Leasing property in Los Angeles can be rewarding if done right.
With its diverse neighborhoods and strong demand for housing, LA offers prominent opportunities for property owners.
But, navigating the complexities of the LA rental market requires some planning and knowledge.
This article outlines the essential steps and considerations for leasing a property in LA to maximize your investment and comply with local regulations.
1. Understanding of LA’s Rental Laws
Before leasing your property, it’s important to familiarize yourself with Los Angeles’s rental laws.
By staying informed and proactive, you can effectively manage your property while protecting your investment and providing a safe living environment for your tenants.
Key laws and ordinances you should understand include:
Los Angeles Rent Stabilization Ordinance (LARSO)
LARSO limits the amount you can increase rent each year, typically allowing an annual increase of 3-8%, depending on inflation and other factors. LARSO also imposes strict eviction rules, often called “just cause” eviction protections.
AB 1482 – California’s Tenant Protections Act of 2019
AB 1482 provides statewide rent control and eviction protections for some residential properties not covered by LARSO. It limits annual rent increases to 5% plus the local inflation rate, with a maximum cap of 10%. This law also requires “just cause” for evictions after a tenant has lived in the property for 12 months.
Los Angeles Just Cause Eviction Ordinance and Relocation Assistance
This ordinance sets the permissible reasons for eviction, such as non-payment of rent, lease violations, or the owner’s decision to move into the property. In many cases, if you evict a tenant for reasons unrelated to the tenant’s fault, you must provide relocation assistance, depending on the tenant’s age, income, and length of residency.
Los Angeles Rent Registry, Inspections, and Fees
Landlords in LA must register their rental properties annually with the Los Angeles Housing Department. This allows the city to monitor and enforce compliance with local housing laws. Properties are also subject to periodic inspections to ensure they meet the standards. Additionally, landlords must pay annual registration fees, which fund the city’s housing inspection and enforcement programs.
State and Federal Fair Housing Laws
Both state and federal laws prohibit discrimination in housing. This means you cannot deny a rental application or evict a tenant based on race, color, religion, sex, national origin, familial status, disability, or other protected characteristics. Abiding by these laws is crucial to avoid costly lawsuits and penalties.
Required Notices and Actions
There are several actions and notices that you must provide your tenants to comply with the Los Angeles Rental Laws:
- Notice of Rent Increase: For increases of 10% or less, it must be given 30 days in advance, and for increases over 10%, it must be given 60 days.
- Notice of Entry: Normally, you must give 24 hours’ notice before entering a tenant’s unit, except in emergencies.
- Notice of Termination: This varies depending on the type of lease and the reason for termination, but generally, a 30- or 60-day notice is required.
- Disclosure Notices: This includes disclosure of lead-based paint for properties built before 1978, mold disclosure, bedbug information, and others as required by state law.
- City of Los Angeles Renter Protections Notice: This informs tenants of their rights under various renter protection laws in Los Angeles
- Rent Stabilization Notice: For RSO properties, at the start of the tenancy and with each renewal, a notice for the rent increase limitations and eviction protections is required.
- RSO Certificate: Landlords must annually serve the RSO Certificate to tenants. The RSO Certificate is the paperwork that states the property was registered with the Los Angeles Rent Registry.
2. Preparing Your Property For Tenant’s
Updating, renovating, and modernizing your property can not only help you comply with local and state laws but also attract more qualified tenants.
LA laws require rental properties to meet basic habitability standards, including functional plumbing, heating, and electrical systems, and to be free from pest infestations. Regular updates and renovations ensure compliance with these standards. Safety regulations must also be followed, such as smoke detectors, carbon monoxide detectors, and secure locks.
Keeping your LA rental property modern and well-maintained helps you stand out in the competitive market and leaves tenants more likely to renew their leases and stay longer, saving you the cost of a vacant property.
If you’re in the market to update your property, the first step is to conduct a thorough inspection to identify the areas that need repairing or updating. Pay attention not only to the aesthetic aspects but also to the structural issues. A few key areas to focus on are kitchens and bathrooms, replacing worn carpet with easy-to-clean flooring, energy-efficient LED lighting options, and fresh paint.
3. Marketing Your Property
Effective marketing is essential to attracting new tenants and quickly filling up your vacant property.
Prospective tenants use popular rental platforms such as Zillow, Apartments.com, and Trulia to search for rentals. Posting high-quality photos on these platforms can help your property stand out and increase interest, so investing in professional photography is critical.
Write a detailed and engaging property description highlighting the key features, amenities, and unique selling points that help your rental shine.
Additionally, utilize social media by joining local community groups to increase visibility through sharing photos, virtual tours, and video walk-throughs of your LA rental property. You can also run targeted ads on social media platforms, search engines, and real estate magazines to reach specific demographics.
When scheduling viewings, offer flexible times, including evenings and weekends, to accommodate various schedules. Organizing open houses allows multiple interested tenants to view the property simultaneously, creating a sense of urgency to commit.
4. Understanding the Local Market and Setting the Right Price For It
Setting the right rental price is crucial: if your price is too high, you might struggle to find tenants. If it’s too low, you’re leaving money on the table. The overall condition, size, and location of your property can significantly impact its rental value.
Properties in desirable neighborhoods close to amenities such as shopping centers, parks, schools, and public transportation typically attract higher rents. Proximity to popular areas in LA, like downtown or the beach, also increases rental value.
The size of your property directly affects its rental price. Larger properties with more bedrooms and bathrooms can accommodate more tenants or larger families, allowing you to charge higher rent. Consider square footage, layout, and usable living space when determining your price.
Amenities play an important role in setting rental prices. Properties with modern conveniences like in-unit laundry, updated appliances, air conditioning, and parking can demand higher rents. Additional features such as a backyard, balcony, or pool add value and a higher appeal.
To better understand the local market and set the right price, conduct market research and compare your property to similar properties to find the competitive price point to attract tenants and ensure a fair value.
5. Screening Tenants
Finding tenants that are reliable is imperative to a lucrative rental property. Effective tenant screening minimizes the risk of late payments, property damage, and other issues.
A thorough screening process can include:
- Application Form: Require potential tenants to fill out a detailed application form, including personal information, employment history, and references. Additionally, inquire about past missed or late rent payments, eviction history, smoking preferences, and whether they have a pet or service/emotional support animal.
- Credit Check: Carry out a credit check to evaluate the applicant’s financial responsibility and history.
- Background Check: Perform a background check to identify any criminal history or previous evictions.
- References: Contact previous landlords and current employers to verify the applicant’s reliability and stability.
6. Creating Lease Agreements
A well-defined lease agreement is important to protect your property and clearly outline the tenant’s responsibilities. Having a detailed lease agreement helps prevent misunderstandings and legal disputes.
Outlined components of the lease agreement can include:
- Lease Term: Specify the duration of the lease, whether it’s month-to-month, six months, or a year.
- Rent Details: Clearly state the rent amount, due date, and accepted payment methods.
- Security Deposit: Define the security deposit amount and conditions for its return.
- Maintenance Responsibilities: Specify which maintenance tasks are the landlord’s responsibility and which are the tenant’s.
- Rules and Regulations: Include rules regarding pets, noise, smoking, subletting, and any other property-specific policies.
It is recommended to consult with a lawyer to ensure your lease agreement is legally sound and protects you and your property.
7. Managing Your Property
Managing an active rental property involves many responsibilities. Some of these tasks include rent collection and following up on late payments, regular maintenance and emergency repairs, ensuring the property meets health and safety standards, and handling tenant complaints. These tasks can be time-consuming and require a systematic approach to ensure everything runs smoothly.
Using a property management company can significantly simplify these responsibilities for you. Property managers are equipped to handle these tasks, freeing you from day-to-day nuisances. Utilizing their expertise, they can ensure your property is well-managed, improving tenant satisfaction and protecting your investment’s value.
How to Rent Out a Property in LA
Renting out your property in LA involves several steps to ensure you’re compliant and have a successful rental experience.
- Research: Start by understanding the rental market in LA and the legal requirements.
- Prepare Your Property: Make necessary repairs, clean, and enhance curb appeal.
- Market the Property: Use online listings, social media, and local advertising to attract tenants.
- Screen Tenants: Perform thorough background and credit checks.
- Create a Lease Agreement: Prepare a comprehensive lease covering all aspects of the rental arrangement.
- Manage the Property: Provide regular maintenance, responsive communication, and legal compliance.
We understand that renting out a property in LA can be challenging, but partnering with a property management company can help with the heavy lifting.
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F.A.Q.’s About Renting Out Properties in LA
How Long Do You Have to Live in the Property Before Renting It Out?
You are not required to live in a property before renting it out. You can rent it as soon as you are ready.
Do You Have to Live in California to Rent Out a Property?
No, you do not have to live in California to lease a property there. You can manage it remotely or hire a property management company.
What Rights Do Landlords Have in Los Angeles?
Landlords in Los Angeles have the right to collect rent, enter the property for necessary inspections or repairs with proper notice, and evict tenants for legal reasons such as non-payment of rent or lease violations.
What Can’t a Landlord Do in Los Angeles?
Landlords cannot evict tenants without just cause, discriminate against tenants, or retaliate against tenants for exercising their legal rights. They also must comply with rent control ordinances.
How Much Tax Do You Pay on Rental Income in LA?
The exact amount depends on your tax bracket and allowable deductions. Consult a tax professional for specific advice.
Do I Need a License to Rent out a Property in California?
No specific state license is required to rent out a property in California.
Can a Landlord Refuse to Renew a Lease in Los Angeles?
Yes, but the landlord must provide a valid reason under the Just Cause Eviction Ordinance.