Landlord offers to extend lease 1 year from now, should I accept? (Los Angeles: apartment complex, rentals)

[oleador]

The landlord of my apartment complex offers to extend the lease by 6 months at current rent, even though my current lease expires almost a year from now.

On the one hand, it would be good to secure the terms of the lease and not worry about rent increase for another half a year. On the other hand, my gut tells me the landlord (a large corporation operating hundreds of apartment communities nationwide) wouldn't make an offer like this if it was not profitable for them. They might expect rents to go down in the area, or they have information about developments in the neighborhood that may reduce the quality of life in the apartment complex (e.g. if construction started nearby).

I'm not sure whether to accept or reject the offer. Any thoughts or suggestions?

P.S. this is my first post, and I'm thrilled to join the community!

[huja]

Originally Posted by oleador

The landlord of my apartment complex offers to extend the lease by 6 months at current rent, even though my current lease expires almost a year from now.

On the one hand, it would be good to secure the terms of the lease and not worry about rent increase for another half a year. On the other hand, my gut tells me the landlord (a large corporation operating hundreds of apartment communities nationwide) wouldn't make an offer like this if it was not profitable for them. They might expect rents to go down in the area, or they have information about developments in the neighborhood that may reduce the quality of life in the apartment complex (e.g. if construction started nearby).

I'm not sure whether to accept or reject the offer. Any thoughts or suggestions?

P.S. this is my first post, and I'm thrilled to join the community!

What's more important to you . . .

A) Sure thing that you can budget for 18 months?

B) The option value of being able to move; stay put at the same rent; stay put at a lower rent; stay put at a higher rent a year from now?

[Miss Pip]

Originally Posted by oleador

The landlord of my apartment complex offers to extend the lease by 6 months at current rent, even though my current lease expires almost a year from now.

On the one hand, it would be good to secure the terms of the lease and not worry about rent increase for another half a year. On the other hand, my gut tells me the landlord (a large corporation operating hundreds of apartment communities nationwide) wouldn't make an offer like this if it was not profitable for them. They might expect rents to go down in the area, or they have information about developments in the neighborhood that may reduce the quality of life in the apartment complex (e.g. if construction started nearby).

I'm not sure whether to accept or reject the offer. Any thoughts or suggestions?

P.S. this is my first post, and I'm thrilled to join the community!

What is the area? I would do research and see if there are any development plans for the neighbourhood or look at Redfin and see if properties are selling a lot and how much for.

[streetscenes]

Depends on if the apartment is rent control or not. If there is rent control no need to sign the extension, they can't raise the rent above the prescribed amount.

[luv4horses]

They might be getting ready to sell the building to a new company. Would that matter to you?

[oleador]

Originally Posted by Miss Pip

What is the area? I would do research and see if there are any development plans for the neighbourhood or look at Redfin and see if properties are selling a lot and how much for.

Thank you for your answer. It's in Fairfax/La Brea area. I've checked Zillow rent data for LA metropolitan area as well as for neighborhoods nearby, and it looks like rents haven't been growing for the past 7-8 months. Maybe they expect no further growth or even a decline in rents, and want to secure future cash flow.

I just thought that it's a little suspicious that the landlord makes the extension offer a year in advance. I don't think it's common practice.

[EdRoth]

Owning rentals in Los Angeles is a better ROI than most any other investment with little to no risk of loss of principle. Many firms looking to secure funding know it's easier to do with firm leases to back their income projections.

[CALGUY]

There are a couple of schools of thought in play here.
My gut feeling is that a new development close to your complex is about to get underway.
Keep in mind, the city of Los Angeles has made it possible for developers to build many homes on small lots, where that was not possible a short while ago.
That in and of itself destroys neighborhoods that have for years been relegated as somewhat tranquil.

This is happening two blocks from where I live, and in many other parts of the city.
Echo park comes to mind.
In my area, an extremely small lot, that housed one three bedroom house, is presently being rebuilt with ten houses on the lot, where one house stood.
These houses will be narrow, but tall(3 and 4 stories high.)which is why they can put so many houses on that tiny lot.
The houses surrounding this are all one level, and will be dwaft by these much taller structures.

This perhaps is what may be going on in your area soon, and the landlord doesn't want his tenants moving out during, or after construction of a new development.
It might behoove you to ask other tenants if they were offered the same deal.

If so, you can rest assured something is going to be happening in the area, and soon.
The only other thing that comes to mind is the property you live in, is in need of repair, that could cost thousands and thousands of dollars, and in the hope tenants won't complain because the repairs are not being done, the offer is being made.
In many building in this city, landlords collect rents, and needed repairs are not done until absolutely necessary.

Being in the business, I know some landlords in the city who forgo doing any major repairs, until the tenants as a group demand that repairs be done.

When buildings are neglected, repairs become extremely costly, and the likelihood of tenants moving out, is very real, so landlords try the old enticement game to keep tenants paying rent.

I am not saying this is the case in your situation, but it could be.

Bob.

[EdRoth]

Originally Posted by CALGUY

There are a couple of schools of thought in play here.
My gut feeling is that a new development close to your complex is about to get underway.
Keep in mind, the city of Los Angeles has made it possible for developers to build many homes on small lots, where that was not possible a short while ago.
That in and of itself destroys neighborhoods that have for years been relegated as somewhat tranquil.

This is happening two blocks from where I live, and in many other parts of the city.
Echo park comes to mind.
In my area, an extremely small lot, that housed one three bedroom house, is presently being rebuilt with ten houses on the lot, where one house stood.
These houses will be narrow, but tall(3 and 4 stories high.)which is why they can put so many houses on that tiny lot.
The houses surrounding this are all one level, and will be dwaft by these much taller structures.

This perhaps is what may be going on in your area soon, and the landlord doesn't want his tenants moving out during, or after construction of a new development.
It might behoove you to ask other tenants if they were offered the same deal.

If so, you can rest assured something is going to be happening in the area, and soon.
The only other thing that comes to mind is the property you live in, is in need of repair, that could cost thousands and thousands of dollars, and in the hope tenants won't complain because the repairs are not being done, the offer is being made.
In many building in this city, landlords collect rents, and needed repairs are not done until absolutely necessary.

Being in the business, I know some landlords in the city who forgo doing any major repairs, until the tenants as a group demand that repairs be done.

When buildings are neglected, repairs become extremely costly, and the likelihood of tenants moving out, is very real, so landlords try the old enticement game to keep tenants paying rent.

I am not saying this is the case in your situation, but it could be.

Bob.

Published source please?!

[CALGUY]

Originally Posted by EdRoth

Published source please?!

What published source are you looking for?

If you are looking for source as to housing development on small lots, here you go
There are a few links you can click on that explain what is going on in the highland park area of thew city.

//www.city-data.com/forum/los-a...ny-houses.html

Bob.