July Update: Moratorium still in place. Rent increases are now allowed

The Rent moratorium is still in effect in Alameda County.

I just had a good conversation with the counselor at the Rental Adjustment Program board for Oakland.
They confirmed that at this time, we still don’t have any notification of when this will end. Unfortunately, Alameda County is the only area where eviction moratoriums doesn’t have an expiration date.
Rent increases are allowed as of August 1, 2022.
Oakland is 3% and Berkeley is 2.1%.
To compare, Santa Monica’s allowable rent increase is 6% and city of Los Angeles is 5%. City of LA includes Venice, Westwood, and Hollywood. So here, we are lower than other rent control areas and well below the actual rate of inflation.
With inflation at this height, we would hope to get a fair rent increase, although renters are having a lot of things go up in price due to overall inflation.
Regarding the allowable rent increases, we will only be raising rent in units that are well below market rent. With units that are at, or near market rent, we won’t be doing a rent increase as that may put them over market rent and encourage tenant turnover.

Current Sales Trends

Recent interest rates have tampered sales of buildings in the East Bay, but not dramatically. We have all seen during Covid that the Bay Area is still a very good place to own multi-unit properties. Overall, buildings are still getting very strong offers at valuations that are still very high.
Whether we use CAP rates, GRM (Gross Rent Multiplier), or price per unit, we are seeing very strong numbers that reflect that East Bay apartment buildings are continuing to be a very desirable asset.
Buyers are very motivated to purchase now, as the Federal reserve bank may be raising interest rates 1-2 more times this year.

Outlook for East Bay Rents

San Francisco metro area is still not quite up to pre-Covid rents. Most other metros are exceeding the pre-Covid rents. Many economists are speculating that this issue is due to the large number of companies in the Bay Area that are allowing 100% remote work. We will see how this trend continues.
If you are having trouble getting a vacancy filled or have questions, please reach out.
Remember that it is better to do a “temporary rent reduction” rather than lowering the rent. This is true for existing tenants and new tenants.

Current Sales Market

If you are thinking about selling in the next 6-12 months, then starting the process now would be a good idea. The market is strong, as buyers are still paying prices based on income that is similar to Pre-Covid. The recent rise of interest rates is having some effect on pricing/values.
Then the issue that has come up is: How do I defer the capital gains taxes.
Two ways:
1) Delaware Statutory Trust. Click DST Tax Deferral,
2) Doing a 1031 tax deferred exchange.
With regards to doing an tax deferred exchange, I have spent some time searching in solid markets (Seattle, Austin, and Reno) for both commercial Triple Net (NNN) opportunities and multi-units that are all delivering at least a 5% CAP rate return.
I did a presentation on increasing your rental revenue at the East Bay Rental Housing Association last year. Click Here: Maximizing the Return on your Investment for the highlights.
Please reach out if you are interested in getting more information on the DST option or 1031 exchange.
My most recent transaction, a duplex in Berkeley, went into contract at $50,000 over list price, very short closing and no issues. If priced right and marketed fully, sellers are getting very strong offers.

Current Market For Building Sales

For example, if you want to sell your apartment at this time, I can help you with an evaluation and guidance.
I have spoken to two of the top lenders for East Bay multi-units and they are working on, and closing transactions at this time. I can forward their contact info if you want to speak with them.
Right now, If buyers have a good down payment they can get a loan and I can navigate you through the process.
It is always important to get guidance and advice from experienced multi-unit brokers who will market your property extensively to all potential buyers and brokers.
Posting a new building on all websites and sending out emails blasts gives the property visibility to literally tens of thousands of potential qualified buyers.
Looking forward a strong year and a great 2022!

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