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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
Rent Control: A Failed Experiment
Posted on 04/23/2007 21:23:27 | Link | Post Comment
Generally I have found that those who support rent control either own no property or have an agenda, such as selling a book or winning local city elections.
I own property in San Francisco and Berkeley, Ca. and in 1996, the state legislature exempted SFRs and condos from rent control. However, some main points here:
1. In Berkeley, where rent control became law in 1979, it had the opposite effect intended by its supporters. It actually recuduced the number of units in service over a 20 year period. Why? Because, owners did whatever they could to take units out of service.
2. From 1980 to 2000, the Bay Area experienced a housing boom. But, not in Berkeley. Why? Because, the city had a bad reputation, deservedly, and attracted few buyers. The city also looked like crap as owners had zero incentive to ever put a dime into maintaining a property.
3. Unlike San Francisco, Berkeley had (has) an “extreme” form of rent control. Namely, no vacancy de-control. In San Fransico, when a tenenat moved, you could always raise the rent to market rents (or whatever you wanted).
4. In Berkeley, it is rather easy to serve a three day pay or quit notice for non-payment. Eviction comes a couple of days later. In San Francisco, it’s nearly impossible.
5. In rent controlled cities, a cottage industry of lawyers representing owners and tenants is a booming business. However, the system always favors the tenant….who gets access to free representation….paid for by…….our property taxes!
6. In San Francisco, laws have been passed in the past 10 years that prevent the eviction of an AIDS sufferer, or an elderly person who has been living in the property for 10 years. So, what if you decide that you want to live in the house or give it to a child for her family to live because today’s prices are too high? Forget about it…..unless you are willing to pay the “extortion” money to have them move….
7. Something funny happened in the late 1990s in Berkeley: the rent stabilization board members, getting older, started to become more sympathetic towards owners. Why? Many had become landlords themselves! Bastids…lol
note: Rents are on the rise across the U.S. -- nationwide, apartment rents average $939, up 4.4% from a year ago, according to real-estate research firm Reis, Inc.
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I own property in San Francisco and Berkeley, Ca. and in 1996, the state legislature exempted SFRs and condos from rent control. However, some main points here:
1. In Berkeley, where rent control became law in 1979, it had the opposite effect intended by its supporters. It actually recuduced the number of units in service over a 20 year period. Why? Because, owners did whatever they could to take units out of service.
2. From 1980 to 2000, the Bay Area experienced a housing boom. But, not in Berkeley. Why? Because, the city had a bad reputation, deservedly, and attracted few buyers. The city also looked like crap as owners had zero incentive to ever put a dime into maintaining a property.
3. Unlike San Francisco, Berkeley had (has) an “extreme” form of rent control. Namely, no vacancy de-control. In San Fransico, when a tenenat moved, you could always raise the rent to market rents (or whatever you wanted).
4. In Berkeley, it is rather easy to serve a three day pay or quit notice for non-payment. Eviction comes a couple of days later. In San Francisco, it’s nearly impossible.
5. In rent controlled cities, a cottage industry of lawyers representing owners and tenants is a booming business. However, the system always favors the tenant….who gets access to free representation….paid for by…….our property taxes!
6. In San Francisco, laws have been passed in the past 10 years that prevent the eviction of an AIDS sufferer, or an elderly person who has been living in the property for 10 years. So, what if you decide that you want to live in the house or give it to a child for her family to live because today’s prices are too high? Forget about it…..unless you are willing to pay the “extortion” money to have them move….
7. Something funny happened in the late 1990s in Berkeley: the rent stabilization board members, getting older, started to become more sympathetic towards owners. Why? Many had become landlords themselves! Bastids…lol
note: Rents are on the rise across the U.S. -- nationwide, apartment rents average $939, up 4.4% from a year ago, according to real-estate research firm Reis, Inc.
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