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East Bay Rental Housing Association

MAY 2014

Volume XI, Number 5 May 2014 EBRHA OFFICE

360 22nd Street, Suite 240 Oakland, CA 94612 tel 510.893.9873 | fax 510.893.2906

Features & Columns






Evangelina Salazar | EBRHA OFFICERS



Reaping the Benefits

Diamond in the Rough




Mark Almeida, Bill Bagnell, Symon Chang, Reggie Hairston, Carmen Madden, Conor Murphy, Rick Philips, Sarah Picker, Judy Shaw, Abbe Sultan, Menna Tesfatsion, Mila Zelkha PUBLISHED BY

Wayne C. Rowland PRODUCED BY

EBRHA Communications Committee Tina Bocheff, Jill Broadhurst, Esteban Cortez, Wayne C. Rowland



The Good Ol’ Days


Tina Bocheff | 510.318.8303


Features & Columns 8


EBRHA Members Address Harmful Bills at Legislative Day in Sacramento 10



Regan v. City of Oakland




Roommate Dilemma


| MAY 2014 |

Rental Housing (ISSN 1930-2002-Periodicals Postage Paid at Oakland, California. POSTMASTER: Send address changes to RENTAL HOUSING, 360 22nd Street, Suite 240, Oakland, CA 94612.


Rental Housing is published monthly for $36 per year by the East Bay Rental Housing Association (EBRHA), 360 22nd Street, Suite 240, Oakland, CA 94612. Rental Housing is not responsible for the return or loss of submissions or artwork. The magazine does not consider unsolicited articles. The opinions expressed in any signed article in Rental Housing are those of the author and do not necessarily reflect the viewpoint of EBRHA or Rental Housing. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting or other professional services. If legal service or other expert assistance is required, the services of a competent person should be sought. Acceptance of an advertisement by this magazine does not necessarily constitute any endorsement or recommendation by EBRHA, express or implied, of the advertiser or any goods or services offered. Published monthly, Rental Housing is distributed to the entire membership of EBRHA. The contents of this magazine may not be reproduced without permission. Publisher disclaims any liability for published articles. Printed by Jostens Printing Co. Copyright © 2013 by EBRHA. All rights reserved.

contributors JOHN CARONNA John Caronna has been an East Bay apartment investment-grade real estate specialist and apartment building owner since 1999. He has more than 12 years of first-hand experience with all facets of multi-unit property management including rent control parameters, tenant relations and property maintenance. John specializes in advising clients on the most important aspects of considering and eventually purchasing small to mid-size apartment buildings in Alameda and Contra Costa Counties.

CLIFFORD FRIED Clifford Fried is a real estate attorney with expertise in landlord-tenant law, eviction and rent control matters in Oakland and the Bay Area. He and his law firm represent residential landlords only and are one of the largest such firm in Northern California. He has processed nearly 10,000 evictions in his career and has authored several books on evictions and hundreds of published articles on rental property ownership.

DAN LIEBERMAN Dan Lieberman is the president of Milestone Properties in Oakland. He has extensive experience renovating, marketing and repositioning multifamily properties. Over the past 18 years, he has upgraded and managed over 50 apartment communities in the East Bay. Dan was the 2004 president of the California Apartment Association, and he is currently writing a book on how to improve the performance of your rental properties, scheduled to come out this fall.

MARC LIPSETT Marc Lipsett became finance manager for a real estate investment company in 1996. He joined their lead bank, Home Savings, in 1998 and worked for WaMu until 2007 when he left to start a competitor. He has been a top producer with Intervest since 2011, winning three Sterling Performance awards.


| MAY 2014 |

Jill Broadhurst, EBRHA’s Executive Director, is running for Oakland City Council Oakland needs a pragmatic, balanced voice to advocate for residents and businesses. Do you live in or have a rental property in District 4? Know someone who does? How can you help? • Consider having a house party in the summer • Put up a lawn sign on all your properties in the District or at its borders • Walk door-to-door or phonebank • Make a campaign contribution SIGN UP AND FIND OUT MORE:


Find Jill on Facebook


APARTMENTS. WE LIVE HERE. Everybody talks about how the population is

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Stay-at-home dads. Work-at-home jobs.

Couples with – or without – children. It makes you realize how well apartment homes fit

into today’s communities. After all, apartments and residents contribute

processors, and cello players who call apartments home. For a fresh take on today’s housing market – state by state – and an interactive picture of how, with your help, we can develop 300,000 new

$1.1 trillion annually to the economy. That’s a ton of

apartments a year to meet this exciting demand, visit

jobs in construction, operations, leasing, management,


news Oakland Property Owners Encouraged to Attend Seismic Retrofit Meetings A discussion of seismic retrofits took

EBRHA members, Board and staff at Legislative Day in Sacramento

EBRHA Members Address Harmful Bills at Legislative Day in Sacramento IN EARLY APRIL, EBRHA members — along with state lobbyist Ron Kingston and Executive Director Jill Broadhurst — went to Sacramento and spent the day lobbying against two important legislative issues. One of the proposed bills aims to eliminate a landlord’s ability to go out of business, and the other permits residential tenants to grow food-bearing plants of any size or amount for personal or commercial purpose inside and outside the rented premises or property. EBRHA members explained to legislators representing Alameda and Contra Costa counties why these legislative measures are harmful to property owners. Executive Director Jill Broadhurst said that meeting in Sacramento, on a legislator’s turf, seems to have a more profound impact. EBRHA thanks all members who attended Legislative Day and fought for property owners’ rights. EBRHA will continue to update members regarding these proposed bills and any other rental housing legislation.


| MAY 2014 |

place at the Standing Committee Meeting of the Housing, Residential Rent and Relocation Board on Thursday, April 24 at 6:00 p.m. at City Hall in Hearing Room 1. If you were unable to attend the discussion, EBRHA asks that you stay alert for more announcements regarding seismic retrofits in Oakland. The average cost to retrofit a unit is $10,000 - 15,000 to rehabilitate and make safe under natural disaster conditions, especially earthquakes, which the Bay Area is prone to. As a rent-controlled city with soon-to-be strict capital improvement pass through rules, how will property owners pay for these necessary upgrades? What if they are mandated? EBRHA will notify members of future meetings on this subject, and strongly encourages members to participate.

Oakland Tops List of Annual Rent Growth Leaders in Q1 2014 Once anticipated to be the most

challenging year for owners and operators in the current cycle, 2014 is off to an impressive start. Effective rents for new leases in the 100 largest U.S. apartment markets grew 3.3% during the year ending in Q1 2014, according to MPF Research, an industry-leading, marketing intelligence division of RealPage. The annual rent growth pace accelerated from levels of 2.9% as of Q4 2013 and 2.6% as of Q1 2013. Typical pricing for new leases jumped 0.9% during the first quarter, specifically. “The momentum seen in apartment rents during early 2014 was a bit surprising,” said Greg Willett, Vice President of MPF Research. “Pricing power normally cools during periods of significant building activity, and there’s quite a bit of construction occurring in most areas right now. Instead of a slowdown in rent growth, we saw that pricing upturns in the existing stock across many local markets strengthened even as construction volumes ramped up. That pattern holds especially true in areas that already rank at the top of the charts for

overall performance.” Metros in the West are the nation’s apartment rent growth hot spots right now, while select markets in the Southwest and the Southeast are also experiencing significant price increases. Oakland takes the top position for pricing power among the country’s large metros as of Q1 2014, with rents up 9.1% on an annual basis. This growth slightly exceeds the 8.7% upturn in San Jose and the 8.1% increase in San Francisco. The three Bay Area metros traded off the nation’s No. 1 position during the past year or so. All three illustrate the general pattern of the strongest performers gaining even more momentum, since the annual rent growth pace within the trio registered between 6 and 7% as of late 2013. Credit: Jay Parsons at MPF Research, a division of RealPage

City of Concord Adopts Bed Bug Policy The City of Concord in Contra Costa County has adopted a Bed Bug Response Pilot Program and declared bed bugs a public nuisance subject to civil, criminal and administrative remedies. Presented by Sgt. Russ Norris of the Code Enforcement Unit of the Concord Police Department, the new policy embraces the City’s role in enforcing bed bug-free rental housing. The new policy was welcomed by tenant advocates who have been organizing for months to push city officials to cite landlords for unabated bed bug infestations. “The City of Concord encourages owners and tenants to work cooperatively to address bed bugs in a prompt manner to help prevent the spread of bugs to adjacent units and within the community,” Norris said in a release. To avoid fines, property owners are to respond immediately to bedbug complaints by: hiring a pest management professional to perform bed bug inspection and abatement for the entire building; create a written abatement plan with the pest management professional; work with tenants to rid the property of bed bugs; and provide a written copy of the pest management professional’s abatement results to the Concord Police Code Enforcement Unit. For more information on handling bed bug complaints in Concord, visit bedbugs. RH



THURSDAY, MAY 8, 5:30 P.M. - 8:30 P.M. Please join Friends of Oakland Parks & Recreation for a night of great people, fine wine and gourmet fare! Support youth scholarships and park restoration projects. The Rotunda Building, 300 Frank Ogawa Plaza, Oakland $75; Register at

Saturday Morning Coffee Hour NEW


SATURDAY, MAY 17, 10:00 A.M. - 11:00 A.M. Ebrha Education Center 360 22 nd St., Suite 240, Oakland Parking Provided; Download parking pass at n Member Q&A: Tori Blanca, CCRM, EBRHA

Women’s Auxiliary Luncheon DATE/TIME LOCATION PRICE

TUESDAY, MAY 20, 11:45 A.M. Scott ’s Seafood Restaurant, 2 Broadway, Oakland Auxiliary members: $20; Guests: $35

Intensive Bed Bug Training DATE/TIME THURSDAY, JUNE 12, 1:00 P.M. - 4:00 P.M. DETAILS EBRHA is offering property owners and managers Bed Bug Control Training. Presented in partnership with Alameda County Vector Control. SPEAKERS n Daniel Wilson, Alameda County Vector Control n Clifford Fried, Fried & Williams LLP n Andrew Sutherland, Bay Area IPM Advisor UCCE PRICE Members: $79; Non-members: $99

Online Registration at

Unless noted, all events are held at the:

Sign up, pay registration fees and receive reminders online.

EBRHA Education Center 360 22nd St., Suite 240 Oakland


MAY 2014




court talk

Regan v. City of Oakland EBRHA fights back against adverse rulings at the Oakland Rent Board. BY CLIFFORD FRIED

Clifford Fried represented the owner


n early March of this year, the Alameda County Superior Court granted a landlord petition that asked the court to reverse an Oakland Rent Board decision that denied a landlord’s application for a certificate of substantial rehabilitation. The Court ruled that the Rent Board decision was not supported by substantial evidence. The Oakland Rent Adjustment Ordinance permits an owner to petition the Rent Board for a determination that a building is exempt from the Rent Ordinance due to substantial rehabilitation. In order to obtain a certificate of exemption, the owner must prove that he or she spent a minimum of 50% of the cost for new construction for the rehabilitation project. In this case, the property in question was damaged by fire. An insurance adjuster declared the building a total


| MAY 2014 |

loss and $278,537 was spent rebuilding. The cost of new construction was $260,028. This should have been an easy victory for the landlord since far more than 50% of new construction was spent on the project. But the Rent Board denied the owner’s petition because insurance company proceeds were used on the project and therefore the owner paid no money to rebuild. The Rent Board felt that the substantial rehabilitation exemption only applies where the owner spends his or her own money on a project. The owner filed an appeal to the full Rent Board commission but didn’t do any better. The full Board ruled that the hearing officer was correct that the owner didn’t pay for the project and that the repair of units with insurance money is not covered by the substantial rehabilitation provisions of Oakland’s rent law. Many Rent Board decisions that are adverse to landlords go unchallenged. And the Rent Board knows this. With so few judicial challenges to Rent Board decisions, there is no reason for the Rent Board to follow its own rent laws. Instead, the politically motivated Rent Board will bend over backwards to favor tenants at the expense of landlords. The owner, with assistance from EBRHA, filed a lawsuit against the City of Oakland seeking a writ of mandate compelling the Rent Board to follow the law and to grant the owner’s petition for a certificate of substantial

rehabilitation. At stake was not only one building being declared exempt from rent control, but the ability of other owners in the future to have their property declared exempt after a building is rebuilt after being destroyed by a disaster. In court, the owner argued that the purpose of the Rent Ordinance is, in part, to provide an incentive to landlords to invest in Oakland rental property and to maintain safe, decent and sanitary housing. If landlords know they could not have their building declared exempt after rebuilding, they would put the insurance money in their pockets and invest it elsewhere. In ruling in favor of the owner, the court said that the Rent Board misunderstood the nature of insurance. The court explained that an insurance policy is an asset of the policyholder and the right to payment under the policy is also an asset of the policy holder. While the insurance company might have paid for the rehabilitation project in the superficial sense, it was the owner who purchased and paid for the insurance policy. The Rent Board distinguishes between repairs and capital improvements. A certificate for exemption will only be granted for capital improvements. In denying the owner’s petition, the Rent Board also felt that the money spent on the project was for repairs and not capital improvements and therefore the exemption should not be granted. The court disagreed and noted that construction took 15 months, architectural plans were required, and that walls, windows, floors and kitchens were completely torn out and replaced. In other words, the units are now brand new. This was all prima facie evidence of substantial rehabilitation. There was no evidence that the work done on the building could be considered or constituted a repair. The Court reversed the Rent Board decision and directed the Rent Board to grant the owner’s petition for a substantial rehabilitation exemption from the Rent Ordinance. The dedication of the owner in challenging the Rent Board, and EBRHA’s support for this challenge, should encourage other landlords to fight back




MIKE POPOVICH SVP/Market Manager p: 510.899.7548 c: 415.385.3999 e: TORREYPINESBANK.COM

TUESDAY, MAY 6; 6:30 P.M. - 8:00 P.M.

Tori Blanca, CCRM, EBRHA Members: Free; Non-members: $69 Tenant Screening, The Application Process, Fair Housing, Measure EE and Rent Control, EBRHA Member Benefits


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Lunch-n-Learn: Protecting & Securing Your Investment DATE/TIME SPEAKER PRICE

THURSDAY, MAY 8, 12:00 P.M. - 1:00 P.M. Limor Margalit, Bay Alarm Members: Free; Non-members: $20

Trading Up to a Mid-size Apartment Building D ATE & TIME SPEAKER PRICE TOPICS

WEDNESDAY, MAY 13; 2:00 P.M. - 3:30 P.M.

Nick Myerhoff, Myerhoff & Associates, Inc. Members: Free; Non-members: $69 Three Value Indicators to Gauge Your True Return, Top Five Economic Indicators, When is it Time to Sell or Trade?, Analysis of Your Rental Properties

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Landlord 103 THURSDAY, MAY 29; 6:30 P.M. - 8:00 P.M.

Clayton Barry, SERVPro Members: Free; Non-members: $69 Navigating, EBRHA Online Form Library, Accessing Leasing Forms, “Do It Yourself” Property Management, Property Management Made Easy

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EBRHA Education Center 360 22nd St., Suite 240 Oakland


MAY 2014



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against adverse rulings at the Rent Board. While the Rent Board will do whatever it can to protect the rights of tenants, it is possible to obtain a fair hearing and justice in a court of law. Fighting bad rulings and laws can require a huge effort and many months of work. Rent control was passed by the City Council only after a few hearings. Eviction controls went into effect all at once when the voters passed Measure EE. Challenging these rent laws, and bad Rent Board decisions, will take time. Thank you to EBRHA and landlords Patrick and Harriet Regan for their efforts in this challenge. The landlords in this case were represented by attorneys Clifford E. Fried and Isaac Jacobson of Fried & Williams LLP. RH

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| MAY 2014 |







Deposit of $15 per ticket is refunded upon arrival at Bay Area Contract Carpets. Seating is limited, two tickets per member. Reserve tickets today! Send your deposit to: EBRHA, Game Night, 360 22nd St., Suite 240, Oakland, CA 94612


MAY 2014



From Start to Finish, EBRHA Integrated Leasing

INTRODUCING INTEGRATED LEASING Marketing • Rental rates set using real-time market and comps database • Best-in-class advertisements created using professional photographs • Your property advertised on all major apartment and relocation websites

Leasing • Signed leases, prepaid rent, and security deposits collected for hand-off to owner/manager • Rest easy knowing that we do all the hard work • Your job — collect more income on your valuable asset

Touring • Prospective tenants schedule tours via phone or online • Appointments available 12 hours a day, 7 days a week • Tours conducted by licensed leasing agents, familiar with building and neighborhood

Screening • Prospective tenants screened and qualified using thorough rental application • Employer and previous landlord references checked • Owner/manager approves tenants or leasing staff can select • Applicant notified as early as 24 hours

Save time and make more money by using EBRHA Integrated Leasing

Fills Your Units with High-quality Tenants Faster

What is integrated leasing? Integrated leasing is a turnkey solution that includes marketing, touring, screening and leasing your rental property. Taking into account your property profile and leasing criteria, integrated leasing results in your units being occupied by your ideal tenant faster, and at an optimal rent, saving time and increasing ROI and property values. Why use integrated leasing? Owners use integrated leasing for a variety of reasons. Some owners want to hand-off this portion of their business so they can focus on other aspects, like expanding their portfolios. Others use integrated leasing so they can scale back their involvement, and simply focus on property management or finances. My leasing process seems to be working well. Why change it? In the lifespan of a residential property investment, the factor that owners have the most control over is income, which comes down to effective leasing. Most owners would be shocked to realize they are leaving money on the table: property managers and resident managers have very little incentive to maximize rents, instead targeting a quick and easy process. As a result, owners feel that leasing is simple, even though their leasing process is effectively losing money.

What does it cost? EBRHA offers members the lowest commission in the leasing industry, anywhere from 25 - 90% of one month’s rent, depending on several factors, including number of units in the portfolio. How will I make more money? Integrated leasing has proven to decrease vacancy downtime by 9-12 days and increase rent by 5% or more. Those who use Integrated Leasing will immediately make higher net income after expenses and achieve significantly higher asset value on their property. How is documentation handled? The entire process is online and streamlined. Applicants are screened with thorough background checks, credit history reports, income verification, and landlord references. All rental forms, property disclosures and leasing documents are processed, making it easy and stress-free for owners and renters. This results in faster leasing, and renters love it. How do I know the status of my unit? Owners have an online dashboard where they can check on the status of their property’s leasing process in real-time, including tenant leads, property tours, and the ability to view applications as soon as they’re complete. Activity is monitored very closely, and users are provided with updates on a regular basis.

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| MAY 2014 |

Diamond in the Rough With effort, repositioning a troubled property can be a rewarding experience. BY DAN LIEBERMAN


uildings age and neighborhoods change. For most income-producing real estate, this is a gradual process. Over time, systems wear out, buildings are not kept up, newer buildings siphon off the best tenants, and financial performance declines. Poor management can bring in the wrong type of tenant, accelerating the process. Occasionally, the decline in a particular property’s value and performance is not mirrored by what is occurring in the market or in the area around it. This can result in tired or poorly performing properties in stable or improving neighborhoods. This is the ideal opportunity to look for. Repositioning troubled properties to increase their value has been a time-honored investment strategy. When renovating a property to add value, consider two critical components: how to increase the income and how to create operating efficiencies to increase the Net Operating Income (NOI). These are not the same. Although NOI is the driver for CAP rate determination of value, many people still look at the income multipliers and other metrics. Working on both is of equal importance to maximize value whether for sale or refinance.

Creating the Plan

Before the first piece of trim is removed, one must analyze what is the best use of available cash. The position of the rehabilitated asset in the market must be defined. What are the likely demographics of future renters? What will they desire? What will they require? What can you give them that they can’t find in the competition? What can they afford to pay? When evaluating a property, a physical examination of the condition of the overall asset, both visible and invisible, is a must. There will always be some repair costs that will not add rental value, such as replacing a roof, but are necessary. Whenever you encounter these situations, try to determine how the item could add value, and whether the additional cost would be justified. For example, our firm purchased one building where the plumbing was at the end of its useful life and needed to be replaced. When we replaced it, we created a direct hot water and cold water feed to each unit. This not only allowed for sub-metering capabilities (thereby removing the water bill as one of our expenses) but was also great when repairs were needed, as we had individual shut off valves to each unit. There is always a finite amount of money to work with. It is crucial to quantify the scope of work, and while this is difficult, it is not impossible. Always have a contingency factor in your budget for unexpected surprises or cost overruns. I recommend at least 15%. There is nothing worse than running out of money before your project is complete.


MAY 2014



debris box on the property and invite tenants to fill it. Post notices where they can be seen. Get the police to do a sweep through the property, if needed. This is the time to set the tone. Don’t forget to re-key common areas. If the building has more than a few units, I recommend an electronic key (key fob, key card) that is programmed on a computer and can be deleted and reprogrammed. If you can afford it, place cameras at critical areas on the property. Technology has made quality video surveillance relatively affordable. If the property has a history of nuisance activity, just the presence of video will reduce the problem. Are people hanging out in front? A little physical modification can do wonders. We had one property where people were doing drug deals in the evening in front of the property. We purposely installed a sprinkler system that oversprayed onto the sidewalk. It didn’t take long for them to move to another location when the sprinklers came on at night.

“Repositioning an occupied property is not easy. You can’t just vacate the building and start renovating, especially in cities like Oakland or Berkeley, which have eviction restrictions.” Implementing the Plan

Regardless of the level of occupancy and the overall caliber of the existing residents, the property is underperforming or you would not be attempting this upgrade. The actions of the prior owner or manager have been sending a strong message to those who live at the property who have developed bad habits, such as paying rent late, intimidating other residents or neglecting the property. Your immediate task is to establish order. This is best done by being present on site as much as possible, and by establishing policies and procedures that will let the residents know what is and what is no longer acceptable. Repositioning an occupied property is not easy. You can’t just vacate the building and start renovating, especially in cities like Oakland or Berkeley, which have eviction restrictions. However, even if you had no restrictions, carrying costs on a vacant property could eat up most or all of your potential profits, so you will usually have to work with occupied buildings and improve apartments upon turnover and over time. Perform a thorough unit-by-unit inspection as soon as possible. Note any habitability issues and fix them. This is not only your responsibility, but will be a tenant’s defense when they don’t pay rent. Look for lease violations. You might start sending rent invoices as well, at least temporarily, so everyone knows what is owed and what is expected of them.

Show Respect for the Property

It is now time to show a new level of respect for the property. A sudden clean up does wonders for laying the groundwork and regaining control. If the property has become unkempt, a little paint, a little landscaping and some elbow grease will go a long way. People tend to mirror their environment. If it appears that the owner or management doesn’t care, tenants won’t care. Many times, all your work looks like it’s been for naught. There will be garbage or cigarette butts on the ground again, and sometimes even new graffiti on the walls. But soon your efforts will begin to take hold and other tenants will notice. Other clean up items include towing any abandoned or non-working cars, making sure common area doors close and lock properly, and keeping the place clean. If you do not change things quickly and strongly, you will not regain control. When you start cleaning up the property, you need to be upfront with your tenants. You need to get the word out graphically that things have changed. Strong communication is important, but it’s time for a little drama. Drop a great big 18 RENTAL HOUSING

| MAY 2014 |

Focus on the Common Areas

The entire repositioning process is a marketing process. You are making physical changes to a property, and adopting policies and procedures that will attract the resident profile you prepared from your original market analysis. You must wait until the exterior work is done before you can really market the property. It takes time for a property to change its reputation in the community. The easiest way to make this change is for it to look different to the outside world. Until that happens, none of your claims of improvement and change will be listened to. You wouldn’t show a dirty apartment to a prospect and tell them it will be clean when they move in, and expect to receive top dollar. Similarly, you cannot officially declare your building changed and expect the world to believe it until the outside states that it is. The sense of arrival is critical for creating a good first impression. You need to think through what someone will see from the moment they drive up until they meet with you, whether at the building entrance, leasing office or at the vacant apartment you have for lease. Site improvements like lighting, gates, lobby areas (in interior hallway buildings), pavement accents, signage and landscape upgrades can produce a major shift in presentation and perception of a building. Focus on creating memorable social spaces. This could be a rooftop deck with a view or a nice outdoor BBQ area — ideally something they won’t find at a competing property.

Focus on the Apartments

My philosophy is that the common area attracts tenants, but the apartment interior is what makes them stay. Once you’ve got your common area planned, then focus on the apartments. In the apartments, first focus on intangibles. How do you make the unit feel more spacious? How can you make the unit feel more light? All things being equal, people will pay more for an apartment that is bigger (or feels bigger) than one that is


MAY 2014




Multi-Unit Residential Specialist Expert in the sale and purchase of duplexes to 18-unit investment properties NEW LISTING IN MONTCLAIR

5 units with over $168,000 in annual rent. Price: $2,249,000

Recent Sales: • Highland Rd. Duplex, Lafayette, Represented Buyer • Snake Rd. 4 plex, Montclair, Represented Buyer Plus:

smaller. All things being equal, people will pay more for an apartment that is full of light, than one that is dark. Likewise, an apartment that feels newer and of higher quality gets a premium also. The first areas of focus are often the kitchen and bathrooms. Utility areas and adequacy of storage are next. The quality of finishes in the remaining areas are the third area of focus. In kitchens, appliances and countertop surfaces are the two areas that most date a property and reflect the greatest wear. Replacing a laminate top with a new granite or faux granite top and updating appliances makes a huge difference. Many times, cabinets can be refinished or refaced without having to be replaced. In the bathrooms, introduce current accessories such as a new vanity top and updated faucet, supplemental shelving, decorative vanity light fixtures and a framed mirror. Paint and updated lights make a huge difference in a bathroom. After looking at the kitchens and bathrooms, flooring, door style, lighting, hardware and interior trim all contribute to the appeal of the apartment.

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There are a number of service related items that can generate increased income or allow you to ask higher rents. These might include offering common area WiFi in the building, going “a la carte” on the items typically included with the apartment (such as parking) and allowing pets for an additional monthly fee. Even with a system for upgrading properties, each building presents its own unique set of challenges. Your financial success as an owner depends on how well you or your manager can handle the challenges, gain control of a property and then transform it. Although there will be many difficulties, repositioning a property is a very rewarding endeavor which not only profits you, but enhances the neighborhood in which the property is located. RH

Dan Lieberman is the President of Milestone Properties in Oakland. He has upgraded and managed more than 50 apartment communities in the East Bay. He can be reached at (510) 8358080 or

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| MAY 2014 |


BENEFITS How to take advantage of the East Bay’s booming real estate market. BY JOHN CARONNA



nce again, the income property market is riding the crest of the wave, and as an owner, you are positioned to reap the benefits. Now is the time to ensure you are maximizing your rental income, or if you are considering selling, preparing your property to capitalize on the current trends to receive optimal offer value. Recently, we had friends in town from the Midwest, and the discussion migrated to the topic of the cost of renting in the Bay Area. I searched Bay Area’s Craigslist for a two-bedroom apartment in some of the popular neighborhoods in San Francisco to show them the realities of our rental market. To their shock, the least expensive two-bedroom apartment was $3,975 per month. To put that expense into perspective, the monthly rent in San Francisco was much more than my friend’s monthly mortgage and property tax on their 3,400 square foot home in the Midwest. Welcome to the Bay Area! As rental property owners, we ask ourselves if the current rental rates are sustainable. Let’s first look at the national trends for evidence. According to Jay Parsons at MPF Research, a division of RealPage, his national ranking listed markets with the highest overall rent growth in Q1 2014, with Oakland topping the list, followed by San Jose and San Francisco. Oakland averaged 9.1% rent growth in Q1 2014. Pretty impressive considering the City of Oakland’s Rent Adjustment Program’s allowable rent increase for existing tenants was 3% last year. To achieve that growth in rent, and if we assume that one in five units in Oakland was vacated and was raised to market rent, that means we had an increase of 24% in rent in those vacated units. That was about the same amount of increase that I was able to get on my own investment property with a single vacancy in 2013. I held our open house for one hour only and posted it on Craigslist. This attracted approximately 35 prospective tenants, of which seven were serious, well-qualified applicants. All had good jobs, strong credit scores and were willing to pay $2,000 per month for a one-bedroom apartment in a quaint four-unit building in Oakland. Why Are Rental Rates Increasing? According to an article on (“Apartment Poor NY suburbs see ‘Brain Drain’”), young adults aged 25-34, are leaving affluent suburbs near New York City as they “indicate they prefer lively urban environments to suburbs, and rental housing rather than owning, and are more comfortable with racial diversity.” This describes a majority of the East Bay communities


MAY 2014



Selling Investment Properties For owners interested in selling their property now, in the East Bay specifically, we still see rents on the rise, and multi-unit properties selling quickly with multiple offers. Many properties are still receiving all cash offers. Compared to spring 2013 market conditions, buyers appear to be more purposeful in their offer strategy, offers are still over asking price in most sales, although to a lesser degree, and buyers are more selective. In all neighborhoods, well-maintained multi-unit properties are still in high demand. If you are considering selling your multi-unit property, the one singular mistake in this type of market is to overprice your property. Buyers assume they will have to bid over the asking price, so your property needs to be priced accordingly. Make sure your agent is working hard for you. The most important aspect of listing your property is to insist that your agent puts your property on a listing service (MLS or Loopnet) for the broadest possible audience to see. A small percentage of agents will try to convince sellers that they have many qualified buyers, but you can’t know what your property’s top value is unless there are open houses and broker tours. Your property must have broad visibility in front of all potential buyers in order to truly gauge interest and demand. It’s a lot more work for the seller’s agent, but that’s our job and number one priority: ensure you receive the highest possible price from a qualified buyer. As a multi-unit property owner, it’s still very important to remember that maintaining your property (inside and out) is one of the two most important aspects in increasing its value. As rents go up, tenants have higher expectations. The second very important factor is increasing your rents within the allowable limits for all tenants. If you have not taken advantage of pass-through rent increases from previous years, now is the time to send out that paperwork to your tenants. It’s important to remember that all your existing tenants who have been in your building for more than 12 months are almost certainly paying below market rent. Your property may be worth 10-16 times its annual rent, depending on its location, deferred maintenance and unit size. So passing through this year’s allowable rent increase of 2.1% with your existing tenants, your property value could potentially increase as much as $30,000-40,000, based on your current rents and total numbers of units.

“IT IS A GREAT RETURN ON YOUR TIME IF YOU CAN ADD $2,000, $3,000 OR MORE TO YOUR ANNUAL CASH FLOW WITH JUST A COUPLE HOURS OF WORK.” where EBRHA members own and manage rental properties. The East Bay rental market appears to still be rising, albeit more slowly, and stabilizing at the highest levels from last spring’s hot market. East Bay rents are still well below rents in San Francisco and most of the Peninsula. As long as the job market remains stable, demand for rentals will continue in the East Bay. Property owners will continue to reap the benefits of their investments. Maximizing your Rental Income Now Add a laundry room or install a washer and dryer. With a four-unit property, you should generate an additional $80-$100 per month. The laundry income will pay for the cost of the machines in 24-36 months. Laundry income is calculated as part of the annual income for your property, and thus increases the value, just as rent increases will do. If you already have a laundry room, ensure that you are charging competitive prices for the washer and dryer. Stop by a local laundromat to compare prices. Hardwood floors. If your apartments were built prior to the 1960s and your units have carpet, there is probably a beautiful vintage hardwood floor underneath. This was true of two of our properties when we purchased them. If this applies to any of your units, at the next vacancy, tear out the carpet and have the wood floor refinished. It will cost typically $900 to $1,200, depending on square footage and condition of the wood. You will probably be able to charge $100 per month more in rent, and greatly decrease your maintenance costs for that unit. Hardwood floors really stand up to tenant wear and tear and are more desirable. This is another example of a simple upgrade that pays for itself quickly, and increases your monthly cash flow and the value of your building. Keep up with trends. Lastly and most importantly, before an upcoming vacancy, spend a couple of hours visiting open houses in your neighborhood to learn more about market rental rates. Don’t just guess or simply add $100 to your old rental rate. Your upcoming vacancy could increase your rental income by as much as $400 to $500 per month. It is a great return on your time if you can add $2,000, $3,000 or more to your annual cash flow with just a couple hours of work. Also, use Craigslist and any resources EBRHA offers to look at vacancies and photos as a starting point. It really pays off. 24 RENTAL HOUSING

| MAY 2014 |

More Tips for Sellers Landscaping and exterior painting. I always advise my clients that if a property is not well-maintained on the outside, expect many additional examples of “deferred maintenance” upon further inspection on the inside. Landlords who don’t take care of the common areas and exterior typically don’t spend money on other general maintenance. Declutter. Clean out the basement, storage and parking areas. New buyers paying top dollar don’t want to take over a build-


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Washers and dryers can generate an additional $80-$100 per month in a four-unit property and can be paid for in as little as 24-36 months.

ing with excess junk from old or current tenants. Paperwork. Get all your paperwork in order. These should include, at a minimum, last year’s expenses broken down into basic categories: utilities, repairs and upgrades, maintenance, property taxes, insurance, business tax and licenses, if appropriate. Lastly, the buyer is going to want copies of your tenant leases with deposit amounts, plus estoppels. It’s important to give buyers the current lease terms, as many buyers today want to live in a unit and collect rent for the others. Keep in mind that owning and managing income property is a business, and a very profitable one if you treat it like a business. RH

The information contained in this article is general in nature. Consult the advice of a professional for specific advice. John Caronna has been an East Bay-based apartment investmentgrade real estate specialist and apartment building owner since 1999. He can be contacted at (925) 253-4648 or


Pass Them On. Or Come Shop. Clean out the property’s basement, storage and parking areas. New buyers paying top dollar don’t want to take over a building with excess junk.

Tenants are likely to pay more for a unit with hardwood floors. If you have hardwood floors installed underneath carpet, rip it out and refinish the floors to get top dollar for your units.

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| MAY 2014 |

The Good Ol’ Days Strong market creates competitive multifamily financing options. BY MARC LIPSETT


he last few years have been the best time ever to be a multifamily borrower in the Bay Area. There were more loan choices, more lenders and, because cap rates have been higher than interest rates, lenders have been able to make loans at a higher loan to value than they have in memory. The acute competition for multifamily loans has encouraged lenders to have reasonable requirements for documentation and loan conditions.

Why Are Rates So Low?

During the Great Recession, the Federal Reserve turned to monetary policy to combat sluggishness in the economy. The Federal Reserve pushed short term interest rates down and when that did not induce a snapback in the economy, began a program of Quantitative Easing, committing the Fed to monthly purchases, at the outset, of $85 billion in longer term bonds and mortgage backed securities. Banks which were paying almost nothing on their deposits had been profitably investing those deposits in safe U.S. Treasury instruments. The QE programs had the intended effect of lowering longer term rates and forcing banks to seek loans rather than buy low yielding government bonds. However, the weak economy made most loan choices unappealing. Home loans, helocs and personal lines of credit were unattractive in a period of falling equity. Good business loans were hard to find during a period of contraction. However, the reversal of the trend toward more home ownership led more people to seek rental accommodations. Higher rents and falling vacancies made loaning on multifamily properties very attractive. As the economy strengthens, the Federal Reserve has announced a tapering of the QE program, purchasing fewer bonds. Interest rates have already moved sharply off their lows, the five year U.S. Treasury note is up nearly 100 basis points in a year. However, rates on five year fixed rate apartment loans are up about half that because of the competitive market.


Why Can’t I Get an 80% Loan?

Technically, you could get an 80% loan. Regulators for federally regulated depositories (banks, thrifts and credit unions) and Fannie Mae and Freddie Mac guidelines, allow loans up to 80% of value. However, most lending institutions have lending plans with their regulator that hold loans to the lower of 75% of value or cost. Fannie Mae and Freddie Mac do make loans up to 80% of value. However, in the Bay Area, that has rarely been achievable. Value is one constraint lenders use, the other is debt service coverage, or DSC. Debt service coverage is the measure of how securely the cash flow of the property supports the debt. Most lenders require at least 15% excess cash flow based on the net operating income of the property, less the mortgage payments. If the loan is an adjustable rate loan, lenders use an underwriting rate that is higher than the actual rate, which could increase. Fannie Mae currently uses a minimum underwriting rate for most of its 10-year products which is higher than the actual rate. Fannie Mae also uses a minimum 1.25% DSC (requires 25% excess cash flow), which is a higher hurdle than most banks.


MAY 2014



the minimum (1%) pre-payment penalty. Fannie Mae loans are available for loan amounts as low as $750,000 and Freddie Mac loans are available for loans from $5 million. The Fannie Mae program encourages lender competition as all loans are underwritten and priced differently by Delegated Underwriter and Servicers, while the Freddie program has uniform pricing, and loans are underwritten directly by Freddie Mac. Both programs have national guidelines, and since Bay Area apartment projects tend to be older, smaller, more costly and often have earthquake vulnerability, the agency programs are not as popular here. Depending on the age of the collateral, there may need to be seismic studies and upgrades before obtaining a loan. The Bay Area, with its history of rapid appreciation, has been a less favorable market for a fixed rate loan that limits the borrower’s flexibility. Tim Thompson, who represents Greystone Servicing Corp, a direct Fannie Mae lender active in the Bay Area, confirmed that Fannie Mae loans are less popular here than they are nationally.

“Bank loans have been the dominant loan in the small apartment market in the Bay Area because they can be obtained quickly and cheaply, they can underwrite to higher loan dollars and they have the security of a fully amortizing loan as well as a flexible and defined pre-payment penalty.” While an 80% loan is the standard for a home loan — and a 1-4 residential property is considered a home loan — 75% is generally the maximum allowed by banks for an apartment loan, which is considered a commercial loan. Homes are not expected to produce income, so the borrower’s global income is considered. Since the financial reforms of the S&L crisis in the late 1980s, it has been a federal requirement that the income of a commercial property support the debt. Therefore, even the most qualified borrower can not necessarily get a high loan to value on a commercial apartment property.

The Agencies

Fannie Mae and Freddie Mac are the giants of the multifamily finance world, holding 44% of the outstanding debt on apartment projects, according to the Mortgage Bankers Association. All the banks together combine for a 28% market share. They are called agencies as they were set up as agencies of the Federal government in the 1930s. They became independent stock companies, but were so closely tied to the federal government and national housing policy that they were bailed out by Washington during the financial crisis. Loans secured by Agency debt are packaged as bonds and sold to investors. Their yields are only slightly higher than treasury yields, thus assuring low rates for borrowers. Their typical loan is a 10-year fixed rate loan with a balloon payment due, and a yield maintenance pre-pay penalty until 180 days before the end of the loan. Agency loans are typically the lowest rate fixed rate loans available at the time they are made for smaller apartment loans. In exchange for low rates, borrowers agree to maintain the yield for investors should they pre-pay the loan. The formula for the prepayment guarantee measures the replacement income not against the rate offered on a similar apartment at the time of pre-payment, but against the rate on a U.S. Treasury bond. Since the U.S. Treasury borrows at a lower rate than an apartment owner, the pre-payment penalty can be onerous. For example, on a 10-year loan, the pre-payment penalty, if pre-paid after one year at an unchanged Treasury rate, would be 15%. If pre-paid 5 years later and the Treasury rates were unchanged, the penalty would be 10%. If rates rise, the pre-payment penalty would be less, and if rates rise 2%, the pre-payment penalty declines to 30 RENTAL HOUSING

| MAY 2014 |


Many banks want apartment loans, but few banks are very good at making them. Banks prefer to make loans with 10-year terms, 25 year amortization and adjustable rates. Sometimes they fix them using a derivative which exposes the borrower to an undefined prepayment obligation. However, a few banks specialize in apartment loans and their typical loan is a 30-year fully amortizing adjustable rate loan that you can choose to fix for a period of 3, 5, 7 or 10 years. There is a pre-payment penalty on the fixed portion of the loan which is generally a defined number of loan points. After the fixed portion of the loan, there is no pre-pay penalty and the loan becomes a fully amortizing adjustable rate loan. Bank loans are typically limited to 75% of the value of the property and per federal regulations, the income of the property must support the debt. In the Bay Area, as cap rates decline, it is not unusual to find smaller properties, especially higher quality properties, qualifying for low loan amounts due to their incomes. This is especially true in rent-controlled areas. Banks which specialize in apartment loans are quick, knowledgeable and can usually offer to lock your rate early. Bank loans have been the dominant loan in the small apartment market in the Bay Area because they can be obtained quickly and cheaply, they can underwrite to higher loan dollars and they have the security of a fully amortizing loan as well as a flexible and defined pre-payment penalty.

Credit Unions

Credit Unions are a little known source for apartment finance. Their programs are very similar to those of the banks with a twist — credit unions make loans that have fixed rates without a pre-payment penalty. Because credit unions do less of this business and because they have no pre-pays, their rates,

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processing fees and third party charges are typically higher than those of apartment specialists. Also, credit unions are smaller, with lower capital bases, so they can go in and out of the market. Occasionally, you will hear of a credit union with a terrific rate or program, only to find that it is no longer offered.

required on an apartment project in a major metro would be eight while an outlying area would be nine. Therefore, if you had $250 million in net operating income on a metropolitan property, you could possibly qualify for a loan of $3.125 million while in an outlying area, it would qualify for $2.78 million.


Life Insurance Companies

They’re baaack! The Wall Street vehicle that collapsed during the financial crisis is making a comeback and they love apartment loans. Conduits are often run by Wall Street firms. They fund loans for a short period while they organize a pool of loans of different types of properties, in varied locations, to securitize and sell to investors. The typical conduit loan is a 10-year loan amortized over 25 years, with reserves for taxes, insurance and capital improvements. The minimum size for a conduit loan is $2 million and there is a minimum of $35,000 in due diligence and legal costs, not including any loan brokerage fees. Conduit loans have a defeasance pre-payment penalty. In general conduit loans are most suited for a fixed rate loan that can’t be done elsewhere. Perhaps it’s in a small market or the borrower is less desirable. Instead of debt service coverage, conduit lenders use the measure debt yield. Debt yield is the loan amount divided by the net operating income of the property. Conduits require a higher debt yield on less desirable projects. According to Gary Wong of Bancorp Bank, a leading small balance conduit, the debt yield

Unlike banks, life insurance companies can predict their inflows from premiums, and it’s their business to foretell their obligations. So while banks prefer to make adjustable rate loans, life insurance companies make fixed rate loans. Since life insurance companies make loans to fund their internal obligations, rates do not fluctuate as much, and are generally locked at application. Life insurance companies view real estate loans as a higher yielding substitute for the ultra-safe Treasury bonds they could buy, so rates track the Treasuries and loans are conservative. Life insurance companies can make spectacularly low fixed rate loans on extremely secure, apartment projects, but due diligence costs are high and they generally start to make sense at about $10 million and over. Since these are pure portfolio loans, they can have a custom structure, or a single loan could secure multiple properties. While the insurance companies prefer yield maintenance prepayment penalties, step down prepayment penalties can be available at higher cost. Most life insurance companies generally have high costs for due diligence and are only cost effective for large loans, but some are good lenders for smaller, urban infill properties that don’t fit elsewhere. For example, they would loan on three apartments above retail in a luxury area. These companies have low cost due diligence similar to banks. Life insurance companies generally require a 25 year amortization, which does reduce cash flow. While the Bay Area has been booming, the rest of the nation has been in slow growth mode. So, Bay Area apartment owners have had a double benefit, rising rents and values, driven by rising effective demand, while we have low rates influenced by challenges in the nation and in the world. Truly, these are the good ol’ days. RH

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The information contained in this article is general in nature. Consult the advice of a professional for any specific problem. The above article is the opinion of Marc A. Lipsett and does not represent the views of his employer. Marc A. Lipsett is Director of Loan Production at Intervest Mortgage, a mortgage bank owned by Umpqua Bank which makes loans for the Umpqua portfolio and correspondent Life Insurance Companies and arranges loans for conduits, credit unions and other banks. He can be reached at 510-622-8515.

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Roommate Dilemma Are Oakland landlords obligated to honor all roommate requests from tenants? BY VARIOUS AUTHORS

You can, however, add the new roommate to the rental agreement and have him or her sign it. But it is important to know that doing so may preclude you from increasing the rent in the future if the original tenant moves out and leaves the roommate behind. In other words, you may be stuck with the roommate as your tenant at the rent controlled rental rate. Whenever a landlord is faced with a proposed sublease/roommate situation, the landlord should consult with an attorney to determine the best course of action. —STEVE WILLIAMS


My tenant’s kitchen flooded recently, and my contractor told me that it would take a few weeks to repair. Since the kitchen is unusable, I offered to pay for hotel accommodations and give a rent credit to my tenant, but he refused. My tenant has been cooperative with letting us in the unit for repairs, but I’m afraid he will later file a complaint with the Oakland Rent Board or sue me. What is the best way to handle this situation?



One of my tenants in Oakland asked if her significant other can move into her unit. Am I obligated to accept a new tenant? If so, what is the best way to add a new tenant to the lease? Also, can I require them to sign a new lease and raise their rent?


The first thing you need to do is review your rental agreement. Does it contain a provision prohibiting or limiting subleasing? If so, then you can generally refuse a request to move in a roommate. If not, or if the rental agreement is oral, then you typically cannot prevent a tenant from moving in a roommate. However, even if you have a provision that prohibits or limits subleasing, the analysis doesn’t end there. Oakland’s Just Cause for Eviction Ordinance permits subleasing under certain circumstances even if the rental 34 RENTAL HOUSING

| MAY 2014 |

Why are you so worried? Your tenant appears to be cooperating and rejected your offer of kindness. If your agreement prohibits it. For instance, if tenant doesn’t want a hotel or rent credit, the proposed roommate is intended to you should be happy. replace a departing roommate (oneIn general, tenants don’t sue landfor-one replacement), then the landlord lords without first making a demand or cannot unreasonable deny a tenant’s requesting compensation. I would think written request. that if your tenant intends to make a So in your scenario, if your tenant claim for a breach of the warranty of kicked out a roommate in order to habitability, or a decrease in housing move in her significant other, then you services, you will receive notice before probably cannot prevent it since this formal action is taken. Despite what you is likely authorized by law as a onemay have heard, most tenants are civifor-one replacement. But if no one has lized and decent people. moved out and moving her significant It may be that your tenant is entitled other in would increase the number to compensation of some kind for being of permitted occupants, then you may without a kitchen for a period of time. reasonably say no to the The compensation could request. “If you are going to take the form of a credit If you are going to allow a tenant to against future rent or allow a tenant to move move in a roommate, an outright payment to in a roommate, then you then you cannot the tenant for loss of cannot charge more rent charge more rent for kitchen use. The exact for doing so. This would doing so. This would method of compensation violate Oakland’s rent violate Oakland’s is a matter of negotiaordinance. rent ordinance.” tion.

The amount of compensation is likewise something that will have to be negotiated. There is no standard formula for calculating the value of a lost housing service. Notwithstanding the loss of the kitchen, your tenant received some benefit from occupying the rental unit while the kitchen was being repaired. So, your tenant should pay some rent. It is rare for a court or rent board to order a 100% rent reduction if the tenant is still residing in the unit. I would think that a tenant could claim extraordinary expenses such as having to pay to eat in a restaurant one or more times a day until the kitchen was repaired. Restaurant dining can be expensive compared to eating at home. And any perishable food items in the pantry and refrigerator that were spoiled could also be an item of damages. And then there is the issue of inconvenience to the tenant. Some tenants ask for compensation for the trouble they have had to endure while the apartment, or a part of it, was out of service. I suggest that you approach the tenant and again make an offer of compensation of some type. If the tenant says “no”, then there is nothing you can or should do. If the tenant says “yes”, try to get the tenant to sign a release of claims so that the tenant can’t come back later and make a claim. —CLIFFORD FRIED RH The information contained in this article is general in nature. Consult the advice of an attorney for any specific problem. Steve Williams and Clifford Fried are an attorneys with Fried & Williams LLP and can be reached at 510625-0100 or

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Landlord Basics Tori Blanca, CCRM, EBRHA Free to Member and Non-members 6:30 p.m. – 8:00 p.m.

Landlord Basics Tori Blanca, CCRM, EBRHA Free to Member and Non-members 6:30 p.m. – 8:00 p.m.



Lunch-n-Learn Presented by: Bay Alarm Topic: Protecting & Securing Your Investment Members: Free; Non-Members: $20 Must RSVP by Monday, May 5

Be Oakland Rent Board Ready Jill Broadhurst, CCRM, EBRHA Members: $39; Non-members: $69 2:00 p.m. – 3:30 p.m.

12:00 p.m. – 1:00 p.m.

Intensive Bed Bug Training EBRHA is offering property owners and managers Bed Bug Control Training. Presented in partnership with Alameda County Vector Control. Instructors:


Trading Up to a Mid-size Apartment Building Nick Myerhoff, Myerhoff & Associates, Inc. Members: $39; Non-Members: $69 2:00 p.m. – 3:30 p.m. SATURDAY, MAY 17

Saturday Morning Coffee Hour Topics: • Member Q&A — Tori Blanca, CCRM, EBRHA 10:00 a.m. - 11:00 a.m. TUESDAY, MAY 20

Women’s Auxiliary Luncheon Scott’s Seafood Restaurant in Jack London Square Topic and Speaker TBD Auxiliary Members: $20; Guests: $35; 11:45 a.m.; Contact Anna Alberti for more info: 510-562-1179 THURSDAY, MAY 22

Resolutions to Handling Tenant Issues Michael Shepherd, The Shepherd Law Group Members: $39; Non-Members: $69 2:00 p.m. – 3:30 p.m. MONDAY, MAY 26


• Daniel Wilson, Alameda County Vector Control • Clifford Fried, Fried & Williams LLP • Andrew Sutherland, Bay Area IPM Advisor UCCE

Members: $79; Non-Members: $99 Must RSVP by Monday, June 7 1:00 p.m. – 4:00 p.m. TUESDAY, JUNE 17

Women’s Auxiliary Luncheon Scott’s Seafood Restaurant in Jack London Square Auxiliary Members: $20; Guests: $35; 11:45 a.m.; Contact Anna Alberti for more info: 510-562-1179 TUESDAY, JUNE 17

Landlord 101 Tori Blanca, EBRHA, CCRM Members: Free; Non-Members: $69 6:30 p.m. – 8:00 p.m. TUESDAY, JUNE 19

Office Closed

Landlord 102 Tori Blanca, CCRM, EBRHA Members: Free; Non-Members: $69 6:30 p.m. – 8:00 p.m.


Landlord 103 Tori Blanca, EBRHA, CCRM Members: Free; Non-Members: $69 6:30 p.m. – 8:00 p.m.

10:00 a.m. - Noon TUESDAY, JUNE 24

Landlord 103 Tori Blanca, CCRM, EBRHA Members: Free; Non-Members: $69 6:30 p.m. – 8:00 p.m. THURSDAY, JUNE 26

Landlord 104 Tori Blanca, CCRM, EBRHA Members: Free; Non-Members: $69 6:30 p.m. – 8:00 p.m.

*Members: $39; Non-members: $69. Mandatory prepayment required; 72 hour cancellation; No Refunds on no shows; Seats fill fast, register in advance! To register and pay, visit or call (510) 893-9873. Unless otherwise noted, all classes and events are held at the EBRHA Education Center, 360 22nd St., Suite 240, Oakland 36 RENTAL HOUSING

| MAY 2014 |


Annual fees are $30 per unit and are due March 1. Owners are allowed to pass through $15 to tenants. BUSINESS TAXES & REGISTRATION

Registration fee is $60 and is due March 1. Tax is based on annual gross rental income at a rate of $13.95 per $1,000 of gross rental income. Tax renewal declarations are mailed at the beginning of the year. LANDLORD PETITION FOR EXEMPTIONS

Claims covered include new construction, substantial rehabilitation, and single-family homes or condominiums.


2014-15 (1.9%) A CPI increase of 2.1% became effective on July 1, 2013. Tenants may only receive one increase in any 12-month period, and the rent increase cannot take effect earlier than the tenant’s anniversary date. In addition, California law requires that for tenancies receiving greater than a 10% increase, a 60-day notice is required; if the increase is 10% or less, a 30-day notice is required. Owners can only impose “banked” rent increases equal to three times the current annual allowable rent increase rate. See schedule at right.


AM O U N T ( % )

JULY 1 ‘14 - JUNE 30 ‘15 . . . . . . . . . 1.9 JULY 1 ‘13 - JUNE 30 ‘14 . . . . . . . . . 2.1 JULY 1 ‘12 - JUNE 30 ‘13 . . . . . . . . . 3.0 JULY 1 ‘11 - JUNE 30 ‘12 . . . . . . . . . 2.0 JULY 1 ‘10 - JUNE 30 ‘11 . . . . . . . . . 2.7 JULY 1 ‘09 - JUNE 30 ‘10 . . . . . . . . . 0.7 JULY 1 ‘08 - JUNE 30 ‘09 . . . . . . . . . 3.2 JULY 1 ‘07 - JUNE 30 ‘08 . . . . . . . . . 3.3 MAY 1 ‘06 - JUNE 30 ‘07. . . . . . . . . . 3.3 MAY 1 ‘05 - MAY 30 ‘06 . . . . . . . . . . 1.9 JUNE 1 ‘04 - MAY 30 ‘05. . . . . . . . . . 0.7 JUNE 1 ‘03 - MAY 31 ‘04. . . . . . . . . . 3.6 Visit to see previous adjustments.



Oakland Rent Board 250 Frank H. Ogawa Plaza, Ste. 5313 Oakland, CA, 94612 510.238.3721 |

(Improvement Costs ÷ Number of Units) 60 months or 5 years REFER TO ORDINANCE FOR QUALIFICATIONS AND AMORTIZATION PERIODS.


Annual fees are $194 per unit and are due July 1. Owners are allowed to pass through $4 to tenants. RATES OF ANNUAL PAYMENT OF SECURITY DEPOSIT INTEREST P E R I OD A MO UN T FEDERAL RESERVE RATES

DEC. 2013. . . . . . . . . . . . . . . . . . . 0.3% DEC. 2012. . . . . . . . . . . . . . . . . . . 0.5% DEC. 2011. . . . . 0.4% (CORRECTED 11/3/2011) DEC. 2010. . . . . . . . . . . . . . . . . . . 0.4% DEC. 2009. . . . . . . . . . . . . . . . . . . 1.1% DEC. 2008. . . . . . . . . . . . . . . . . . . 3.4% DEC. 2007. . . . . . . . . . . . . . . . . . . 5.3% DEC. 2006. . . . . . . . . . . . . . . . . . . 5.1% DEC. 2005. . . . . . . . . . . . . . . . . . . 3.4% DEC. 2004. . . . . . . . . . . . . . . . . . . 1.6%


2014 (1.7%) PERI OD AM O U N T

Beginning in 1998, adjustments are not allowed for the year following a tenant’s initial occupancy. To obtain the maximum amount for a specific address, please use the “Rent Ceiling Database” calculator on Berkeley’s Rent Board website. Visit to see previous adjustments.

2014. . . . . . . . . . . . . . . . . . . . . . . . 1.7% 2013. . . . . . . . . . . . . . . . . . . . . . . . 1.7% 2012. . . . . . . . . . . . . . . . . . . . . . . . 1.6% 2011. . . . . . . . . . . . . . . . . . . . . . . . 0.7% 2010. . . . . . . . . . . . . . . . . . . . . . . . 0.1% 2009. . . . . . . . . . . . . . . . . . . . . . . . 2.7% 2008. . . . . . . . . . . . . . . . . . . . . . . . 2.2% 2007. . . . . . . . . . . . . . . . . . . . . . . . 2.6% 2006. . . . . . . . . . . . . . . . . . . . . . . . 0.7% 2005. . . . . . . . . . . . . . . . . . . . . . . . 0.9% 2004. . . . . . . . . . . . . . . . . . . 1.5%, + $3 (1% + $3 IF TENANCY CREATED AFTER JAN. 1999)

2003. . . . . . . . . . . . . . . . . . . . . . . . . 0% 2002*. . . . . . . . . . . . 3.5% (NOT TO EXCEED $30) *ADDITIONAL ADJUSTMENTS ARE ALLOWED IF AN OWNER PAID FOR ELECTRICITY OR HEAT.



DEC. 2013. . . . . . . . . . . . . . . . . . . 0.1% DEC. 2012. . . . . . . . . . . . . . . . . . . 0.2% DEC. 2011. . . . . . . . . . . . . . . . . . . 0.3% DEC. 2010. . . . . . . . . . . . . . . . . . . 0.4%

Berkeley Rent Board 2125 Milvia Street Berkeley, CA 94704 510.981.7368 |


MAY 2014



member directory


Environmental Remedies, Inc. Jaime Tamayo 925-519-6354 P.W. Stephens Environmental Kimberly MacFarlane 510-651-9506 Water Damage Recovery Rick Walker 800-886-1801 APPLIANCE SALES & PARTS

Appliance Parts Distributor Mike De Fazio 510-357-8200 Appliance Warehouse of America David Jepsen 510-921-1071 APPRAISERS

Access Appraisal: Apartment Specialists Joe Spallone 510-601-1466 Mark Watts Commercial Appraiser Mark A. Watts 415-990-0025 ARCHITECTURE

InsideOut Design Pennell Phillips 510-655-1198 ASPHALT/CONCRETE

American Asphalt & Concrete Jeannie Nyberg 510-723-0280, x28 ASSOCIATIONS

BOMA Oakland/East Bay Stephen Shepard 510-893-8780 Oakland Association of Realtors Patricia Bouie Hinds 510-836-3000 Oakland Chamber of Commerce Joseph Haraburda 510-874-4808 ATTORNEYS - EVICTIONS/PROPERTY OWNER DEFENSE

Bornstein & Bornstein Daniel Bornstein 510-836-0110, x1007 Buresh, Kaplan, Feller & Chang Fred Feller 510-548-7474 Ericksen Arbuthnot Jason Mauck 510-832-7770 38 RENTAL HOUSING

| MAY 2014 |

Fried & Williams LLP Clifford Fried 510-625-0100 Law Offices of Elaine Lee Elaine Lee 510-848-9528 Law Offices of Leon H. Rountree III Leon H. Rountree III 510-343-6299 Law Offices of Marc L. TerBeek Susy Meyer 510-689-0140 Matthew Quiring - Attorney at Law 510-225-1345 Richards Law John Richards 925-231-8104 The Evictors Ed Nagy 510-839-2074 The Shepherd Law Group Michael Shepherd 510-531-0129 ATTORNEYS - LAND USE/CONDO CONVERSION

Law Offices of John Gutierrez John Gutierrez 510-647-0600, x2 Law Offices of Marc L. TerBeek Susy Meyer 510-689-0140 Richards Law John Richards 925-231-8104 ATTORNEYS - REAL ESTATE/ CORPORATION

Buresh, Kaplan, Feller & Chang Fred Feller 510-548-7474 Burnham & Brown Jack Schwartz 510-444-6800 Ericksen Arbuthnot Jason Mauck 510-832-7770 Law Offices of John Gutierrez John Gutierrez 510-647-0600, x2 Law Offices of Marc L. TerBeek Susy Meyer 510-689-0140 Richards Law John Richards 925-231-8104


Ken Betts Towing Services Ayub Azam 510-532-5000 BANKING/LENDING

Chase Commercial Josh Milnes 510-891-4545 Chase Commercial Ted Levenson 415-945-5430 Chase Commercial Neil O’Callaghan 415-315-8901 Cooperative Center Federal Credit Union Chris Perez 510-647-2127 First Federal Savings & Loan Assoc. Anthony Moreno 415-460-2657 First Republic Bank Jeff Fung 510-336-3907 Intervest Mortgage Marc Lipsett 510-622-8515 Luther Burbank Savings Larry Miller 925-627-2790 Opus Bank William Craun 925-648-5915 Torrey Pines Bank Mike Popovich 510-899-7548 BATHROOM & KITCHEN REMODELING

American Bath Enterprises, Inc. Larry Arcadi 510-785-2600 APT Maintenance, Inc. Keith Berry 510-747-9713 KMK Contracting & Property Services Kevin Knobles 925-292-8667 SGK Home Solutions Vladmir Merabian 408-264-6964 CARPET CLEANING

Cleaner Carpets Ron Russell 510-522-1344 CODE COMPLIANCE

Armstrong Development Barbara Armstrong 510-337-1998 COLLECTION AGENCIES

Credit Bureau Associates Kathy Parsons 800-564-6440 CONDO CONVERSION

Armstrong Development Barbara Armstrong 510-337-1998 CONSTRUCTION

A-One Construction Dirksen Rogers 408-690-0890 D.W. Hamilton Construction, Inc. D.W. Hamilton 510-919-0046 Going Green Dan Antonioli 510-652-7593 KMK Contracting & Property Services Kevin Knobles 925-292-8667 Schafer Construction, Inc. Mike Barker 510-568-7200 SpottCheck Consulting Susan Spott 510-816-1452 Vasona Construction, Inc. Dan Scharnow 510-413-0091, x203 West Coast Premier Construction, Inc. Homy Sikaroudi 510-271-0950 CONTRACTORS/RESTORATION

ARC Water Damage Nina Lauffer 510-835-3073 SERVPRO of San Leandro Clayton Barry 510-352-2480 Water Damage Recovery Rick Walker 800-886-1801 DOORS & GATES

R & S Overhead Garage Door Sean Boatright 510-483-9700, x14 SGK Home Solutions Vladmir Merabian 408-264-6964 Statcomm Inc. Cherie Anderson 650-988-9508 ELECTRICIANS

Thomas Electric Co. (TEC) Thomas Hurtubise 510-814-9387 ELEVATOR REPAIRS

Paramount Elevator Corp. Mark Pipoly 510-835-0770 ENERGY RETAILER

AXA Corporation Purie Infante 415-740-6178 FINANCIAL PLANNING

David White & Associates Miguel Delgado 925-277-2635 FIRE ESCAPE SERVICE

Great Escape Susan Giaquinto 415-566-1479 FIRE PROTECTION

Bay Alarm Limor Margalit 510-639-2652 Detect All Security & Fire Amy Roither 510-835-4100 Sentry Alert David Ingham 510-549-0306 Statcomm Inc. Cherie Anderson 650-988-9508 FLOOR COVERINGS

Bay Area Contract Carpets, Inc. Kerry Plain or Ken Scott 510-613-0300 Dick’s Carpet One Dan Biles 510-633-9533 GARAGE DOORS

R & S Overhead Garage Door Sean Boatright 510-483-9700, x14 GLASS & GLAZING

ALBA’s Glass Ben Moazeni 510-644-2522 GOVERNMENT AGENCIES

Housing Authority of the City of Alameda Mike Pucci 510-747-4325

Oakland Housing Authority Leased Housing 510-874-1500 GREEN BUILDING

Going Green Dan Antonioli 510-652-7593 GUTTER CLEANING

Mr. Sparkle Dylan Kelly 510-504-7048 HANDYMAN SERVICES

Halcyon Properties Roger Shane 510-847-7075 KMK Contracting & Property Services Kevin Knobles 925-292-8667 Start to Finish Christopher Bailey 510-727-9128 HAULING SERVICES

KMK Contracting & Property Services Kevin Knobles 925-292-8667 HEATING & AIR CONDITIONING

Advanced Home Energy Marisa Lee 510-540-4860 Albert Nahman Plumbing & Heating Albert Nahman 510-843-6904 Black Diamond Mechanical Robert Lopez 510-522-4196 DP Heating & AC Daryl Price 510-532-2043 Hassler Heating & Air Conditioning Mike Hassler 510-848-3030 INSPECTIONS

SpottCheck Consulting Susan Spott 510-816-1452 INSULATION

Advanced Home Energy Marisa Lee 510-540-4860 INSURANCE

Capital Insurance Group John Reynoso 1-800-682-9255, x7519


MAY 2014



Commercial Coverage Insurance Paul Tradelius 415-436-9800 The Greenspan Co./Adjusters Int’l. Rich Hallock 866-331-4790 Jain L. Williams - State Farm Insurance Jain L. Williams 510-530-3222 Kelly Lux – State Farm Insurance Kelly Lux 510-521-1222 Ruben Leon - Farmers Insurance Group Ruben Leon 510-525-6540 Ruth Stroup Insurance Agency Ruth Stroup 510-874-5700 Stone Creek Insurance Agency Tom Lynch 925-297-4202 Yonas Hagos - Farmers Insurance Yonas Hagos 510-763-1030 INTERCOMS & ACCESS CONTROLS

R & S Overhead Garage Door Sean Boatright 510-483-9700, x14 Sound Communication Systems Jerry Dean 510-595-8111 Statcomm Inc. Cherie Anderson 650-988-9508 INVESTMENT OPPORTUNITIES

Martinez Real Estate Investment Jose Martinez 510-769-0436 LAUNDRY EQUIPMENT

Coinmach Carlos Barraza 510-429-0900, x54435 LEAD, MOLD & PEST MANAGEMENT


Agent Access – Bay Area Fredric Harper-Cotton 510-689-4048 RentMethod Greg Sirotek 415-335-6814


Golden Gate Locksmith Co Ralph Scott 510-654-2677 PAINT SUPPLIERS

Dunn-Edwards Paints Megan Mutimer 415-755-0685 PEST & VECTOR CONTROL

Alameda Co. Dept. of Environmental Health Vector Control Services Daniel Wilson 510-567-6826 Terminix Robert Sater 510-489-8689 Times Up Termite Mike Barker 510-568-7200 PLUMBING - WATER HEATERS

Albert Nahman Plumbing & Heating Albert Nahman 510-843-6904 Ethan’s Service Plumbing Ethan Elkins 510-390-4185 Pacific Drain & Rooter Service Nasir Jalil 510-452-4606 Roto-Rooter Martin Alvarez 510-755-1262 Aspire Business Consulting Natalie Koffler 510-919-0914 PROPERTY MAINTENANCE

APT Maintenance, Inc. Keith Berry 510-747-9713 KMK Contracting & Property Services Kevin Knobles 925-292-8667 PROPERTY MAINTENANCE SUPPLIES

Ferguson Enterprises, Inc. Jermane Griffin 916-752-7608


| MAY 2014 |


SpottCheck Consulting Susan Spott 510-816-1452


Alameda County Healthy Homes Dept. Julie Twichell 510-567-8252


Rental Roost, Inc. Nitin Shingate 925-357-8783

Wilmar Nick Mraz 800-345-3000 PROPERTY MANAGEMENT

Advent Properties, Inc. Benjamin Scott 510-250-7918 Bay Property Group Robert Goldman 510-836-0110 Beacon Properties Carlon Tanner 510-428-1864 Caldecott Property Management Services Ronald Reece 510-594-2400, x226 Canyon Pacific Management Tom Scripps 415-495-4739 Cedar Properties Jonathan Weldon 510-834-0782 Crane Management Kit Crane 510-918-2306 The Enterprise Company William McLetchie 510-444-0876 ERI Property Management Sasha Bermudez 510-883-7017 Lapham Company Jon M. Shahoian 510-594-7600 Marquardt Property Management Karen or Judi Marquardt 510-530-2050 Oaktown Urban Properties Michael Moynihan 415-572-0334 OMM Inc./Mason Management Janice Mason 510-522-8074 Premium Properties Sam Sorokin 510-594-0794 Shaw Properties Liz Hart 510-665-4350 Sphinx Property Management Jon Goree 510-798-9299 Wellington Property Company Jillian Loh 510-338-0588

Woodminster Property Management Nicholas Drobocky 510-336-0202 PROPERTY MANAGEMENT SOFTWARE

Buildium Sam Clarke 888-414-1933 x152 REAL ESTATE BROKERS & AGENTS

Advent Properties, Inc. Benjamin Scott 510-250-7918 ARA Pacific Mike Colhoun 415-273-2177 Caldecott Properties Andy Read 510-594-2400 CBRE Keith Manson 510-874-1919 Coldwell Banker – Apartment Specialist John Caronna 925-253-4648 Coldwell Banker Commercial Henry Ohlmeyer 925-831-3390 Edrington & Associates Steven Edrington 510-749-4880 Home & Investment Realty George Vassiliades 510-710-6826 Lapham Company Tsegab Assefa 510-594-0643 Litton/Fuller Group Luke Blacklidge 510-548-4801, x130 Marcus & Millichap Eli Davidson 510-379-1280 Marcus & Millichap David Wolfe 510-379-1200 NAI Northern California Grant Chappell 510-972-4941 Property Counselors Link Corkery, Inc. Link Corkery 510-886-1212 Red Oak Realty Kevin Hamilton 510-250-8780

Woodminster Real Estate Co Inc. Nicholas Drobocky 510-336-0202 RECYCLING/REUSE

DR3 Mattress Recycling Robert Jaco 510-798-3734 RENT CONTROL CONSULTANTS

Alan K. Beales 510-339-9776 Bay Area Property Group Cristian Villarreal 510-474-7404 Edrington & Associates Steven Edrington 510-749-4880 RENTAL SERVICES

Cal Rentals Elaine Perkins 510-642-3644 Hamilton Properties Bay Area Delesha Hamilton 404-606-2141 ROOFERS

A-One Construction Dirksen Rogers 408-690-0890 Fidelity Roof Company Steve Parry 510-547-6330 Frank Fiala Roofing Frank Fiala 510-582-6929 General Roofing Company Michael Wakerling 510-536-3356 SECURITY/SURVEILLANCE

Bay Alarm Limor Margalit 510-639-2652 Detect All Security & Fire Amy Roither 510-835-4100 Golden Gate Locksmith Co Ralph Scott 510-654-2677 R & S Overhead Garage Door Sean Boatright 510-483-9700, x14 Sentry Alert David Ingham 510-549-0306 SEISMIC CONSTRUCTION

Adobe Soil & Structures Mark Almeida 510-919-1880

B.A.S.S. Seismic Retrofit D.W. Hamilton 510-919-0046 West Coast Premier Construction, Inc. Homy Sikaroudi 510-271-0950 SEISMIC ENGINEERING

Earthquake & Structures, Inc. B.K. Paul 510-601-1065 TENANT SCREENING SERVICE

Contemporary Information Corp. (CIC) Dan Firestone 888-232-3822 Credit Bureau Associates Kathy Parsons 800-564-6440 TOWING SERVICE

Ken Betts Towing Services Ayub Azam 510-532-5000 PPI Towing Stephanie Gipson 510-533-9600 WASTE & WASTE HANDLING EQUIPMENT

DR3 Mattress Recycling Robert Jaco 510-798-3734 Waste Management Company David Tucker 510-430-8509 WATER MANAGEMENT

HydroPoint Colleen Moore 415-602-6984 cell WELDING - STRUCTURAL & ORNAMENTAL

Vidrio Enterprises Jessie James Vidrio 510-453-8052 WINDOW WASHING

Mr. Sparkle Dylan Kelly 510-504-7048 WINDOWS

Advanced Home Energy Marisa Lee 510-540-4860 ALBA’s Glass Ben Moazeni 510-644-2522 SGK Home Solutions Vladmir Merabian 408-264-6964


MAY 2014



ad index



Membership Application for Property Owners and Managers


Environmental Remedies. . . . . . . . . . . . . . . 21 P.W. Stephens. . . . . . . . . . . . . . . . . . . . . . . . . 33 APPLIANCE PARTS & SALES

Appliance Parts Distributor. . . . . . . . . . . . . . 3 JOIN TODAY AND RECEIVE BENEFITS SUCH AS:



Bornstein & Bornstein. . . . . . . . . . . . . . . . . . 27 The Evictors. . . . . . . . . . . . . . . . . . . . . . . . . . 31 Fried & Williams LLP. . . . . . . . . . . . . . . . . . . 21 The Shepherd Law Group . . . . . . . . . . . . . . 33



Urban Ore. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 CARPETING & FLOORING


Bay Area Contract Carpets, Inc.. . . . . . . . . 35



Going Green. . . . . . . . . . . . . . . . . . . . . . . . . . 31 KMK Construction. . . . . . . . . . . . . . . . . . . . . 33 West Coast Premier Construction. . . . . . . 31



Adobe Soil & Structures. . . . . . . . . . . . . . . . 27 Earthquake and Structures, Inc.. . . . . . . . . 25 West Coast Premier Construction. . . . . . . 33




DP Heating & Air. . . . . . . . . . . . . . . . . . . . . . 33 ADDRESS




CIG Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 5 Jain Williams - State Farm. . . . . . . . . . . . . . 12 LAUNDRY

Wash Multifamily. . . . . . . . . . . . . . . . . . . . . . 33



JPMorgan Chase Bank. . . . . . . . . . . . . . . . . 12 Torrey Pines Bank . . . . . . . . . . . . . . . . . . . . . . 11



1-2 UNITS = $249.00

Golden Gate Locksmith Co. . . . . . . . . . . . . 31

3-4 UNITS = $269.00

5-8 UNITS = $289.00


9-16 UNITS = $299.00

17+ UNITS = $299.00 + $5.00 PER UNIT

Team Too. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PLUMBING

Albert Nahman Plumbing . . . . . . . . . . . . . . . 11 CHECK (PAYABLE TO EBRHA)








Maisel Property Management. . . . . . . . . . . 33 PROPERTY MANAGEMENT & SALES

Bay Property Group . . . . . . . . . . . . . . . . . . . 27 Beacon Properties. . . . . . . . . . . . . . . . . . . . . 31 REALTORS

John Caronna - Coldwell Banker . . . . . . . . 20



ECHO Housing. . . . . . . . . . . . . . . . . . . . . . . . 13





360 22nd Street, Suite 240

Applied Waterproofing Systems . . . . . . . . 35

Oakland, CA 94612



510.893.9873 | FAX 510.893.2906


| MAY 2014 |

Frank Fiala Roofing. . . . . . . . . . . . . . . . . . . . 21 General Roofing Co. . . . . . . . . . . . . . . . . . . . 35

SGK Solutions.. . . . . . . . . . . . . . . . . . . . . . . . 44 Acceptance of an advertisement by this magazine does not necessarily constitute any endorsement or recommendation by EBRHA, express or implied, of the advertiser or any goods or services offered.

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925-344-5755 877-264-6964

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Rental housing may 2014