Proposition 19 was passed and as part of the measure, children who inherit their parents’ houses will no longer receive a property tax break if they intend to keep it as a second home or rent it out.

This has a serious effect on the traditional parent-child exemption from reassessment under the original Proposition 13.

Previously, transfers of the principal residence of a parent, and up to $1 million of assessed valuation of other property, passed to children without being reassessed for property tax purposes, thereby preserving the benefits of Proposition 13 for heirs and trust beneficiaries.

Now, the exemption from property tax reassessment for property inherited from a parent (or grandparent if the parents are deceased) will only apply if the child occupies the real property and files a homeowner's exemption application within one year.

I hope this was helpful and feel free to reply or call me at 562.430.0609 with any questions you may have regarding this topic. 

• Tenants, affordable housing groups and local governments will get first crack at buying foreclosed homes under a measure approved Monday by Gov. Newsom.
• The bill is designed to keep corporations from snapping up homes and letting some fall into disrepair as they did during the Great Recession.
•  · The issue drew national attention a year ago when several homeless mothers calling themselves Moms 4 Housing moved into a vacant, corporate-owned house in West Oakland.
•    · It was among 15 bills Newsom signed into law as renters and home-buyers again struggle during mass layoffs prompted by the pandemic.
•    · The governor said the measures “will directly lead to more affordable opportunities for renters and homeowners.”
• · The law bars sellers of foreclosed homes from bundling them at auction for sale to a single buyer.
•  · In addition, it will allow tenants, families, local governments, affordable housing nonprofits and community land trusts 45 days to beat the best auction bid to buy the property.
• · Owners of poorly maintained properties can be fined as much as $2,000 a day under the bill.
• · Sen. Nancy Skinner said her measure gives people who want to live in a house a fair shot at buying it.  
• · She said the measure that takes effect Jan. 1 sends the message that “We won’t tolerate another corporate takeover of housing.”
•  · Newsom also signed bills increasing subsidies for dense, affordable housing projects; allowing school districts to use low-income housing tax credits to build affordable housing for teachers and school employees on district-owned land; and exempting bicycle, pedestrian, light rail and bus rapid transit projects from California's strict environmental reviews.
•  · Another bill expands a law that allows crime victims to break their leases without penalty.
•   · The law had applied only to victims of domestic violence, stalking, elder abuse or human trafficking.
•   · The expansion adds crimes that result in injury or death; & bars landlords from refusing to rent to tenants who have taken advantage of the law.

In a desire to open up rental housing and provide home owners with more “use” choices for their property, AB 3182 is currently moving through the California Assembly. Authored by Assembly member Philip Ting of (D) San Francisco Assembly Bill 3182; which (if passed) restricts the ability of homeowners in any HOA to prohibit or limit rentals (with just 2 minor exceptions). Ting represents the state's 19th District, which includes the west side of San Francisco, in addition to Broadmoor, Colma, Daly City, and South San Francisco.[1]  Ting, is currently the Chair of the Assembly Committee on Budget.

The bill proposes to make several amendments to current  Davis-Stirling Act   and Civil Code Section 474 —which was enacted in 2012 to exempt current owners from enacting prohibitions on leasing of HOA residences.

The bill would remove the current “grandfathering” and make several other changes regarding rentals in HOAs. Rental bans or limits are normally imposed by HOAs after they are voted on by the homeowners within the community.

AB 3182 would make rental bans illegal, regardless of how the owners vote to operate their association. However, AB 3182 would leave in effect two restrictions:

1) Short-term / "vacay" rentals (30 days or less) could still be banned

2) HOAs are permitted to have a rental limit of 25% of the total units

Note: In a real-life scenario this 2nd restriction appears to be unenforceable for several reasons.

For example:

If a 100-unit complex has 24 units (24%) currently rented, then 2 homeowners put up “for rent” signs; which of the 2 will be allowed to actually rent out the unit?

1) The one who advertised first?

2) Or, the first whose tenant actually signed a lease?

3) Or the first with a renter to put down a deposit?

4) Do 2nd homes count as rentals in this scenario? Or not?

5) How about relatives living in the unit but not paying rent? Is that unit considered a rental? Or owner “occupied”? Etc. Etc. Etc. ad nauseum!!!!!!!! Who watches the Watchers?

Most HOAs lack “capable leadership” for a host of reasons. Many residents are to busy to serve, not qualified, just not interested in serving for a number of reasons.

So (as with the aforementioned example) who would be specifically designated to enforce the 2nd restriction? And whomever it is, they will be a “very popular” person (pariah) indeed. Oh btw: since few communities are built in EXACTLY round numbers does the HOA allow 25.1% or must it be 24.99999% or less. And who does the math on THIS issue? See where I’m going with this? So, scratch restriction 2.

To track the bills progress click here To find and find your local California assembly member click here.

Most U.S. real estate markets are booming. Yet I own apartment buildings in a city where there’s a recession, and it’s hurting me.

Wherever you’re investing in real estate, it will face a future economic downturn sometime, so there’s a lesson in this for you.

First – how could I be the one invested in a “down” market? Aren’t I the one always talking about how in real estate investing, the geographic market is even more important than the property?

Well, thankfully I’m invested in multiple U.S. cities for diversification. Most real estate investors only invest in their home market. That’s riskier than you know.

Chances are that you aren’t invested in my hometown income property market of Anchorage, Alaska like I am. With a population of 300,000, it’s the United States’ northernmost city of that size. Anchorage is in an economic recession.

The problem with Anchorage is that the economy is not well-diversified. It’s heavily dependent on oil extraction. You probably know that oil prices have been slashed in half in recent years. That meant oil companies became less profitable and consequently announced layoffs, which led to the recession.

My Anchorage apartment buildings don’t cater to higher-paid oil employees. But it still hurts me.

You see, when an “oil dad” is laid off and his entire family leaves the area, that means there are fewer people to dine at restaurants, buy cars, and patronize hair stylists. My modest apartments cater to people like food servers, auto mechanics, and hair stylists. So there’s a “trickle-down” effect.

Anchorage lost 1,500 residents in the last year. That’s one-half of one percent. Poof. Gone. It promises to continue or even worsen.

Let’s look at Anchorage’s recent year-over-year net employment change, sector-by-sector, and see what this small case study can teach you, wherever you’re interested in investing:

Source: Anchorage Economic Development Corporation

What stands out? It’s the fact that although Anchorage has suffered net job losses, there is still a gain in the health care sector.

This isn’t just happening in Anchorage. Nationally and elsewhere, as the population ages, there is outsized demand for medical jobs.

What’s your takeaway as a real estate investor?

Well, most major metropolitan areas have portions of town where health care jobs are concentrated in medical campuses. Buy property near medical districts, and you’ll be hedged against larger economic downturns.

Back when Anchorage’s economy was healthy, I purchased apartment buildings adjacent to the medical district. So although the market rent amount is lower now than it was a few years ago (there are fewer dollars circulating in Anchorage’s recessed economy), I’m able to keep my properties nearly 100% occupied – even in the midst of a recession.

In real estate investing, the market is more important than the property. More accurately, it’s the submarket that’s even more important. A metro area’s medical submarket is a smart place for you to invest over the long-term.

This was completely predictable. When I purchased the apartment buildings years ago, new employment concentrated in the medical sector was already a trend.

This trend is still forecast for years into the future. Even futurists say that it will be difficult for robots to simulate what nurses do.

When I hosted Ken McElroy, the Rich Dad Advisor for real estate on my popular weekly podcast, he said: “Real estate is dumb and slow.”

I love that line!

It doesn’t take a genius to forecast this. Medical = Jobs = Occupied units = Rent-paying tenants = Durable rent income streams = More profitable rental properties, even in a recession.

What are your takeaways?

• If you buy income property in a smaller, less economically diverse metro, try to buy near a medical district.

• Invest in multiple metro markets to diversify geographically, not just your hometown.

The fact that I practice these two bullet points has kept me profitable and resilient, even in a recession. It will help ensure your prosperity in the long-run too.

Here’s to your wealth and success.