in my community get $3600 for 2500 s.f. with a decent view.
Hi rants…you are irrelevant.
May 11th, 2008 at 9:25 am
OC Pro: my recollection is that Realtor DaveE who posts here quite often researched Redfin in our county over the past year…and they had 15 transactions. They do not pay their salespeople commissions, therefore, I think you get what you pay for with them. The best agents will go elsewhere and they will have big trouble hanging onto any decent sales minded individuals.
May 11th, 2008 at 10:04 am
That guy Poggi may turn out to look like a genius
http://www.nctimes.com/articles/2008/05/11//business//z514fbd14e181c87c8825744100641913.txt
May 11th, 2008 at 11:49 am
There are reasons why there are so many laws on the books for landlord/ tenant relations. Especially with tenants rights laws have had to balance themselves out with abuses of landlords, Always keeping your deposit for whatever reason they determine, trying to push you out and raising your rent, or complaining about maintenance and the landlord refuses to fix it. I have rented in OC for so long and I have run into only 2 good landlords who are descent business owners, The rest could care a less that this is your living environment and treat you more like a commodity. Or their atiitude thier way or the highway. The law does not support these kind of abuses.
Landlords having a tought time in OC? Please! They are so protected in OC than in LA And have made a ton of money too. It usuallly takes a tenant to get justice in OC at the appellate level because lawyers who protect landlords and judges are are just as bad. But the law is clear when a landlord does not fix or maintain their property, retalliation of landlords that is so common in this County. None of this is allowed. It’s up to the tenant to figure out how far they have to fight to get justice with an abuse landlord. And this is one of the reasons why their are so many lawsuits in this County with landlord/ tenant, and rightfully so!
May 11th, 2008 at 2:59 pm
It’s very true that you need to balance landlord and tenant rights. However, the increasing trend for every dispute in society to become litigation is disheartening and does not benefit anyone except judges and lawyers.
May 11th, 2008 at 4:04 pm
I think Redfin is a self-service brokerage with a self-service fee and experience. They are not taken seriously in this market as they do not compensate on a fair scale compared to the rest of the brokerages. I constantly hear the bears whine, moan and complain about 5-6% listing fees. You get what you pay for. If you want to do it all yourself, FSBO it my brethren! Then you will see just how much work goes into selling and closing your own property. Have fun…
May 11th, 2008 at 4:10 pm
oh wait…most of you rent, which is cool with me…dont buy until you are ready, willing, and able. As I have mentioned, I do not begrudge renters. It will be refreshing when you do own as to how your tune will change about housing prices which are good for the economy as a whole…that will be luscious indeed…and a bit hypocritical in the end as your view will change entirely.
May 11th, 2008 at 8:16 pm
Mulliganville Says:
May 11th, 2008 at 4:10 pm
“oh wait…most of you rent, which is cool with me…dont buy until you are ready, willing, and able. As I have mentioned, I do not begrudge renters. It will be refreshing when you do own as to how your tune will change about housing prices which are good for the economy as a whole…that will be luscious indeed…and a bit hypocritical in the end as your view will change entirely.”
Ah Mully, always taking cheap shots and making backhanded comments. You still skew and distort what bears generally believe in.
BTW, if homeowners did not pay bubble prices and managed their finances reasonably, why would they care about the current RE debacle? I’m willing to bet that many owners in that situation oppose federal bailout plans.
May 11th, 2008 at 8:47 pm
not really price…I just know most of this blog rents, so they have a PERSONAL interest for pricing to fall…like a short seller on wall st. They do not care about the economy as a whole. If they did, they would wish for pricing to stabilize in the near future as this county’s economy is very tied to RE. Shockingly, current homeowners have a desire for prices to RISE. It really is very simple. Do you want your stock to increase or decrease…for the good of the economy? Just tell it like it is…it is a self-indulged view of a pod of people who are not vested in the commodity they seek. Case closed.
May 12th, 2008 at 6:35 am
It is obvious that most of you here lease your home from someone else.
May 12th, 2008 at 8:01 pm
Mulliganville Says:
May 11th, 2008 at 8:47 pm
“not really price…I just know most of this blog rents, so they have a PERSONAL interest for pricing to fall…like a short seller on wall st.”
Yes they do, but not as short sellers. Bears are prudent buyers, not slaves to greed and mania. They are long term buyers, not short term investors. They know that sound, long term economic fundamentals will keep prices from falling into the abyss. Meanwhile, bulls clearly have a short term outlook. You want federal bailouts at the expense of current and future homeowners who are not in trouble. You want to sacrifice the prospects of first time buyers just to subsidize current bubble prices.
“They do not care about the economy as a whole. If they did, they would wish for pricing to stabilize in the near future as this county’s economy is very tied to RE. Shockingly, current homeowners have a desire for prices to RISE. It really is very simple. Do you want your stock to increase or decrease…for the good of the economy? Just tell it like it is…it is a self-indulged view of a pod of people who are not vested in the commodity they seek. Case closed.”
Those who continue to defend the bubble are also shortsighted about the greater good of the economy. No matter how much bulls will deny it, the local RE market is highly susceptible to global events. Investors have squeezed all that they can from RE. RE can no longer be the single most important engine of economic growth. Instead, we must strive to create and innovate new industries.
To use the stock market in context:
- Buy when prices are low, not during the bubble years.
- Buy within your means
- Putting all your eggs in the one basket (i.e. RE) is setting yourself up for disaster. Diversify, diversify, diversify.
- Real estate does not provide the same returns as other investments do. Hence, RE is a secondary investment.
May 12th, 2008 at 8:23 pm
rants Says:
May 10th, 2008 at 10:07 pm
hey gilligan our resident clueless moron
better watch your mouth.. I might have my
10 year body slam your weasly little ass
Nice Rants. Sicking your 10 year old Mongaloid Mulli.
May 15th, 2008 at 9:39 am
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