Allow me to introduce myself. I live in San Francisco, am a Bay Area resident of 20+ years, and a proud Cal grad (Go Bears!). I jog Bay to Breakers in costume next to you, drink beers in the bars alongside you, and participate with you in all the great wackiness this city has to offer. You would never distinguish me from any other early-40-something in this great city, except that I’ve suddenly become a bad word in this town. I am a landlord.
In the last few years, I’ve gone from living as a conventional citizen in a city that has always felt welcoming to being unable to ignore the new sentiment of a seeming majority that’s turned against me. News articles are popping up demonizing landlords for the recent double-digit percentage rise in rents. I totally understand the origins of public opinion, but I have to say, we’re not all bad guys making a killing with your rent money. It’s tough being a landlord here – so much so that I’ve begun pulling up stakes and focusing my efforts outside this city, and I’m not the only one.
This all started in the late '90s when I bought my first place, a modest house. To subsidize my mortgage, I rented rooms to people I found on Craigslist and got my first taste of being a landlord. I was hooked – renting property felt like a great way to connect with a variety of people, and there’s something very fulfilling about helping others find a home they love.
Almost a decade later, when home prices hit bottom, I combined resources with friends to buy a couple more buildings, and have since continued to purchase here and there. But I’m by no means a real estate maven. I follow a few simple rules: Always buy within my means in areas I know, and look for situations where I believe I can add immediate value to the property. I buy with the intention of making quality improvements over time to increase a building’s worth, and it’s rewarding but also a hell of a lot of work.
The average landlord loather doesn’t know just how regularly tenants take advantage of this system. One woman, for instance, who has resided in one of our four-bedroom units for 17+ years, pays just over $1,000/month rent and proceeds to rent out rooms on Craigslist for around $900/month each. I see the postings, know that she is making a killing off the rent-controlled price, and yet can do nothing about it.
San Francisco’s rent control ordinance restricts annual rent increases for existing tenants in apartments built prior to 1979. Since I began purchasing properties in 2009, I haven’t had any units in the city turn over organically. This means the people who’ve come with my buildings pay rents way below those crazy numbers everyone has come to loathe, and none are planning to leave anytime soon. That doesn’t faze me: I went into these purchases with eyes wide open.
What does get me a bit frustrated is that the average landlord loather doesn’t know just how regularly tenants take advantage of this system. One woman, for instance, who has resided in one of our four-bedroom units for 17+ years, pays just over $1,000/month rent. That is all fine and good, as the purpose of rent control is to keep places affordable – but she proceeds to rent out individual rooms on Craigslist for around $900/month each. I see the postings, know that she is making a killing off the rent-controlled price, and yet can do nothing about it. Sounds crazy, right? But she is not the only one … suffice it to say that rent control is quite a powerful force when the master tenant is still living in the unit, and conversations with three different lawyers have gotten me nowhere. In the meantime, renters like this are increasing my expenses (random repairs, insurance, utilities, taxes) and eroding any chance I have of breaking even.
There’s never a dull moment in being a landlord. I’ve had tenants flush aquarium rocks down the toilet and clog the pipes. Neighbors have called to complain about late-night noise and drug dealing at a unit of mine, and renters once inadvertently caused a fire when they let a dryer get overrun with lint. And it’s not just tenants creating havoc – many of the systems that were designed to help tenants are broken as well.
Take Section 8 housing, which was created to subsidize apartments for people in need while encouraging landlords to take in lower-income tenants. After inheriting a number of these units, I have petitioned for standard rent increases, to be paid for by the San Francisco Housing Authority, for the last four years, only to be denied every time. (As opposed to the Berkeley and Oakland housing authorities – both in rent-controlled cities – which have approved every request that has been made.) It is unfortunate: I have units that are Section 8 with rents two to three times lower than comparable non-Section 8 buildings on the block, and subsidies from the city could help with that disparity. I refuse to pass on the difference to my low-income tenants, so I end up eating increasing costs myself. I don’t know anyone willing to bring new Section 8 residences to the market now, even though the demand for low-income units continues to rise.
Being a landlord isn’t all endless heartburn. I’ve built good relationships with some of our long-term renters, and I am happy to see how excited they get when we do minor improvements to upgrade their homes (deferred maintenance seems to be the norm in SF).
But being a landlord isn’t all endless heartburn. I’ve built good relationships with some of our long-term renters, and I am happy to see how excited they get when we do minor improvements to upgrade their homes (deferred maintenance seems to be the norm in SF). My renter friends also know about my avocation, and I often have the chance to help them out when they’re presented with a tricky situation with their landlords (which unfortunately happens all too often). Understanding the basics of landlord-tenant law to cover my back as an owner has enabled me to share the knowledge with friends who are sitting on the other side.
When all is said and done, though, the little wins don’t make up for the bigger pressures. I increasingly feel as though my San Francisco tenants are angling for any way to take advantage of me, and popular sentiment is against me. It has gotten to the point where I know a couple small-time owners who prefer to keep units vacant and off the market so they don’t have to deal with onerous laws and entitled tenants.
It never was easy to own rental properties in the city, and it continues to get harder. Between rent control, building regulations, construction difficulties, rising prices, and a public turned against me, being a landlord in SF seems to make less and less sense. Maybe I don’t have the hardened temperament or cutthroat business tactics required to be a successful landlord here, but I think I will sleep better at night knowing that I have a little more control over my own destiny by renting units outside of this city.