Home Buying in Hollywood>Question Details

Raygun, Other/Just Looking in Hollywood, Los Angeles...

Considering buying an income property in Hollywood which is occupied.

Asked by Raygun, Hollywood, Los Angeles, CA Wed Nov 21, 2007

The current tenants are paying rents well below market- what are my options if I decide to buy this property , how much will I be able to raise the rent, and what will I have to pay the tenants to relocate?

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Kevin’s answer
I bought a charming duplex in Hollywood several years ago. It was built in 1926, so it had rent control. The tenants were living there practically for free, but the property was priced as if they were paying market rates. This seemed to be the norm for pricing old apartments with immovable tenants. I was only able to get them out by paying them off -- I don't remember how much -- and moving my family members in. I moved into one unit, and my brother moved into the other unit. I'm not sure how I would have gotten rid of them otherwise. We lived there for a couple of years, then moved and raised the rent to market rates. We try to rent to people who seem unlikely to stay for long. Otherwise, we'll end up subsidizing them, and we're capitalists, not commies....
1 vote Thank Flag Link Wed Feb 11, 2009
Hi Raygun,

It's been almost a year since you posted for advice on how to increase your rent if you bought the property. I'd love to hear how it all worked out in the end. Would you care to share your story with us? We learn everyday...

0 votes Thank Flag Link Thu Jul 28, 2011
Talk to a real estate attorney. Sometime tenants are willing to take compensation to move which allows you to bring the rents to market value which increases your property value overnight. But make sure you have an attorney help you thru everthing (especially if the property is subject to rent control) so you don't have any issues come up.
Web Reference: http://MrWestside.com
0 votes Thank Flag Link Tue Sep 28, 2010
There certainly is rent control in Hollywood. Therefore any income property that is delivered vacant at the close of escrow is so much more desirable. Rent can only be raised a specific percentage (about 3%) once a year and there are only a few reasons that would allow you to evict the current tenants. Owner occupancy is one of them. In addition if you have a senior tenant or a tenant with disabilities the relocation could cost you $20,000 plus. Check out the city of LA rent stabilization website and call them to educate yourself. Best of luck!
0 votes Thank Flag Link Wed Aug 26, 2009
Hi Raygun,

You have to be careful when it comes to income property in Hollywood because it falls in the city of Los Angeles and you might be dealing with rent control. Keith gave an excellent answer. Ideally you'll want to work with an agent who knows the rent control ordinances, and the area. I sell a TON of income property in Hollywood and I can help you with the intricacies of buying in this area. Call me anytime!

Grant Linscott
Keller Williams Realty
323.333.6222 cell
0 votes Thank Flag Link Sat Dec 20, 2008
Wow, you've got some interesting answers. You should do your own research or talk with an agent that has worked in income property in Los Angeles.

Here are the facts:
The city of Los Angeles has a rent control ordinance (see link).
I called the RSO office, and Hollywood IS part of the City of Los Angeles (West Hollywood is a separate city), so you are looking at the potential for rent control.
The ordinance applies to only properties of a specific age
To be subject to the RSO of the City of Los Angeles, a property must meet the following three criteria:

1. The property must be within the City of Los Angeles; and
2. There must be two or more units on the lot; and
3. The building must have a Certificate of Occupancy issued on or before October 1, 1978. (In the case of mobile homes and mobile home pads, the park must have been issued a permit to operate before February 10, 1986).

In order to raise rents above the permitted rate there are very strict regulations, which basically prohibit you from evicting tenants solely to increase rent rates.
Another way to say this is that if the building was built before 1978 the rents WILL be under market, by definition, and there is absolutely nothing you can do.

If you are serious about investment property I'd be happy to discuss your plans and see if I can help you.
0 votes Thank Flag Link Fri Sep 12, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
You can raise the rent to market value. If they are paying below then raise it.
Pay tenants to relocate? What do you mean? I thought you wanted them to pay market rates?
search all Hollywood listings below

0 votes Thank Flag Link Thu Sep 11, 2008
Your options are clear. Pay the tenants to leave, and rent the units out for today's market value. 2) Keep the tenants in place, put a large down payment and hopefully break even.
I am a broker/ realtor to many investors. Contact me If I can help
Web Reference: http://www.marcwizman.com
0 votes Thank Flag Link Sun Apr 13, 2008
Unless you are in West Hollywood - there is no rent control in Hollywood at this time. Therefore a 30 day notice to the tenants would be appropriate if you cannot be happy with what you and the tenants can agreed to on a rent increase. Sitting tenants are many times unhappy with any rent increase, whereas a new tenant is very happy to pay market rate rents. Since there is no rent control, there is no limit as to what you can raise rent - assuming there is no existing lease.
0 votes Thank Flag Link Wed Nov 21, 2007
Mario Pinedo,…, Real Estate Pro in Cupertino, CA
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