LONG BEACH, Calif. – Property owners like Nicholas Dunlap are preparing to weather a storm.
“We’ve done a lot of preventative maintenance, but hopefully all of our roofs are also secured and keeping our residents warm as well,” says Nicholas Dunlap, a past president of the Apartment Association of Orange County.
Dunlap says he actually enjoys the rain, but the idea of it changed once he followed in his dad’s footsteps. Dunlap studied English at University of California Los Angeles and thought he would go into law school, but ended up passing the real estate license exam and entered the real estate investment place.
Despite being in that business, Dunlap doesn’t like being called a landlord. Instead, he considers himself a second-generation rental housing provider.
“I think our duty as a housing provider to provide a safe and quality place to live. It just brings on so many additional responsibilities and a lot of that comes with the cost to maintain and cost to preserve the physical structures,” says Dunlap.
The company Dunlap works for owns and manages a 360-unit complex in Long Beach. Due to his position in the real estate industry, Dunlap and his colleagues are paying close attention to Assembly Bill 1482, which was signed into law by Governor Gavin Newsom. The bill is a statewide rent-control law that will go into effect on January 1, 2020. It will limit rent increases to 5 percent each year plus inflation and bans landlords from evicting people for no reason.
Housing advocates argue the law will help prevent people from getting priced out of their communities. However, some housing professionals like Dunlap say landlords and tenants will both be negatively affected. He says professional rental housing owners or corporate real estate groups won’t necessarily feel the negative impact compared to mom and pop owners who might have not kept up rental rates over time.
Dunlap says what’s happened in Oregon and New York after those two states passed a similar law could potentially happen here.
“There has been no new permits pulled for multi-family residential developments and the year since rent control was passed statewide in the state of New York, we’ve seen sale volumes have dropped by as much as 50 percent. At the end of the day, you see developers who aren’t building and property owners who are seeing their values decline because sales volumes are dropping,” says Dunlap.
He goes on to talk about how oftentimes landlords or companies that own apartment properties have to seriously consider raising rents because they have to make mandatory improvements to ensure a safe place for families to live.
“As the real estate in and around Orange and Los Angeles Counties, it’s not uncommon to see apartment buildings that are 50 to 60 years old. These are aging structures with aging systems. They need thing like new plumbing, electrical systems, new roofs, and in some cases seismic retrofitting. These are sizable expenses. They can be tens of thousands of dollars, hundreds of thousands and some cases if you’re talking about seismic retrofitting, depending on the size of the building, that could be a million dollars expense,” says Dunlap.
Since the law was signed by the governor, there has been many reports of landlords trying to get ahead of it by evicting tenants or raising monthly rents. Dunlap says his company has gradually increased rent over the years and budgeted for things like maintenance, utilities, infrastructure repairs and security.
So even with this new law, Dunlap believes his properties and tenants will be safe.
At the end of the day, Dunlap says the housing business isn’t about dollars and cents. He says he is making a social impact on acquiring and preserving affordable housing in Southern California and that is much more important that any money he makes from the business.
Dunlap is currently a board member with the Apartment Association of Orange County, which educates property owners on how to keep their operations running efficiently and economically. It also keeps members up-to-date on new laws and regulations. Dunlap recommends property owners to sign up to become a member.