All right, let’s talk about this. There are some new laws coming for real estate investors and it’s some scary stuff. Folks, they are sending shockwaves through the investing world, as we speak, we’re going to get to all of those new laws in a moment or actually a handful of them, because there’s way more than I can even talk about. But if you’re new here welcome, this channel is devoted to helping you make money and building financial intelligence. You’re going to learn things on my channel that’ll set you apart from everyone else. I hope and you’ll learn things that we were never taught in school, never taught in high school. So please subscribe and drop me. A comment to. Let me know that you are new here, say: hey I’m new here, please! Let me know I try to respond to every comment that I can ok, let’s talk about these scary new laws and I’m gon na give you three choices as to which state is starting this trend of hurting landlords. More and more, can you guys guess which state it is? Can you three choices? If your answered California, then you’re absolutely right and once again it’s a room, it’s a reminder as to why I would never invest there. So, what in the world is going on in the Golden State? Well, how about this listen to this? You can’t do a criminal background check on a tenant. You must rent out your property or pay a fine. You must report all of your company’s beneficial owners boom, boom, and boom. This is a lightning bolt right, shooting through the world of investing, and this is bad stuff. Folks, do these sound like an authoritarian bureaucracy? This is the stuff you’d expect from Russia or Cuba, not the United States. California, at this point, probably should just secede from the union already. This is a disgrace. This is a huge restriction on property and privacy rights. Folks. This is really really scary. So in California, the Oakland City Council, outlawed criminal background checks on prospective tenants. Now the purpose they said is to allow the formerly incarcerated to compete for housing and avoid being homeless. Ok, I get it now. My great attorney friend Garrett Sutton broke it down like this, and I love the way that he puts this and he hates California. By the way, he said that any housing provider at any person aiding a housing provider ie a man company – will face stiff penalties for doing a criminal background check. Liability can be three times the greater of a one month’s rent or be actual damages, including damages for mental or emotional distress. A court may actually award punitive damages and attorneys fees. Criminal penalties may also be asserted against the landlord, so tenants’ rights attorneys could make hay with this ordinance going after landlords like crazy. So let me get this straight. If I run a company and I’m hiring, I can do a criminal background check to make sure that the person I’m hiring doesn’t have a criminal history. But if I want to rent out my property to you, I can’t do this anymore. This is a total catch-22, which I’ll explain more of in a moment and Gareth Sutton goes on a little further to explain that if you own a rental property in Oakland, you most certainly want it titled in the name of an LLC which would, under normal circumstances, Shield you from personal liability and rather than screening, tenants personally, for which these new, crazy high penalties would apply. You’Ll want to use an independent management company for that task. Make sure they’re doing it, not you, because if there’s an accidental criminal background check on a prospective Oakland tenant the management company’s going to suffer the consequences, not you it’s crazy right, but that doesn’t sound like a great plan either, because now the management company is liable. Look landlords have a duty to protect the neighborhood of the rental property from the criminal acts of their tenants. Landlords are routinely held responsible for their tenants, dealing drugs on the property or having an illegal dog that bites somebody or just name a crime, and we as landlords are responsible, other tenants or anyone in the neighborhood can sue. The landlord can sue me for the rental property being a public nuisance that threatens Public Safety if you’ve been following our journey on one of our new jersey properties, you know the story, so in Oakland you have to rent to criminals, but you’re still responsible. If they engage in the crime, so if one of your investing guidelines is to avoid nonsensical catch-22s, you may want to just sell your Oakland properties and never in stare again, please note that that’s not the only place either. San Francisco is also considering legislation to ban criminal background checks. What so, I would run not walk away from California, because it’s gon na happen, statewide here’s something else would be coming to other big cities in blue states. San Francisco voters just approved two measures affecting real estate rights. The first one aims to deal with the blight of empty storefronts and no one likes empty storefronts right at empty buildings. But the owners of these retail spaces remaining vacant for six months or more are going to now have to pay a tax of $ 250 per foot of linear frontage to the street and they give up to a thousand dollars in later years. And New York City is considering a similar tax. Now supporters say that landlords care more about the neighborhoods and they only want more rent that they don’t care about. The neighborhood, of course, leaving a storefront vacant for years does not actually constitute more rent. No one wants that opponents argue. The measure ignores current realities, San Francisco’s, the permitting process for tenant improvements and alterations, as well as new business approvals, they’re notoriously old school, and it can take a year or more to get your paperwork through bank financing requirements for expensive neighborhood retail spaces. You have to they’re called the feature covenants, calling for only the most creditworthy tenants. It limits the pool of prospective users, and the rise of e-commerce has certainly not benefited. Anyone on these brick-and-mortar spaces throughout San Francisco everyone’s buying stuff online and the unintended consequences of this new ordinance in San Francisco will be interesting to watch from a distance because it’s gon na hurt what about Detroit other big cities. The state of California, is also inserted. They’re very visible hand into the real estate market. Statewide. Rent control folks have arrived properties older than 15 years are limited to annual rent increases of 5 percentage points, plus inflation rate over 10 percent. Whichever is less owners cannot raise the rent above the new limits to cover capital improvements on these older buildings, which means the Golden State just like Portland and parts of Oregon will now have all of this deferred maintenance. The new California law also restricts landlords ability to evict tenants if a tenant has occupied a unit for at least 12 months. Evictions can for just cause where the tenant is at fault and in a limited number of cases where they’re not at fault such as the owner moving in or taking over the unit of taking the unit off the market. So when you’re evicting any tenants, a new landlord must now provide written notice and state, whether it’s an at fault or no fault issue. If there’s no fault on the tenant’s part, the landlord must provide one month’s rent money to cover the tenants, relocation expenses in California. Corporate officers and managers can now be held personally liable for civil penalties resulting from minimum wage violations, and you know Garretson likes to talk about personal liability because it always you know that it’s very, very important for you to be covering your personal liability with an LLC New York has gone now, a big step in hurting limited liability companies and it could totally upset the balance between productive employment and limited liability protection. The top ten owners of an LLC can now be held personally responsible for violating New York’s wage and hour laws. So consider like here’s an example and we’ll kind of break it down. You invest ten thousand dollars into an LLC, that’s doing business in New York. In exchange, you get a one percent interest in the LLC. That’s normal right! Nine other investors hold the remaining. Ninety-nine percent and three of them conduct the LLC’s business operations, you’re a passive investor with no management or authority. You like it that way. That’S the type of investor you are. You invested into a limited liability company, because your liability is limited to the ten thousand dollars that you invest in and nothing more right. That’S the whole historical value of an LLC going back hundreds of years, but New York has now changed the rules. If three managers don’t pay for the example, one hundred thousand and wages you’re now on the hook for the payment, even though you only own one percent of the LLC, and had no management authority, you’re now jointly and severally liable for the money. This means that if the other nine owners flee or are bankrupt, you now owe the entire wage claim amount. What if people turn in their shares and all of a sudden, without your knowledge, your your that one of the top ten owners, you’re responsible for the whole claim that can happen. New York’s law now totally up ends. The concept of limited liability and attorneys are gon na, be counseling clients to think long and hard about doing business in New York. All this disruption is in the name of protecting workers. Thats what they’re saying, but what about the owners of these companies DC is also demanding more from limited liability companies. Their government with the stated virtuous goal to expose ban, let bad landlords hiding behind an LLC. That’S literally a quote from them now wants ownership information on all LLC’s, whether for real estate or business formed in DC or doing business in the district just visualize this. For a moment, this is one step away from collection of information and plaintiffs attorneys are going to be suing not only the LLC but also the LLC’s individual owners, and in some cases the courts are going to dismiss any personal claims. That would be normal when a liability rest with the LLC, but now in many cases the suing of individuals will be used to gain leverage in litigation and again the limited liability protection of the LLC will be diminished through government regulation and we’ve already seen. Statewide, rent controls on the books and moving in different states across the country, we’ve already seen it in Portland Oregon, and these are just some of the laws that are now coming and again this I come back to my point about investing in blue states versus red States, when you have these incredible regulations all of this red tape, it makes it in hospital inhospitable to do business in those states. New York has spent millions of dollars on television commercials for build a business in New York. It’S the greatest place to build a business. Why do you think they’re spending millions of dollars on television commercials to encourage you to do business in New York? Its because so many people are moving out of New York to other states like Texas, Tennessee, North Carolina and Florida way more hospitable for business growth. California, everyone’s leaving going to Idaho and Arizona and Texas there’s all of this migration out of these blue states. Then all these people leave all these businesses leave. They have to raise property taxes for the people that remain, they make it more Draconian every year, they’re not gon na roll. These things back, but some states just did like Texas. Texas went the opposite direction, which is why I love. You know why we do so much business in Texas and building our properties there. So Texas, during the November election, made it even better for landlords. They made it even better for us as landlords and now with a statewide income tax reduction. So the people in Texas said: hey: we’ve done a lot of business moving here. Yes, we’re paying higher in property taxes than maybe we’re comfortable with, but we’re happy to not be paying income tax, so huge shifts across the country in certain states. Blue states making it more inhospitable for business and landlords if you’re in California, with so many. Viewers of our channel that asks are like well, I live in California. How can I invest – and my point is – don’t invest in California and that’s out of state and that’s like what our company does and Morris invest. We help, I think, of maybe 70 % of our clients live in California and buy properties through us in in Texas and other states, because we make it incredibly easy cash flowing rental property with tenants already in place new construction built from the ground up. You don’t have if you live in one of these blue states that are really Draconian and you were thinking about investing or finding a rental property in your backyard. Please don’t I’ve already warned you about New Jersey. Now morning you about New York and I’ve been warning. You about California for years to pay attention to these laws and they’re gon na start popping up in other blue states across the country. You watch Milwaukee, I’m talking to you, I’m talking to you Milwaukee. I cannot believe I I bet you I’ll put money on Milwaukee over the next few years, having some of these really Draconian laws pop up you watch. I want to take me up on that bet, so there you go folks, some brand new laws that will dramatically affect us as real estate. Investors.