Investment Property Checklist
The following is a checklist for you to work from to generate the tenant related information to provide tenant related disclosure to a potential purchaser:
- Rent History. Understanding the tenancy and rules of the building will be critical in the building’s sale because investors will want to know what they are buying. Calculate the allowed banked increases on each unit, note when the last increase was done and identify what is allowed.
- Consider banking increases with notification to the tenants, or raise them as allowed.
- Pull together copies of leases, 6.14 notices, and all tenant/landlord correspondence.
- Pull together documentation on capital improvements and operating and maintenance expenses, which can be passed through to your tenants. The city’s form is lengthy and time-consuming; you may want to hire someone to do this for you.
- Pull together any rent board hearing information or small claims court information.
- Consider getting some necessary repairs or deferred maintenance fixed.
- Empty units generally are a premium and will raise the value of the building; if you have vacant units, consider selling the building with the unit(s) vacant.
- Have structural pest control inspections. This gives a clear picture of the condition of the building and will take some of the negotiation away from the purchaser of the building. The condition of the building may contribute significantly it’s value in the marketplace.
- Serve Rental Questionnaires and Protected Status Addenda. A rental questionnaire is a statement completed, on a form provided by the landlord or real estate agent, by a tenant on their understanding of the tenancy; it should match the landlord’s interpretation, but occasionally this does not happen, this mis-match needs to be worked out between landlord and tenant in advance.
- The protected status addenda is also significant in that it is intended to identify protected status claims for tenants who are elderly, disabled or catastrophically ill which would protect them from eviction for an owner moving into their unit. Children under 18 years old who have lived in the property for 12 months or more, are on their way to becoming protected tenants in a legislation currently under consideration. A protected tenant does significantly affect property value.
- Tenants are not required to fill out either one of these forms. By trying to get them completed by the tenants in advance, we will have a clear picture on how to market the building, if the tenants will be cooperative, or if there are documents that are not available to provide to a prospective buyer.
For more information about the rent control ordinance, contact the Rent Board information line at: (415) 252-4600 or visit their web site: www.ci.sf.ca.us/rentbd/. You can download a copy of the latest rent ordinance and rules and regulations.