Are you underwriting a 2 to 20 unit building in Long Beach and wondering how AB 1482 will shape the numbers? You are not alone. Between the statewide rent cap and local rules, small multifamily returns depend on careful modeling and compliance. This overview gives you a practical, investor-first map of AB 1482 and the Long Beach policy checkpoints that matter for underwriting, operations, and exit planning. Let’s dive in.
AB 1482 baseline you must model
AB 1482 sets a statewide floor for tenant protections. Local law can be stricter, so treat the state rules as a starting point when you model deals in Long Beach.
- Rent cap formula. Annual rent increases are generally limited to 5 percent plus local CPI, not to exceed 10 percent total. Cities with stronger rent rules can override this and control the increase differently.
- Just-cause protections. You can terminate tenancy only for stated at-fault reasons, such as nonpayment or lease breach, or for limited no-fault reasons, such as owner move-in, withdrawal from the rental market, or substantial remodeling. Many protections apply once a tenant has been in place for a set period, commonly 12 months. Some no-fault actions require relocation assistance and specific notices.
- Common exemptions to verify. New construction within a defined window, often 15 years from certificate of occupancy, may be exempt. Single-family homes and condos are often exempt if you provide the required written notice and the owner is not a covered corporate entity. Owner-occupied duplexes are commonly exempt. Short-term rentals and certain government-assisted units can also be exempt.
- Interpretation shifts. Details like the corporate-owner carveout, 15-year counting, and serial tenancies can change with guidance and cases. Always confirm the current statutory text.
How the cap impacts your numbers
AB 1482 constrains in-place rent growth, so it directly affects stabilized NOI and valuation.
- Rent growth. Underwrite conservative annual growth tied to the cap formula or local CPI if stricter. Avoid pro formas that assume outsized gains on in-place tenants.
- Turnover assumptions. Many markets allow vacancy decontrol at turnover, but stronger tenant protections can lower churn. Model realistic turnover rates and longer timelines to reach market rent.
- Reposition timelines. Plans that depend on quick rent lifts through frequent turnover may take longer and cost more. Build in time for notices, potential relocation assistance, and leasing.
- Valuation and IRR. Expect lower projected NOI if increases trail market and if you add legal, registration, and relocation costs. Include a rent-control sensitivity in your model.
Operations and compliance to budget
Strong tenant protections shift value creation toward precise compliance and steady operations.
- Notices and documentation. Serve the correct notices for rent increases, exemptions, and any tenancy terminations. Poor notice can void actions and create delays.
- Relocation assistance. Budget for relocation payments where required on no-fault actions, plus legal and administrative time.
- Screening and management. With narrower pathways for removal, you benefit from careful screening, proactive maintenance, and early remediation to stabilize cash flow.
- Capital improvements. Some cities allow limited rent adjustments for qualified capital work, often with strict rules and approvals. Confirm if any Long Beach programs apply before you assume pass-throughs.
- Lender expectations. Many lenders want proof of compliance, conservative growth cases, and reserves for legal exposure. Plan for this in your financing strategy.
Model three scenarios for Long Beach
Build a simple scenario set so you can adapt to market and policy shifts.
- Base case. In-place rent growth capped by the AB 1482 formula or by local limits if stricter. Standard turnover and lease-up timelines.
- Downside. Low CPI with minimal increases, higher capex and relocation costs, longer vacancy between turns, and slower approvals.
- Upside. Vacancy resets to market, targeted capital upgrades at turnover, and any eligible local approvals that support rent adjustments.
Long Beach policy checks before you buy
Local rules can change your cash flow and timeline. Verify these with the City of Long Beach before closing.
- Rent stabilization status. Confirm whether a local rent stabilization or rent adjustment ordinance applies to your property. Identify covered unit types, allowable increases, and whether the city has vacancy decontrol or vacancy control.
- Just-cause beyond state law. Check for any city rules that add protections or increase relocation amounts and notice periods for owner move-in, withdrawal, or substantial remodel.
- Registration and inspections. Determine if rental registration is required, what fees apply, whether periodic inspections occur, and if habitability programs trigger work orders.
- Relocation and conversion. Review requirements for tenant relocation on demolition, condo conversion, or substantial rehabilitation, including notice windows and any replacement housing rules.
- Short-term rental and licensing. Confirm short-term rental limits, home-sharing rules, business license requirements, and any local tax implications for nontraditional operations.
- Enforcement process. Identify which department handles complaints and enforcement. Understand how timelines and remedies work so you can plan responses.
- County or state overlay. Consider whether county or state programs or emergency protections could affect collections or actions.
Due diligence checklist for small multifamily
Request and verify these items to support underwriting and compliance.
- Rent roll with move-in dates, current rents, lease terms, deposits, concessions, and date of lease.
- All executed leases and recent rent increase notices.
- Tenant ledgers showing payments, arrears, and any payment plans or forbearances.
- Records of prior or pending eviction actions.
- Any exemption notices, such as single-family or owner-occupied duplex letters.
- Building age and certificates of occupancy to test the new construction exemption.
- Title report to confirm ownership structure and any restrictions.
- City correspondence, including code complaints, inspection reports, registration certificates, and notices of violation or relocation demands.
- Records of capital improvements, permits, and any local rent pass-through approvals.
- Insurance, service contracts, and utilities responsibility schedules.
- Property management agreements and copies of tenant notices and templates.
AB 1482 compliance checks on file
Before you close, confirm the property aligns with state rules and any local overlay.
- Verify unit eligibility or exemption status by age, type, and ownership.
- Identify tenants with occupancy under 12 months as this can affect just-cause application.
- Review rent increase history to confirm prior increases complied with the cap.
- Confirm delivery and content of required AB 1482 notices and any exemption disclosures.
Pricing, negotiation, and risk controls
Use what you learn to sharpen price and protect your downside.
- Run sensitivities with rent growth capped at the AB 1482 formula and at lower CPI. Test IRR impacts from slower turnover and higher compliance costs.
- Add line items for relocation assistance, legal fees, registration, and inspection-driven capex.
- Consider price adjustments or escrow holds if you uncover open code issues or unresolved city findings.
Bottom line for Long Beach investors
AB 1482 sets the floor for rent caps and just-cause, and Long Beach policy can adjust the ceiling on both your revenue and risk. If you model conservative growth, budget for compliance, and confirm the local overlay early, you can still execute a clear plan on 2 to 20 unit assets. Align your underwriting and operations with this framework, then pressure test your exit timing.
If you want help applying these steps to a specific property or lining up a 1031 exchange, connect with Jack McCann for a focused, investor-ready plan.
FAQs
What is AB 1482 and how does it affect Long Beach multifamily?
- AB 1482 is California’s tenant protection baseline that caps annual rent increases and limits evictions to just-cause or permitted no-fault reasons, and Long Beach local rules can add stricter requirements you must check before you buy.
What is the AB 1482 rent cap formula for my pro forma?
- The annual increase is generally limited to 5 percent plus local CPI, capped at 10 percent total, so model in-place rent growth conservatively unless a stricter local cap applies.
Which properties in Long Beach might be exempt from AB 1482?
- Common exemptions to verify include new construction within a defined 15-year window, certain single-family homes or condos with proper notice, owner-occupied duplexes, and specific subsidized or short-term rentals.
How should I budget for relocation assistance under AB 1482?
- For permitted no-fault evictions, you may owe relocation assistance and must follow specific notice steps, so include a relocation line item and confirm any higher local amounts in Long Beach.
What local Long Beach programs can change my NOI?
- Registration or inspection programs, local relocation rules, short-term rental limits, and any rent stabilization measures can add fees, timing, or caps that affect collections and expenses, so verify them with the City before closing.
