Owning a rental property can be a smart investment and a powerful way to build long-term wealth. It can also be deeply rewarding – providing quality housing, supporting your community, and creating a reliable income stream. But let’s be real: being a landlord today, especially in California, isn’t for the faint of heart.
Whether you’re thinking about purchasing your first rental property or you already own one and want to better understand your responsibilities, it’s important to go in with eyes wide open. California has some of the most tenant-friendly laws in the country, and staying compliant means keeping up with evolving state and local regulations.
The Basics: What You’re Signing Up For
Being a landlord involves much more than collecting rent. At a minimum, you’ll be responsible for:
- Understanding Rent Control & Eviction Laws: California’s Tenant Protection Act (TPA) sets strict rules on how much rent you can charge and under what circumstances you can ask a tenant to leave. Many cities also have local rent control ordinances that are even more restrictive. Even if your property is exempt, you need to notify tenants of that exemption in writing and include it in the lease.
- Maintaining a Habitable Property: This means making timely repairs, ensuring basic systems (like plumbing, heating, and electrical) are in working order, and complying with safety laws regarding smoke detectors, carbon monoxide alarms, and more. The legal standard for habitability is high – and rightfully so.
- Handling Security Deposits Correctly: New rules effective July 1, 2024, limit most landlords to collecting only one month’s rent as a security deposit, regardless of whether the unit is furnished. There are a few exceptions, but they’re narrow. And beginning July 1 2025, landlords will be required to take and share photos of the unit at move-in and move-out if any deductions are made from the deposit.
- Complying with Disclosure Requirements: Landlords must disclose things like mold, bed bugs, flood zones, and more. Local laws may add even more to the list, and federal law applies too (e.g., lead-based paint disclosures for older buildings).
- Navigating Pet and Assistance Animal Laws: Landlords may prohibit pets – but not service or emotional support animals. Discrimination here can result in serious legal consequences, so it’s essential to understand the difference and follow proper documentation protocols.
- Staying Current on Insurance & Liability Coverage: Insurance requirements change once you turn your property into a rental. You’ll need coverage for both the structure and liability, and tenants should be encouraged – or required – to carry renters insurance.
- Respecting Fair Housing Laws: California’s fair housing protections are extensive and include protections related to income source, immigration status, family makeup, and disability accommodations. “Testers” are sometimes used to check for compliance, so it’s not just theoretical – mistakes can be costly.
Why It’s Still Worth It
It might sound like a lot (because it is), but don’t let that discourage you. With the right preparation, solid professional advice, and a willingness to learn, owning a rental property can absolutely be worth it. In fact, many California landlords find the experience to be both financially and personally fulfilling – especially when they work with knowledgeable advisors and put good systems in place from the start.
Get Informed Before You Invest
The California Association of REALTORS® has prepared a comprehensive Rental Property Owner Advisory, which outlines these responsibilities in greater detail. We highly recommend reviewing it – especially if you’re considering buying a property to rent out. Click here to read the full C.A.R. Rental Property Owner Advisory.
It goes without saying that you need a great team on the field with you. We’ve had great success finding excellent tenants for clients and making sure everyone’s in compliance…give us a call to talk about how we can do the same for you!