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. 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.

Find all the details on becoming a landlord or property manager in California in the free e-book: Real Estate Property Management.

Property Management Basics

A deep dive into the four types of leasehold estates held by tenants.

The various requirements to become a property manager in California.

A property manager needs to hold a valid broker license.

Lease agreements and disclosures

This suite of forms is used by a leasing agent, property manager or landlord for all property management-related situations. Types of forms include: lease and rental agreements, disclosures, notices to vacate, notice of intent to enter dwelling or conduct a pre-expiration inspection, addenda and more.

Choosing a commercial or income-producing property

For commercial properties: data on a property’s operating costs are gathered and set forth on the property expense profile, which is handed to prospective tenants.

The capitalization (cap) rate is the annual rate of return produced by the operations of an income property and stated as a percentage of invested capital and is useful in choosing the most profitable income-producing property.

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 producing property for investor review regarding the property location, zoning, improvements, financing terms, income tax aspects, service providers, rent and expense data.

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 properties built prior to 1978.

Waste is the intentional destruction or neglect of property which diminishes its value.

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.

As the short-term rental market continues to shift, fewer short-term rentals are influencing the broader housing market.

Some sales agents and unlicensed individuals are attempting to use 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 landlord to discriminate based on a tenant’s source of income, which includes Section 8 housing vouchers.

A 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.

Pet and service animal policies

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

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 at 5% plus the rate of inflation for much of California multi-unit residential properties.

Despite California’s pre-existing rent control measures which cap rent increases statewide at 5% annually, some metro areas enact more restrictive local ordinances and additional protections 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 harmful impacts of gentrification.

Evictions

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

Landlords seeking a higher rent increase may attempt to find loopholes to evict tenants. But, in this case, the landlord was unable to evict the tenant.

The Ellis Act enables California landlords to evict their tenants when the property changes use or is demolished. But the Ellis Act 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 are increasing 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 paying a mortgage payment on a similar home, with the spread even wider for renters in California due to the state’s high home prices.