Being a Landlord is Such a Drag…

I have to admit, watching the banks, AIG, the automakers, and finally, homeowners get a bail out, I did more than once cry out piteously: “But who the f— will bail out me?”

Answer: Chris Daly.

I didn’t really ask for this kind of bailout, but Daly’s constituents are largely renters; and hey, so is San Francisco. Thus a little protection for us too is a nice gesture.

Specifically, Daly’s proposals, to quote from the Chron, are as follows:

Three laws proposed by Supervisor Chris Daly on Tuesday would bar landlords from increasing rent to more than one-third of a tenant’s income, would expand the rights of tenants who want to add roommates, and would limit the amount of so-called banked rent increases in which annual increases allowed under city laws are saved up and then imposed all at once.

I should embrace this, since I am a renter. However, I’m also aware of the ironic side effect of many “renter protection laws” that actually end up keeping the rental market as expensive and competitive as it is here, even now. So I eye these laws cautiously, though they excite me, if only because I hope they make my landlady unhappy. Because I hate her.

But I digress. Surprisingly, Mayor Newsom, who is by all accounts not a member of the Daly fan club (in fact, I believe he’s probably the founder of whatever club is the opposite of that one), appears amenable to these laws.

It’s not yet clear whether the proposed laws will have sufficient support at the Board of Supervisors, but Mayor Gavin Newsom – who advocates had expected to oppose the measures – appeared open to the ideas.

So, does that mean SF is about to get even harder on landlords? 

In the end, I’m out of my league. My bias is obvious, but I don’t want to rent forever, so I like to undertand long term effects.  I bring this article to you, the educated Front Steps populace, to explain why these laws are a bad idea, a good idea, a crazy idea, or a pipe dream.

27 thoughts on “Being a Landlord is Such a Drag…”

  1. I think I just found out what I am looking for after spending a lot time surfing the net.Falling house prices would be wonderful. There would be fewer marriage breakups spurred on by financial difficulties caused by massive debt. More mothers would stay at home and raise their own children rather than go to work to pay off that massive debt. They might not need to rely on failing profit-motivated companies like ABC that are now going down the gurgler. People might focus on the important things in life like LIVING and RELATIONSHIPS with other people rather than chasing their backside to pay off their oversized debts. Real estate agents might stop whinging that people shouldn’t be talking down the market, when they’ve spent the last five years TALKING IT UP. This is because houses would be reasonably and fairly priced to suit income levels.I am very happy to post my comment in
    this blog. I gathered lot of information from this site. Nice blog.

    Tom

  2. FrontSteps, I’m wondering since you sell real estate, but rent, why? I’ve always been curious about those who sell real estate and don’t actually own it. You seem to be very happy with these Daly measures. From what I can see the majority of home owners will get no relief from the Feds, the city or the state, but renters will possibly via SF. So, I think we should all rent, correct??? What’s your justification for renting?????

    [Editor's Note: "written by Anna Marie Hibble"...a contributor to the larger theFrontSteps population. But for the record, I, the editor do rent in SF, but own multiple properties throughout the country. I rent here in SF, and will buy as soon as the right deal comes along for my family. We were previously priced out for what we needed. FYI, many, many Realtors in SF rent.]

  3. Anna Marie posted that one, Wondering.

    As a small building landlord I think that renters get PUH-LENTY of protection as it is. Protecting a rent raise from exceeding 33% or 31% of the renter’s income is not a place public policy should go, in my opinion.

    The roommate one, even if the lease forbids it? Get real! As if another person does not add wear and tear onto a property! There is no way on earth this one is gonna stand up in court. It’s going to waste taxpayer’s money, period.

    And the banked rent increase limit? How is that fair? The same tenants who are up for the banked increases are the ones who DID NOT PAY THE INCREASED RENT FOR YEARS. That’s why it is banked. This one too, is ridiculous.

    All in all, I concur with this woman from the story, Janan New, executive director of the SF Apartments Association,

    “”You can’t impose public policy on private owners. … Shouldn’t there be some public subsidy?” she said. “This is the worst rental market I’ve seen in 20 years. This isn’t a market where people want to lose a tenant. I don’t understand the premise.”

  4. Seriously, if this tripe moves forward, how about a subsidy for every landlord of a 6 unit or smaller building who has at least one sub-market renter? Let’s even the freaking playing field for once. I can’t wait till Chris Daly gets termed out next year.

  5. Don’t get me started. Just as in NY and other high cost cities with rent control, there are plenty of extremely affluent people who choose to rent. One of my friends is happy to drive his Z3 around town; he’s just never seen the point in buying his own pad.

    And besides, why should landlords, the vast majority of whom, in this city of relatively small rental buildings, are hardly the Donald Trumps of this world, be singled out to cure the economic disparities of the world? Of course housing affordability is an issue — but then let’s deal with it via an equitable public policy — for example, by raising taxes on the well-off — me included — whether they rent or own.

    Rent control in San Francisco is a perfect example of the tyranny of the majority: renters vote in their own (perceived) self-interest, fairness be damned.

    Just for starters, can someone tell me how it can be fair to require landlords to pay interest on deposits at 5%, year in and year out, but be limited to rent increases of just over half of an inflation rate they have no control over?

    I used to own and live in a 3 unit Victorian in NOPA, which my mother and I bought in 1987 and slowly upgraded. I took my obligations as a landlord seriously and mostly had pretty good tenants. I sold it in 2002 and swore I’d never own rental property in SF again because the return on our investment just wasn’t worth the headache.

    Hey, Mr. Daly, when are we going to impose limits on movie ticket prices and on the cost of appetizers and cocktails? We have a right to those too, don’t we?

  6. fluj, i see that point, but isn’t it too late for that objection?there are already a ton of public policy restrictions on rental property…

  7. Does the landlord get a copy of the renter’s W-2 form every year to see what 1/3 of that income comes out to be?

  8. Thank goodness rent control does not apply to my unit that I plan on leasing out (exempt by state law since it was built after June 79).

    All this type of assistance does is drive up rental rates on non-controlled units.

  9. I’ve been TRYING to find for 8 months the study that shows rent control actually drives up rents in cities and disadvantages lower income people as it stops movement. I heard it on cited on NPR years ago during the dot.com mania, where it stated the stagnation caused by renters reluctant to move and hoarding rent controlled properties caused rents to be artificially driven up and did little to help the majority of lower income residents.

  10. a great article on ditching rent control:

    http://www.newcoalition.org/Article.cfm?artId=864

    re regulation 1 and 2. do they exclude each other? if not, PLEASE, have a room mate so I can RAISE the rent to the total of BOTH incomes!!! ;)

    re (stupid) regulation 1. what when the tenant looses his/her job? rent goes to zero? What if tenant’s income goes DOWN?

    Unfortunately in this city, I have still to find one legitimate rent-control tenant, and I’ve got countless stories of not rent control abuse. It looks like either way, the one who’s got the power always abuse the situation – hurting [b]thousands[/b] of fellow tenants (and landlords).

    Re C.Daly. Beware of what you wish for. You know who you’ll loose, but you don’t know who you’ll get. If you know any SANE person with a BRAIN to run against C.Daly’s child, please let us know. It’s time to start planning the campain.

  11. the original full article is here:

    http://www.cato.org/pubs/pas/pa-274.html

    my choice of quotes:
    “A ceiling on rents will reduce the quality and quantity of housing.”
    “There can be no doubt that rent control creates housing shortages.”
    “Higher rates of homelessness are a manifestation of rent control.”
    “Crowding is a manifestation of rent control.”
    “Rent control has actually accelerated gentrification in Berkeley and Santa Monica, Poor and working class people have been forced out of those communities faster than in surrounding municipalities.”
    “In many European countries, regulation has destroyed private rentals to the point that there is little left but public housing.”
    “New York has lost 200 of its 250 national corporate headquarters over the last 25 years, in part because these companies found housing almost unattainable for transferring employees. ”
    “The hate campaign against landlords feeds on itself, becoming a self-fulfilling prophecy, since owners in the shadow market can charge exorbitant prices, while owners in the regulated sector do best by making life uncomfortable for their low-rent tenants. ”

    [b]“Rent control is a disease of the mind that soon becomes a disease of the market. Those cities that resist infection –merely by having a healthy tolerance for the rights of others–are rewarded with a normal competitive housing market in which housing is available at every price level. Those cities that succumb to the disease of rent control are [u]doomed to never-ending, house-to-house warfare over an everdiminishing supply of unaffordable housing.[/u] Public policy creates its own rewards.”[/b]

  12. Daly is an idiot. How would a rent control plan like this be implemented, administered & enforced? Maybe everyone can move into Chris Daly’s house/apartment and live for free?

  13. Is the market there really so pro tenant? Having lived in Spain for 10 years, if you have someone in your property 12 months or over a landlords right are almost zilch.

    I love San Francisco and would like to rent a property there, deal dependant of course.

  14. I don’t get it? My realtor tells me this is a great time to buy for the last 3 years, while he sits on the bench and rents?

    I guess it’s like a football coach who never actually played football?

    (This is not intended about the frontsteps but a comment about realtors in SF who do not own).

  15. That provokes a response. Can a doctor that has never had their own baby, or the same disease they are treating still be a good doctor/advisor. Flawed thinking IMHO.

    I am an agent, I do own but I dont tell everyone in every situation that buying is their best option, cuz sometimes it’s not! I’m no accountant either but it makes sense to tell some people they would be better off renting until the financials make sense to them. That irks me. I think it’s responsible to rent until you can or need to own – and I would trust a realtor more who can see both sides equally. My rant for the day.

  16. Hold Up! Your thinking is flawed. This has nothing to do with be a professional who went to school for years to become a doctor. We are talking about realtors who took a 2 week class and passed a test. Different story.

    Can you tell me you’ll trust a financial advisor who’s trying to sell you stocks but he/she does not invest. Would you trust that person? I think it’s important for somebody like a realtor to “put their money where their mouth is”. How can you give advise, “it’s a good time to buy” when you are sitting on the sidelines? Isn’t that your job, to sell?

    If you are a realtor, have a little professionalism and post your real name on a blog instead of hiding. I would but I’m a nobody who finds the real estate market good or bad in SF interesting, so it doesn’t matter if my name was Ben, Mark, Jennifer or Sara. (Pick one)

    I find it funny when a realtor compares himself/herself to a doctor. Please! I almost choke on my own spit laughing at that statement.

    Thanks for the good laughs, Mr Anon Realtor. Shouldn’t you be showing a listing today? It’s Tuesday.

    (This is not intended about our host/editor Alex)

  17. I do agree with the last statement.
    however, I’d like to note that not every agent has worked enough and has enough savings to buy a property in SF – and income might not be steady enough to get a loan – thus making it very difficult to buy.

    I do agree that we have been asking all potential agents if they owned, what they owned and what was their take on the market as owners – but I would also pull Alex’s ear if if was announcing buying a large SFH in SF that I knew was out of a safe budget for his family (and I would be equally mad if he was moving kids and pets into a bough 500sqft affordable studio).

    So yes, it’s an important question, but REQUIRING a SF agent to own his/her own living quarters in SF in not totally reasonable.
    And this also apply to your architect, your contractor, etc..

  18. Agree on the architect, contractor etc. because they are selling a skill. When you are purchasing something as large as a house and plunking down all that cash, you’ll want your salesman to have something in the pot instead of them working only for their commission. You’ll both want to see your home values go up.
    Wouldn’t it suck if your realtor sold you a house in 06 for $1,000,000 saying it’s a great deal. Fast forward to 09 and that house is worth $800k. You just lost $200k. Then you find out your realtor has been renting all along and has not lost anything but gained your 2.5% sales commission.

    Who’s hurting now and who is the one that really cares?

    As for Mr. Anon Realtor, If you were in the business from 03-07 i’m sure you were telling your clients to buy instead of rent. I love how realtors are NOW using the rent method. (It’s like the new black!). “What happened to buy now or forever be priced out?” I remember a Zephyr ad in The San Francisco Times having a headline “Renting is Wasting Money”. I wonder what happened to that realtor and his clients?

    I know there are a lot of GREAT agents in San Francisco and it’s now time to weed out losers. Especially ones who post on blogs claiming to be an ANON AGENT, and can’t stand behind their name.

  19. Don’t worry. Lots of realtors are being weeded out right now. It’s been pretty tough on a lot of people. Don’t put so much on the amount of study required and the relative ease of the test. That’s really not what it’s all about. For example, my friends in finance tell me the Series 6 and 7 tests aren’t rocket science either. But that’s not it. Just because you pass a test doesn’t make you a trading genius, or a great realtor. Skillsets are developed over time, and yes, with study. Study of people more than anything.

  20. Fluj, I always respected your comments especially those posted on the “site”. I’m guessing you own, right?

    My beef is anybody can be a realtor. Easiest test to take. You need no degree, No AA and i’m not even sure you need to pass highschool to be a realtor. For your series 6 and 7, I think the min. requirement is at least a 4 year degree. I think having a degree doesn’t make you a genius, but it as least shows you had the discipline to finish the 4 year course.

    I would at least expect a little more from my realtor and hope they put their money where their mouth is. I wouldn’t want a realtor to pass a test, post on blogs “it a great time to buy” and then walks away when the market is down and hide in their rent controlled property. I’d want someone in the trenches with me.

  21. Yeah I own in the city. I believe in the area I purchased too, and I follow its performance religiously. And I think you need at least a g.e.d. Not sure. I’m not saying it’s a hard test, of course. If your criteria for evaluating r.e. agents begins with, “Easy test. Two strikes against for starters,” then hey, it works for you. I’m just saying that’s not really what it’s about and you better believe some agents are getting weeded out right about now.

  22. WHOA! Not hiding in the slightest – sometimes it’s easiest to post anonymously lest it degrade into personal attacks rather than be on topic. And N O I am not comparing real estate agents to the training doctors do, it was an analogy. I could have used anything – since you’re so opposed to that how about using a hair dresser that cuts or colors hair (any idiot can do that right) even if they don’t color their own hair? Still any woman knows that you can go to SuperCuts or go to a really good hairdresser and you pay for their experience, not their schooling.

    Look my point was and is that you do not have to be a real estate owner to sell the product or believe in it. I seriously doubt many Lamborghini sales reps own the car they sell, or half the art dealers, doesn’t mean they don’t know their product, and what is going to resell well. Owning real estate is a personal financial choice one in which I seriously hope you consult your own financial consultant/advisor/accountant before doing. We are NOT those professionals. We are the ones that advise you on what is the best deal in the market at the time you are looking and do the best to get you the best price buy or sell given what the current market conditions are. Meredith Martin

    PS sorry Alex wasn’t trying to steer traffic in another direction but felt he wanted to know who I am, so here I am.

    [Editor's Note: No apology necessary. Glad to see you. Tell your Tweeps. ;-) ]

  23. There is a time for renting and a time for owning. I would only ‘ding’ a Realtor if he/she were a rent hog, which is a disgrace. But it takes a lot of wherewithall to buy property, and right now it’s especially hard for the non-salaried to get financing. Also, Realtors should not be pitching property for appreciation but for it’s value to a particular buyer–if it meets your needs, you like it and can afford it, and you plan to live in it for a while, then it is right to buy. This is not rocket science and having an MBA or PhD in economics would not help with the decision making. Those degrees WOULD be useful to folks making investments, speculating, or developing property because those are risky businesses as lots of folks are discovering right now.

    Only about 20% of the folks who get licensed are successful Realtors. One of the best and most successful I know did not finish high school and now works entirely with developers–has a large stable of very satisfied clients. He is by far the exception; most college grads fail right along with the GED’ers.

    When looking for a good Realtor homeownership OR higher education would not necessarily be the criteria I’d use. I’d find someone with whom I am comfortable and who can provide lots of references to satisfied clients . . .

  24. also degrees do not grant ethics nor honesty. nor competency, really, since being compentent is by no means the domain of the academic elite. g. bush, jr. is a harvard grad, ya’ll.

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