Question for Landlords in California - New Laws

[Tidybuoy]

I have a 2 Unit Duplex, and one tenant is asking me to install solar. I do not plan on doing this, but I want to understand the law.

It is my understanding that the new law in California allows me to raise the rent no more than 10%. Or, 5% + cpi for my area, whichever is lower.

If I were to install Solar, the monthly cost to me would be about $350 and I would need to increase the rent by this month. The tradeoff would be that the tenant would have reduced electric bill. The rent is currently $1500 so the most I could raise the rent would be $150 - correct?

The tenant had a solar company contact me and they sent me their ridiculous proposal. 1) they do not tell me the cost of the system, only the monthly payment (first deal breaker for me). 2) their proposal is $328/mth for 30 years. I haven't done a time value on this yet, but it sounds like it is very expensive. 3) they have a 3.5% annual escalator clause which I am assuming is the annual payment increase. 4) it states that I waive the tax credit. You've got to be kidding me?? 5) my tenant proposed this to me as a completely free deal. This is why she is a tenant, and I am a landlord - NO DEAL.

Anyway, I'm really just wondering about the rules for raising rents. BTW, I have not raised the rent on this tenant ever and she's been here for 5 years. I value a steady tenant vs. gouging the renter and all my costs are covered with about $1k profit each month factoring the 2 units.

Thanks in advance for any advice or comments.

[ltusler]

Show her the math and ask her if she wants the rent raised to cover it.

[Rick Lee]

Why does a tenant think it's her place to make such a suggestion? And that price sounds insanely high. We got our solar panels in 2012, a 20 yr lease, paid nothing out of pocket and the monthly is $83 on a house that would rent for $4000/mo. So how in the world are they getting $328/mo for 30 yrs? That's insane. Assuming the panels are still meeting the yield guarantee at the end of the lease, I can either buy them out or tell the company to come and remove them. I think I'd be the one holding most of cards here.

[look 171]

Fk that is all I can say but if you feel like coughing thousands of dollars, and feel better about yourself, do it.

Rent control will continue to get worst and its bleeding up you way to other states. I say if they want to cover the cost of your monthly payment, by all means, do it but I would look into the laws before they bite you in the ass and turn around and have you pick up the tab. Just leave well enough alone.

[dad911]

Originally Posted by Tidybuoy

..... BTW, I have not raised the rent on this tenant ever and she's been here for 5 years. .....

Time to raise the rent.....

I've had hundreds of tenants over the years. I'd help them if asked, heck I gave one gas money to evacuate hurricane Irma. However, costs go up, salaries go up, your rents should also.

[Por_sha911]

The tenant wants the landlord to pay to put in solar to reduce the tenant's electric bill (seems rather one sided don't you think?)

If I were the landlord, my answer would be a) no to solar and b) I am raising the rent by $(whatever the legal maximum amount is).

When the tenant complains, advise them so sad too bad.

[WPOZZZ]

Just say NO! Over 30 years that comes to $120k. WTF!

[Pazuzu]

What if the A/C unit is very old, and the tenant is overpaying for power because the thing is crap? If they say "hey, we need a new A/C unit, something new and efficient and multi-speed and has a digital thermostat that lets us set multiple temp parameters, and this will lower our costs by $150 a month while increasing the value of your property"...isn't this kinda the same?

[look 171]

Originally Posted by Pazuzu

What if the A/C unit is very old, and the tenant is overpaying for power because the thing is crap? If they say "hey, we need a new A/C unit, something new and efficient and multi-speed and has a digital thermostat that lets us set multiple temp parameters, and this will lower our costs by $150 a month while increasing the value of your property"...isn't this kinda the same?

What if I just remove the old AC and they can just take a cold shower and open the windows. There are tons of rentals that has no AC and they rent all day long 'til Christmas. No law requires owner to include AC ( around here anyway). All my rentals has AC with the exception of two. One is about 1 mile from the beach. Its 75-80 degrees most of the year but they all have heat, required by law. The other has a window unit but its written that if it breaks, it will not be replaced and its up to the renter to replace should they need AC ( this one is rent controlled). Rent is high here so I make sure they get what they pay for. But if one of my tenants come to me and complain about the AC being not cold but cool, I will ask them to think about leaving at the end of the lease if its rent control. Install new AC, remodel, and up the rent, next. That's how I increase the value of my properties.

[Tidybuoy]

Originally Posted by WPOZZZ

Just say NO! Over 30 years that comes to $120k. WTF!

Wrong! With the 3.5% annual increase, it comes to $202k - This company preys on the dumb and it won't work on me.

[Tidybuoy]

Originally Posted by Pazuzu

What if the A/C unit is very old, and the tenant is overpaying for power because the thing is crap?

I suspect that this may be the issue. I bought this place about 6 years ago and one unit had newer A/C and the other unit has a much older unit. The other tenant states that their A/C runs great and their utility bill is low. I just put new A/C in my house and I can't believe how much better it is - only runs for a short while and chills the house very well whereas my old A/C ran all day for mediocre results. I have called my A/C company to service this unit and give me an estimate for replacement.

[Tobra]

Being a landlord in California would be horrible.

[pwd72s]

Originally Posted by Tobra

Being a landlord in California would be horrible.

You can add Oregon and Washington to that list..

[look 171]

Originally Posted by pwd72s

You can add Oregon and Washington to that list..

It bleeds upwards and it seems that it will bleed out to Phoenix and other places east of us. They seem to all rent control. Well, I say we should have price control for work performed and materials on rentals and should be subsidized by tax payers. This way regular people will vote those blood sucking idiots out of office and let the free market flow again.

I say no AC.

[Rick Lee]

I got a new A/C about a year after I went solar and the new unit cut my power bill by more than going solar did.

[Bill Douglas]

Could say to the tenant that you yourself don't want solar in the place. But she is most welcome to get a solar system installed at her own expense providing it stays there when she leaves or there is no damage left if she removes it.

[Tidybuoy]

Originally Posted by Tobra

Being a landlord in California would be horrible.

Not really. I was lucky to buy this place before the prices went way up. I earn about $1k per month after all expenses (i.e, mortgage, insurance, taxes, gardener, water/garbage). So far, I've had good tenants with both units rented to the same people for 5+ years.

[Dixie]

I'm thinking that's one heck of a solar salesman. He convinced the renters to try selling it to the property owner.

[jim72911t]

Originally Posted by pwd72s

You can add Oregon and Washington to that list..

How many rentals do you own in California, Oregon and Washington? I’ve owned a rental property in California for a while and would love to compare our experiences.

[Tidybuoy]

This deal is over. I told the tenant is was a bad deal which would require raising rent $600/mth.

I told the solar company to pack sand. The deal was outrageous and I was not interested. They countered with: "We sent you the wrong proposal, we sent you a PPA (no idea what that means). They said they made a mistake since they sent it on Sunday and that is family day - are you kidding me? They followed with a new proposal.

I asked what is the cash price and they quoted me $40k via text. Then they followed up with a document that said $58k. One hour later, the document (a live document connected to their website) changed to $60k.

Solar Maintenance Pros - In case anyone is looking for a "good" solar company.