What kind of property is the best for rentals?

Q: What type of property class do you recommend for a rental?
A: It depends. In the Bay Area, if you want cash flow (at least the positive kind), you need to go with multi-residential. This means several units in one location and if possible, small 1-2 bedroom units. With any rental, you have diminishing returns. What does this mean? Look at the example below:

1 bedroom rent: $1300 800sqft
2 bedroom rent: $1500 1000sqft

The 2 bedroom unit has 25% more square footage but does not have 25% more rent (only 15%). When you buy property, the price of the property is based on the square footage. So the small the unit, the more return you will get on your investment dollar per dollar. You aren't getting a good pay off for the extra space. 1 bedrooms are good for the following reasons: easy to rent & easy to clean/fix. Also, people who live in 1 bedrooms generally won't be asking for anything fancy. As long as it works, that's it. You can make everything standard in a small, lower end unit. If the market goes up, you raise the rent. If it goes down, you lower the rent. Usually, you will always be able to rent it out as long as you set a fair price and keep it in good condition.

Rental Deposits Small Claims Court

See my comments at the end after you've read this article below
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Action Line: Questions linger for landlord after judge's ruling

Q Last month you replied to a question regarding renters' rights and gave the name of an organization that could be contacted. I seem to have misplaced that number as I am looking for my deposit back on a rental I lived in and am having difficulties.

Second, I also own a house in Santa Cruz and my tenants recently moved out, leaving the very expensive home a mess.

I had to have the carpets cleaned, door handles replaced, paint and general cleaning done, etc.

I refunded 30 percent of the deposit, which represented the deposit minus my expenses and extra days the tenant stayed.

The tenant had been there one year.

We went to small claims court and produced all the receipts and pictures of the premises.

I lost in court and the tenant didn't have to pay any cleaning or painting or extra days.

Aren't there some regulations that require a property to be professionally cleaned (regardless of home cleaning by the tenant) on the tenant's move-out?

And if they move in early aren't they still responsible to pay for those days?

B.C.

A I'll take the second question first, B.C. No, there are no regulations that require a property be professionally cleaned. The law says that the property must be returned to the condition it was in when it was originally rented minus normal wear and tear.

As for the extra days charge, it looks like the judge answered that one for you.

The organization you are looking for is Project Sentinel. It is a non-profit agency providing services to help people resolve housing problems.

According to its Web site, "The agency assists home seekers as well as housing providers through counseling, complaint investigation, mediation, conciliation and education. The services are funded by cities and counties in the greater Bay Area and Central Valley. All services are free and confidential."

You can contact Project Sentinel at (408) 720-9888.

San Jose residents can contact Santa Clara County's dispute resolution program at (408) 792-2314.

For a free copy of the California Department of Consumer Affairs "California Tenants - a guide to residential tenants' and landlords' right and responsibilities," you can call (800) 952-5210.

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This is called bad tenants and liberal judges in our small claims court system. Small claims court is just that, for small items less than $7500. No lawyers allowed. Most of the time, the judge will side with the poor tenant because the rich landlord/owner can afford it. There is almost no "justice" in small claims court. It's about quick resolutions and getting the case out of the system.

This has happened to me before where a tenant lived in a unit for 1 year and used a can of spray paint to do "touch up." Let's just say it looked like a mess, was not in the ORIGINAL condition, and could not be rented without a complete repainting of the unit. I even showed up with PICTURES! My unit looked like it was a freeway sound wall tagged with spray paint. Like the landlord above, I lost the case.

Q: So Bo, what can I do in a case like this? Nothing. Or don't rent out expensive houses to bad tenants. I suspect the landlord didn't find the best tenant or possibly rented out to several individuals vs. one nuclear family. I know beggars can't be choosers but in the end, a bad tenant cost the landlord alot of time, frustration and money.