Most people who end up renting out a home in Los Angeles, California never planned to become landlords. They inherited a house from a parent, took a job in another state, or simply outgrew the home as their family grew. According to Jesse Sasomsup, founder of Earnest Holmes Property Management, that pattern describes roughly 90 percent of his clients. Understanding what that means practically, financially and legally is the first step before putting a property on the rental market.
Sasomsup says the typical path looks the same again and again. A homeowner buys a house to live in, not to invest in. Then life changes. The kids move from elementary school into middle or high school and the family needs a different district. A better job offer comes from a state where money goes further. A parent passes away and leaves a property behind. In almost every case, the owner did not set out to build a rental portfolio. They simply have a house they no longer live in and a decision to make about what to do with it.
That distinction matters because accidental landlords usually do not know the rules that come with renting out a home in California, especially if they are moving out of state.
One of the first questions Sasomsup asks a new client who is relocating is whether they plan to move back to California within the next couple of years. California continues to treat income from a property here as taxable, even for owners who move away. Depending on how long an owner stays out of state, they may owe a portion of their rental income to the state on a regular basis rather than only at tax time. Many new landlords assume that once they leave California, the state no longer has a claim on their rental income. That assumption is incorrect, and it is one of the more common surprises for first-time landlords in Los Angeles.
Talking to a tax professional or an experienced property manager before the property goes on the market can prevent an unpleasant surprise later.
For owners moving out of state, coordinating repairs, showings and tenant screening from a distance is one of the biggest practical challenges. A full-service property manager typically handles the entire process from start to finish: an initial inspection to confirm the home is rental ready, professional photos and marketing, showings, tenant screening, lease drafting, a move-in inspection, day to day management once a tenant is in place, and eventually the move-out inspection. For someone who is also packing up a household and starting a new job in another state, having one point of contact for all of that removes a significant amount of stress.
Becoming a landlord by accident does not mean an owner has to figure everything out alone. The tax rules, the local rental market and the day to day responsibilities of being a landlord are all things a new owner can learn quickly with the right guidance. The owners who run into trouble are usually the ones who assume renting out a home works the same way everywhere, without checking the specific rules that apply in Los Angeles and California.
Earnest Holmes Property Management is a full-service property management company serving Los Angeles, managing nearly 700 properties across the Valley, South Bay, and Westside. Founded in 2015, the company specializes in guiding first-time and out-of-state landlords through LA’s fast-changing tenant laws, offering end-to-end services from marketing and tenant screening to leasing, maintenance, and move-out. Earnest Holmes backs its service with a 24-hour communication guarantee, a $5,000 pet-damage guarantee, and a $5,000 eviction-cost guarantee, with management fees starting at 5% per month. Jesse Sasomsup, founder of Earnest Holmes, is a contributor to Forbes Business Council.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.
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