You are required to pay interest on the security deposit in San Francisco. The interest must be paid annually, which means you need to send your tenants a check every year, or give them a onetime rent credit based on the amount of interest that is due on the security deposit. The amount of interest changes every year. This year, it is 0.4 percent. Every year the Rent Board sets the amount of interest that security deposits must be paid.

Keeping good records is essential when you are managing your rental accounting. Just like any investment that you might make, you want to have a detailed and accurate record of all your income and expenses. Use whatever method of recordkeeping that works for you, just make sure you are keeping up with it and that it is correct.

One more thing to remember is that you should keep copies of all the bills for the property. This includes PG&E bills, water bills, garbage bills and any bills associated with maintenance expenses. Having these records accessible will help you if you ever want to go to the Rent Board and get a pass through rent increase. When you do that, you will be required to have two years’ worth of all your bills. The Rent Board requires a lot of paperwork, so make sure you hang on to those bills and save them in a safe place with the rest of your financial records and bookkeeping.

So there you have it – your accounting responsibilities as a San Francisco landlord are not complicated. You need to pay interest annually on the security deposit and keep good records during the term of any lease agreements you have in place. If you have any questions about this, please contact us at Gordon Property Management.

The post How to Be a Landlord in San Francisco: Handling Accounting and Security Funds appeared first on Gordon Property Management Blog.

You will need to notify your tenants that you plan to enter the property. The requirement is 24 hours written notice, but at Gordon Property Management we like to provide more than 24 hours notice – give your tenants a week’s advance notice. Anytime you give a tenant a 24 hour notice to enter you need to give a reason. The reason we give is to inspect the smoke detectors and carbon monoxide detectors. We go into the property with our maintenance person and we check every smoke detector and carbon monoxide detector to make sure they are functional. We replace batteries and if the detector isn’t working, we install a new one. We also get the chance to walk through the whole unit and note the condition and see what needs to be fixed, particularly if it is causing long term damage to the property.

Make sure you follow up after the inspection. While you’re in the property, if you notice some maintenance items that need to be taken care of, give them attention. Send your maintenance team into the unit to take care of any repairs or replacements that you noticed. You should be checking for long term problems as well. Examine the exterior paint and try to judge when you will have to re-paint it. Your annual inspections provide you with a great opportunity to begin planning for the future and your long term maintenance concerns.

Finally, if you see something wrong, don’t ignore it. For example, if you notice a dog in the property and the lease states no pets, notify the tenant immediately in writing that removing the dog is required. Make sure the dog is taken away and that the lease is being followed. If you see a lease violation while you are doing your inspection, but you do nothing about it, you are essentially giving your tenant permission to ignore that lease requirement.

If you have any questions about the best way to manage an inspection in San Francisco, please contact me at Gordon Property Management.

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First, be sure to look at the lease agreements carefully once you start reviewing the paperwork on an apartment building that you buy in San Francisco. Find out who is living in the apartment, are they named on the lease agreement? You want to know who has tenant’s rights under the San Francisco Rent Ordinance. If there is no lease agreement at all, be cautious. It could be problematic for you once you own the apartment if there is no written agreement in place with the tenants living in any of the units. You could try and push the seller to get the tenants to sign a lease agreement, but chances are you will not get it.

Next, ignore fair market rents. Market rent means very little when you are buying an apartment building that is is occupied by tenants and subject to San Francisco’s Rent Control Ordinance. You should check and see if the tenants have had all the allowable rent increases over the years, and if not, you will be able to give them a banked rent increase. However, you cannot bring them up to market. Fair market rent is not a key factor in your buying decision.

You also need to take a look at the long term tenants who are living in the property. If you have tenants in the apartment building who have been there for 10 or 15 years, chances are they’re planning to be there for a long time. This means you will be stuck at that rent with only the allowable increases each year. If they are difficult tenants you may be stuck with them for a very long time.

Finally, get copies of all bills for the last two years, or get written permission from the seller to go directly to PG&E and the water and garbage companies to get those records. If you ever want to do a capital improvement pass through or an operating and maintenance pass through at the San Francisco Rent Board, you will need those records. So, be sure to gather them before you buy an apartment building.

If you have any questions on buying investment property in San Francisco, please give me a call at Gordon Property Management.

The post San Francisco Property Management Advice – How to Look for an Investment Property appeared first on Gordon Property Management Blog.

Today’s tenants in San Francisco are different from what they were many years ago. They are young, they are affluent and they want nice things.  The hippie days in San Francisco are over and people today want modern and sleek spaces with top of the line appliances. This is important for you to keep in mind as you consider whether or not to remodel. The best tenants in San Francisco are going to want nice things, so if your house is dumpy and tired and you keep it that way, you are more likely to get dumpy tenants who will not take good care of the place. If you have a home that you decide to put on the rental market, do you want five or six college kids living there? If you decide not to remodel, those kids might be the only tenants you are able to attract.

You also have to consider how long your plan to rent out your property. If the home is a long term investment, and you are planning to rent it out for 10 years or more, then you should definitely remodel as much as you can because you want to benefit from those investment dollars right away. Don’t wait for three or four years to remodel, do it now so it can have an impact on the income that you will collect for the full ten years.

If you think you’ll sell in a few years, talk to your sales agent and get some advice. Some of the upgrades and remodels you need to do to attract a good tenant will also be what you will need to do to attract a homebuyer. Therefore, it might make sense to remodel now, even if you are planning to sell in the near future.

It looks like the short answer is yes. Yes, you should fix up your property as much as you can. This will help you to attract the highest rent that you can, and it will also help you find the best tenant to live in that property.

Please do not hesitate to contact me at Gordon Property Management for any other information, or to answer any questions.

The post Property Management Advice: Should You Remodel your San Francisco Home Prior to Renting? appeared first on Gordon Property Management Blog.

Timeframes

If you are planning to sell your home in a year or two you might not want to venture into San Francisco’s rental market.  If your home or condo building was built before 1979 then San Francisco’s eviction controls will apply to you.  If you’re hoping for a better sales market in a year or two, you should factor in the costs of keeping your home as a rental.  You will most likely incur costs to get your home ready to rent and there will be ongoing costs in maintaining your home.  Add in management fees, your mortgage, insurance and property taxes and you might break even.   Add in the “only in San Francisco” cost of getting a tenant out of your home and it likely will tip the balance.

Ideally you should be thinking in the longer term if you are considering becoming a landlord in San Francisco.   If you have a flexible time frame and want to rent out your home for at least three to five years you should probably do very well.  Rental properties in San Francisco have been a great investment for many of my clients.

If you are moving away on assignment for a year or two and you want to move back to your home after your assignment is up renting out your home is often the only realistic option.  Just be aware of the costs of having an attorney do an owner move in eviction under the rules of the San Francisco rent ordinance as well as the cost of the only in SF “Relocation Fee” that will be due to your tenants (if your home or condo was built before 1979).

Emotional Attachment

Think about the emotional attachment you have to your home. If you love your home and you don’t want anyone to touch it or change anything and you have a particular way that you want it to be, renting out your property is probably not a good idea. Sell it and let it go. Tenants do damage things, they change things, and they want to paint the walls. You have to be able to let go of that emotional attachment if you are going to rent it out. If you cannot do that, renting out your home is not great for you.

Economics

The decision to rent or sell your home might be an economic issue. Talk to a property manager like me, and I’ll let you know what I think you can rent out the house for. Then, talk to a real estate sales agent, who will tell you what you can probably sell it for. Also talk to your tax advisor regarding the tax implications.  Do the math and make your decision based on economics. I can tell you that in the long term, an investment property in San Francisco can be a great investment.

Hopefully this will help you decide whether to rent or sell. If you have any questions, or you want to discuss your options further, please contact me at Gordon Property Management.

The post Relocating from San Francisco? How to Decide to Sell or Rent your Home appeared first on Gordon Property Management Blog.

1.    Use the SFAA lease. The San Francisco Apartment Association (SFAA) prepares an excellent lease agreement that covers everything that needs to be included. You can call them and either purchase a one-time lease for a flat fee, or you can join the association, which I highly recommend. They have a lot of great resources for landlords and property owners. The SFAA lease is written by a team of San Francisco lawyers and it is specific to the rent control needs in San Francisco.

2.    Make sure that everyone who moves into the unit signs the lease. Do not try to outsmart the rent control ordinance by having one person sign the lease and leaving everyone else off of it. Anyone who is living in your property must be on the lease, and you have to make sure it is signed by everyone who is living there. However, when there are roommate changes, do not add anyone to the lease. The original tenants who signed the lease are the “master tenants” – anyone who moves in after that is an unauthorized sub tenant.  You do not want to add people to the lease as this gives them tenant status under the rent control ordinance (which they do not get if they are treated as an unauthorized sub tenant).

3.    Don’t lose the lease. This is very important. If you have no written agreement with your tenants you will have no way to enforce any rules.  Make sure you put the original signed lease in a safe place, and make several copies that you can have on hand and access quickly. You don’t want to find yourself in the situation where you cannot produce the signed lease.

When you and your tenants are preparing to sign the San Francisco rental agreement, make sure you are using a lease produced by the SFAA, have everyone’s signature on the lease and that you don’t lose it. These are the most important considerations for San Francisco landlords. If you have any questions about rental agreements, please give us a call at Gordon Property Management.

The post Property Management Advice – San Francisco Rental Agreement appeared first on Gordon Property Management Blog.

Part of the reason San Francisco rents are so high has to do with the San Francisco Rent Control Ordinance. Once a tenant moves into a unit, you can only raise the rent a very small amount each year. For this reason, we don’t get normal turnover on apartments in San Francisco. Tenants who might otherwise move to a smaller or larger apartment can’t afford the new market rate rents after they have occupied a unit at a rent controlled rate for a number of years.   Many tenants have such a good deal on their apartment they don’t ever try to buy a home.   If a tenant has a rent controlled apartment, they often stay there for a very long time and take advantage of the rent control rules.  When a rental unit does become vacant the landlord can raise the rent to whatever the market will bear.  Once the unit is rented it then comes under rent control and the landlord will only get a small increase each year as long as the tenant occupies the unit.   So there is no incentive for the landlord to rent for less than top dollar as they could be stuck with that rent for a very long time.

Another reason for high rents is that the rent control ordinance has scared off developers. Across the country, other cities have been building new apartments at a rate that we have not seen in San Francisco. Even though new construction is exempt from San Francisco rent control laws, the idea of rent control and the political climate in San Francisco scares away a lot of developers.  And development of any kind in San Francisco is expensive.  Getting a new development constructed can often require a political fight. Neighbors are often against the construction of anything new and have the power to put up road blocks.  For these reasons, not a lot of property gets developed, and when it does get built, it can be quite expensive.

There is also a high demand for housing in San Francisco.  We have a well-educated and highly paid workforce in San Francisco. With companies like Twitter, Zynga and other high tech businesses setting up shop in the city, there are a lot of workers moving to San Francisco for jobs.   With lower than average supply of housing and lots of young people moving to San Francisco with good jobs and needing housing, the laws of supply and demand kick in and prices go up.

If you have any questions on rental rates in San Francisco, the rent control ordinance or anything pertaining to residential property management, please contact me. I would be happy to talk to you and answer any of your questions.

The post Property Management Advice: Why is Rent so High in San Francisco? appeared first on Gordon Property Management Blog.

The most important thing you can do is check out the market. I recommend starting on Craigslist. In San Francisco, we are fortunate because Craigslist is widely used by everyone. So, if you have a two bedroom house for rent in the Sunset, go to Craigslist and look up other two bedroom houses in the Sunset. Take a look at what is out there; examine pictures, look at the location and determine how it compares to your property.  Track it. If you see the same house listed week after week, then you know the rent is probably too high on that particular property in that location. You will not be able to get that much for a similar house. If you see a property very similar to yours and it is no longer listed the next week, that’s a good indication that the property was fairly priced. You could even call the landlord or the property management company and ask if they got the rent they were advertising for. Most owners or managers will be willing to tell you.

After you have looked at comparable properties on Craigslist, look truthfully at your own house. Ask how your house compares to what else is on the market. If you are seeing houses with remodeled kitchens that have granite counter tops and stainless steel appliances, and your house has a 1960’s kitchen, you will not get the same rent that the upgraded houses are getting. The same is true on the flip side. If you have renovated your property from top to bottom and it is drop dead gorgeous, with every possible amenity, you are going to get the top dollar for it.  But you want get a whole lot over top dollar.  If your property is in the Sunset, you will only get what the top rentals are getting in that location. You will not get the price you might get in Pacific Heights or other neighborhoods that command higher rents. Be honest about your property when you are looking at comparable rentals.

The San Francisco rental market can be complex. If you have any questions, or you’d like more information, please do not hesitate to contact us at Gordon Property Management.

The post How to Be a Landlord in San Francisco: Pricing Your Rental with the Market appeared first on Gordon Property Management Blog.

In San Francisco, there are a unique set of rules and regulations to pay attention to as a real estate investor. The San Francisco rent control ordinance often makes it more hazardous to be a landlord. While it also creates additional opportunities for smart investors, you need to know what you are doing in order to be successful. These are three of the top reasons you might need a property manager in San Francisco.

1. Managing the rent ordinance. As a landlord, you need to be familiar with this law and you need to manage your property in accordance with it. If you are not willing to become an expert on the rent control ordinance, you definitely need a property manager to help you follow its requirements.

2. Tenants can take advantage of less experienced landlords. Tenants in San Francisco are often smart and very savvy. They know their rights, and there are many places such as the Tenants’ Union where they can get free advice if they feel you are not doing something that they think you should. If your tenants are pushing your buttons, or making you feel like you are doing something wrong, you should get help from a property manager. A good property manager can manage that tenant/landlord relationship and make sure that all parties are satisfied while ensuring you are not taken advantage of.

3. Maintenance issues. Another great reason to use a property manager is for maintenance issues. In San Francisco, navigating the handyman and worker’s compensation rules can be tough. Knowing when to hire a general contractor or when a basic maintenance person will do can be a hard call. Most property managers have a network of maintenance personnel and vendors who they can call and work with. As a landlord, you will not have to worry about scheduling a light fixture change or inspecting a roof.

Not every landlord feels like a property manager is necessary, but if you are worried about your ability to actively participate in your investment, consider using a property manager as a resource. Property managers can take care of all rent control ordinance issues, manage your relationships with your tenants and ensure that the property is being well maintained and taken care of.

As always, if you have any questions, feel free to contact us.

The post Why You Need to Hire a Property Management Company in San Francisco appeared first on Gordon Property Management Blog.

1. Familiarize yourself with the rent control ordinance. There are many good resources you can use to find information on San Francisco’s rent control law. Going online to research facts around what the ordinance requires will help. If you join the San Francisco Apartment Association, you will get a lot of updated information and helpful suggestions. Read the magazine they send out and check out their website. This association is a great tool in understanding the rent control ordinance.

2. Do not ignore problems. If you have a problem tenant who is acting out, or you discover that someone is storing junk or housing pets that are not allowed, take action immediately. It is very important that you address the problem instead of hiding from it. Follow up on the issue and put your expectations in writing. You must make clear demands on how to rectify the problem. If you ignore issues, San Francisco law will see you as giving your renters permission to do whatever it is they are doing to cause problems. Document everything. A phone call to the tenant will not be enough. Follow up with an email, a letter or some kind of written proof that you have discussed the problem and required the tenant to change a particular behavior.

3. Consider hiring an attorney. If you are managing investment property in San Francisco your self under the San Francisco rent control ordinance requires you to be aware of the law and protect yourself and your investment. If you are a landlord managing your own rental, keep these 3 things in mind, having a reliable and experienced real estate attorney with specific knowledge of landlord – tenant law in San Francisco will help you a lot. If you run into a situation where you think you might need a lawyer, you probably do. Look for an attorney who has experience in rent control cases and can provide sound advice and help when you need it. It will make a difference in how effectively you are able to manage your rent controlled property.

If the task of staying on top of your rent controlled residential property seems too much, you might be better off working with a property manager. A professional property manager can take care of your investment property for you, and ensure that all issues with your rent controlled apartment are managed. Property managers can be your best tool in managing tenants, rent control ordinances and legal issues that may arise in the care and leasing of your residential property.

As always, if you have any questions, feel free to contact us.

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