Property Management 101

One of the few recession-proof jobs in real estate, property managers are always in demand to manage the operations of rental units, commercial or residential. 

What does it take to be a property manager in California, and how can a new landlord or property manager get started?

Read on for a summary of California property management laws and best practices. For details related to the contents of this article, you will find them in the free e-book: Real Estate Property Management.


Property Management Basics

Take a deep dive into the four types of leasehold estates held by tenants to understand leasehold concepts, how each are conveyed by to the tenant, and conditions placed on the tenancy.

Learn the various requirements to become a property manager in California, including licensing needs and tenant protection rules.

A non-resident property manager needs to hold a valid broker license. A licensed real estate agent may be employed by a broker to represent the broker providing property management services.

Lease agreements and disclosures

For leasing agents and property managers of commercial properties, the types of forms used to manage occupancies include:

  • lease and rental agreements;
  • disclosures;
  • notices to vacate;
  • notice of intent to enter or conduct a pre-expiration inspection;
  • addenda, and more.

The acquisition of an income producing property

For income properties: data on a property’s operating costs are gathered and set forth on the Annual Property Operating Data sheet (APOD), which is handed to prospective buyers. The net operating income (NOI) is the basis for determining the market price for the property.

The NOI represents the annual return produced by the operations of an income property. For the owner, the amount of NOI is the annual return they receive on their invested capital. For buyers, the annual rate of return they want to receive for a particular property is used to set the price they will pay for the property, called the capitalization (cap) rate.

Marketing a commercial or income-producing property

This Income Property Brokerage (IPB) suite of forms is used by an agent when preparing a marketing package specifically for an income property they listed for sale, to gather information about the property for an investor review regarding the property location, zoning, improvements, financing terms, service providers, rent and expense data, and income tax aspects.

Read the full Income Property Brokerage (IPB) e-book.

Safety standards

Landlords and property managers need to comply with reasonable and necessary safety regulations to protect their tenants.

The federally-mandated Lead-Based Paint Disclosure is required when selling or leasing residential properties built prior to 1978.

Short-term rentals

A short-term rental is a property available for rent for a period of 30 consecutive days or less. In California, the legality of short-term rentals varies across different cities and even by neighborhood, though the state steps in to set statewide standards.

Some sales agents and unlicensed individuals mis-apply the short-term transient occupancy exemption to enter into property management agreements and manage properties with rental terms longer than 30 days.

Anti-discrimination rental laws

In California, it is unlawful for a residential landlord to discriminate based on a tenant’s source of income, which includes Section 8 housing vouchers.

A residential landlord is prohibited from causing a tenant to involuntarily vacate their rental property by threatening to disclose the immigration or citizenship status of the tenant or other person associated with the tenant.

Fair housing laws protect individuals from illegal discrimination and harassment in the renting, leasing or purchase of housing.

To assist with the standardization of tenant applications and reduce tenant application costs, landlords are encouraged to accept reusable tenant screening reports.

Pet and service animal policies

In California, a rental property’s pet policy is almost entirely under the landlord’s discretion.

However, landlords of any housing development financed by the Department of Housing and Community Development (HCD) beginning in 2023 must allow pets.

Pets are simply allowed or prohibited. No picking and choosing.

Landlords are prohibited from discriminating against a disabled tenant who uses a service dog.

*Rent Control

Local ordinances that are reasonably related to the prevention of excessive rents and maintaining the availability of existing housing. [See RPI Form 550 §1.3]

Rent caps

The Tenant Protection Act (TPA) caps annual rent increases for California multi-unit residential properties at 10% or 5% plus the rate of inflation. Read more about the many types of owners and property exempt from the TPA.

Despite California’s pre-existing rent control measures, some metro areas have enacted more restrictive local ordinances than the state.

Rent control is meant to keep rents from rising beyond the financial abilities of long-term tenants, but it rarely works to stop the impacts of gentrification.


The Tenant Protection Act (TPA) requires “just cause” to evict residential tenants in place for 12 months or more.

California residential landlords may seek to evict their tenants when the property changes use or is demolished, but this loophole is often abused by landlords seeking more rent.

Property marketing 

Both new and experienced landlords can step up their marketing plans to attract a wide range of tenants.

Current rental market conditions

View the most recent data on rental vacancy rates in California, alongside the homeownership rate.

Watch how California’s rental vacancy rates interact with multi-family construction.

Why rents increased so quickly here in California — especially considering the recently passed legislation to prevent huge rent spikes.

As of 2021, the majority of renters are cost burdened, meaning they are forced to spend more than 30% of their income on rent.

The typical U.S. renter saves money each month by renting rather than buying a similar home and paying a mortgage and covering property operating costs. Renters in California are generally less able to save money when renting due to the state’s high home prices.