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You have the 85 year old widow that puts up a student in exchange for help around the house... then there are mega corps that own many thousands of units Coast to Coast.
The fact is large multi-unit complexes have few options... sure, some might go Condo and some redeveloped... most will stay rentals.
The existing Prop has many riled up because it potentially covers all units/rentals...
It gets more complicated because rental housing is a business but proposals seek limit going out of business... for lack of a better way to put it.
I know small Mom and Pop owners of 1 to 4 units that simply no longer rent... my city has rent control and Just Cause Eviction... it use to be simple and non-confrontational to move out a problem tenant... simply not renew the lease... I have used this.
Now... tenants are tenants for life unless one of the approved reasons can be proven... often litigated or cash for keys... which comes with it's own perils.
Some of the tenants I manage go back decades... with the average over 13 years... so clearly there are tenants and providers in workable scenarios...
What I think will happen is the smaller properties will increasingly become owner occupied and removed from the rental stock should this pass.
More fail than succeed at being a small time provider... it is a job and one that has only become more technical as time goes on... at least in my city.
Plenty of providers went under 10 years ago... many that tried tell me the two happiest days of their life was the day they bought an investment property and the day they sold.
Contrary to popular belief... it really is impossible to buy a small 1-4 unit property and have it cash-flow unless the owner is providing free labor... overtime, with growth the situation generally improves... but going back to 2009-12 the properties I managed in Oakland lost 20 years of appreciation and I can show addresses down 60 to 80% in value...
Real Estate is cyclical... history proves this.
Great post .
When you mention you know owners of 1-4 units that don’t rent . They are leaving the units vacant ?
Someone on another post mentioned they knew owners in Santa Monica that are renting out units for storage instead of dealing with tenants and rent control .
For a while Airbnb seemed to be a profitable alternative but then the cities started cracking down on that .
Yeah it can be too much of a hassle just dealing with a small property even if it’s in a high demand area.
Many small time landlords don’t have system in place . I know a lot of multi family investors won’t consider deals under 100 units even because that is where one can have on site staff to manage everything and there are economies of scale .
Fairly certain everyone has made up their mind by now on which way they're voting on this Measure but if anyone is interested in reading an interesting article, it pretty much explains exactly what will, okay might, happen if Prop 10 passes. Mind you, this is an opinion piece and not actual facts so take the info as you please. Here's a blip of what the author wrote: https://www.sacbee.com/opinion/elect...218278780.html
Thanks for adding that. Yes, you're right, some people won't take the time to understand that this prop just says that local government would be able to enact rent control or not - it doesn't actually create any rent control.
Also it should be irrelevant whether someone bought the property years ago or recently . Yes they bought at a lower price but they’ve also put in time , money etc over the years .
Many people have inherited rental property as well . Does that mean they shouldn’t be able to make anything on it ?
People buy rental property as an investment and to create wealth, not to run a charity .
Many people owned property in rough areas that have just recently come around too and invested their time and energy in those properties and in some cases risked their lives .
Rent control just really goes against the American values of capitalism and enterprise . It’s also limited the supply of new housing because rent control areas make it very difficult and tedious for people to redevelop property and also it results in an aging housing stock . Which could also be very dangerous in the next earthquake .
Many of the apartment buildings in L.A are from the 60s 70s or earlier . Furthermore it gives no incentive /funds for landlord to fix up their buildings resulting blighted and run down buildings.
Also it should be irrelevant whether someone bought the property years ago or recently . Yes they bought at a lower price but they’ve also put in time , money etc over the years .
Many people have inherited rental property as well . Does that mean they shouldn’t be able to make anything on it ?
People buy rental property as an investment and to create wealth, not to run a charity .
Many people owned property in rough areas that have just recently come around too and invested their time and energy in those properties and in some cases risked their lives .
Rent control just really goes against the American values of capitalism and enterprise . It’s also limited the supply of new housing because rent control areas make it very difficult and tedious for people to redevelop property and also it results in an aging housing stock . Which could also be very dangerous in the next earthquake .
Many of the apartment buildings in L.A are from the 60s 70s or earlier . Furthermore it gives no incentive /funds for landlord to fix up their buildings resulting blighted and run down buildings.
Just bad policy all around
Why should it be irrelevant (to this discussion) that many properties have been in the hands of landlords for a very long time? You previously wrote how hard it is for landlords to even break even. That’s nuts. Landlords wouldn’t be landlords if it wasn’t a great investment business. Too much trouble and risk.
I am not anti-landlord, nor anti-Prop 13 ... and I’m not particularly advocating rent control in this thread. I am pointing out the silliness of your protest about poor, starving, landlords.
No one said landlords “shouldn’t make money” on renting their properties. Of course they should. And they do. They wouldn’t do it otherwise.
When you mention you know owners of 1-4 units that don’t rent . They are leaving the units vacant ?
Someone on another post mentioned they knew owners in Santa Monica that are renting out units for storage instead of dealing with tenants and rent control .
For a while Airbnb seemed to be a profitable alternative but then the cities started cracking down on that .
Yeah it can be too much of a hassle just dealing with a small property even if it’s in a high demand area.
Many small time landlords don’t have system in place . I know a lot of multi family investors won’t consider deals under 100 units even because that is where one can have on site staff to manage everything and there are economies of scale .
A lot of local money has moved out of anything with a bed... one of my best investments is storage units... it is also very straight forward when it comes to arrears... the contents auctioned off and the rent starts all over again.
What has happened in cities like Oakland and Berkeley is a stranglehold on small housing providers... or a minefield just waiting for one misstep... the system sets up litigation as the norm... if you have a large complex one litigation is just part of the business... if you own a duplex and one unit is tied up in the legal system for 6 months... you may very well be sunk.
I know two small owners... one of a duplex and one with a tri-plex that no longer rent... each property is owner occupied so the duplex is 50% vacant and the tri-plex is 66% vacant... bad experiences to good people.
The duplex is a widow... she has lived in her home for 50 years... they always rented to students and never advertised... it was work of mouth from former renters.
Somehow they got a real piece of work in the unit... he never paid anything except at move-in and kept filing appeals/motions... the owner on social security and rent money had over $10,000 in legal expenses plus almost a years lost rent... she simply could not afford to take another loss so it sits vacant...
The triplex was similar...
I have been around long enough to know it was not always this way...
Time is your friend in California Real Estate... given enough time... monumental blunders will often work themselves out... if for no other reason other than inflation.
Once the mortgage is retired... the constraints are lifted... many single family rental are default rentals... maybe the family has been transferred as was the case of several of the military families I know... maybe they were badly upside down when the market crashed and decided not to take a hit on their credit and wait the market out...
There are no shortage of former housing providers that say never again and the prize is often appreciation... the money realized comes not from renting but equity that builds over time.
For 40 years East Oakland where I live was in dire straights... the city was selling homes for $1 just to get someone in... there were strings... you had to live in the home for 5 years, make some improvement... a new roof, paint and windows would do the trick...
In 2007 these dollar homes were selling for $275k... in 2009 the homes were selling for $60k...
I sold my second home on Havenscourt for 255k on 2006... 18 months later it resold for 350k... didn't do a thing... in 2009 it sold foreclosure for 70k...
Sure looks like a money making can't loose proposition... NOT... now if the person that bailed in 2009 would have just sat tight... he would be even in 2017 and now be 50k up in 2018.
Last edited by Ultrarunner; 11-02-2018 at 09:45 AM..
Yep- free market has its ups and downs which makes it well, free! History has taught us many lessons this besides the content of your excellent post- the back end of this seems to be a desire for more and more subsidized,govt controlled housing- which is no surprise given the left wing policies of California. This prop seems to help create more legal issues for landlords like you described ultrarunner- if anything there should be more laws helping landlords evict deadbeats etc and eliminating the insane squatter's rights situation....is prop 10 more legislation forwarded by attorneys?? Strictly regulated pricing on what else now??
VOTE NO!!!
I get about 4 calls a day and several pieces of mail on Prop 10
The mail is 50/50 for and against.
The telephone calls all support Prop 10.
Callers are from local churches and community groups...
What is overlooked is housing providers depend on customers... just like any other business...
I vote with my feet... bad service, failing to deliver and I am done... today it is even easier as the Internet provides almost instant feedback...
There is an entire legal and para legal industry flousishing in cities with Rent Control...
My evictions are far and few but they do happen...
The last one filed a notice that delayed the process 6 weeks... I had originally offered to waive all back rent and return her full security deposit if she vacated by the end of the month... she had lost her job and prospects slim of finding a new one... she did have a large family of adult children...
Once filed... her mailbox was full of offers to delay or STOP the eviction for a fee...
IN order to file I had to first get permission from the city as Just Cause applies.
She was a no show in court... after court I go to the house and she said she is willing to accept my offer... I said that was 10 weeks ago and the money I was going to give was all spent on lawyer fees... and it was.
For a time... I never missed a city councel meeting and often spoke... it made no or little difference... the hand writing is on the wall and why I have been slowly transitioning out of residential units... the work is too much for the return.
As my tenants leave... I have been exchanging out or residential and life is so much more enjoyable.
The tenant of a warehouse with NNN lease is never going to call me about a toilet!
A lot of local money has moved out of anything with a bed... one of my best investments is storage units... it is also very straight forward when it comes to arrears... the contents auctioned off and the rent starts all over again.
What has happened in cities like Oakland and Berkeley is a stranglehold on small housing providers... or a minefield just waiting for one misstep... the system sets up litigation as the norm... if you have a large complex one litigation is just part of the business... if you own a duplex and one unit is tied up in the legal system for 6 months... you may very well be sunk.
I know two small owners... one of a duplex and one with a tri-plex that no longer rent... each property is owner occupied so the duplex is 50% vacant and the tri-plex is 66% vacant... bad experiences to good people.
The duplex is a widow... she has lived in her home for 50 years... they always rented to students and never advertised... it was work of mouth from former renters.
Somehow they got a real piece of work in the unit... he never paid anything except at move-in and kept filing appeals/motions... the owner on social security and rent money had over $10,000 in legal expenses plus almost a years lost rent... she simply could not afford to take another loss so it sits vacant...
The triplex was similar...
I have been around long enough to know it was not always this way...
Time is your friend in California Real Estate... given enough time... monumental blunders will often work themselves out... if for no other reason other than inflation.
Once the mortgage is retired... the constraints are lifted... many single family rental are default rentals... maybe the family has been transferred as was the case of several of the military families I know... maybe they were badly upside down when the market crashed and decided not to take a hit on their credit and wait the market out...
There are no shortage of former housing providers that say never again and the prize is often appreciation... the money realized comes not from renting but equity that builds over time.
For 40 years East Oakland where I live was in dire straights... the city was selling homes for $1 just to get someone in... there were strings... you had to live in the home for 5 years, make some improvement... a new roof, paint and windows would do the trick...
In 2007 these dollar homes were selling for $275k... in 2009 the homes were selling for $60k...
I sold my second home on Havenscourt for 255k on 2006... 18 months later it resold for 350k... didn't do a thing... in 2009 it sold foreclosure for 70k...
Sure looks like a money making can't loose proposition... NOT... now if the person that bailed in 2009 would have just sat tight... he would be even in 2017 and now be 50k up in 2018.
Interesting . I’ve been hearing a lot of successful multi family investors mention they have gotten into storage .
Not specifically in CA but in general . In general multi family is super competitive these days and everyone seems to want to own apartment buildings .
Lots of funds and international investors too that deploy so much money they are find with lower yields
I’ve seen in other states where they are selling a 2-4 unit where they mention it can be converted to single family I wonder if we will see this happening in CA more . Not sure if there is anything that can stop it or not .
Seems like it could make sense in a hot area .
Of course this is going to do the opposite of what the yes on 10 Pro rent control crowd wants . More rental housing .
Yeah I have seen that happen regarding accidental rentals . Have a relative that tried to sell during downtown even in a desirable area of L.A ... couldn’t sell so rented it out . Turned out to be a good move because prices have about doubled or maybe a little more .
House was bought in late 90s .. current prices about 500% higher than back then . It’s been rented for years at a decent price but would be losing a fortune every month if bought at current prices to rent out .
When the market was down 2009-12 I tried to get co-workers interested... some were bitter saying prices were so high they dropped out.
Strange think is when prices were rock bottom they were not interested either... now, they all work in Health Care with stable jobs so this was not a consideration… between 2009 and 2012... renting was thought the smart thing to do...
Only one RN took a chance... we talked about it... a single mom with a daughter just entering High School... I went to look at the place with her... it was a foreclosure... solid but neglected... in the right school district and close to work... most told her it was dumb as owning was gong to cost her $800 a month more... never mind it was a 3 bedroom home.
Well... in ten years the rents at her old place have gone up $800 and the value of the foreclosure more than doubled... she has over $200k in solid gains if she were to sell when it was all said and done... again, a single Mom in the SF Bay Area took a chance after running the numbers...
Those same that passed are more upset... because they had the same opportunity but passed on it...
Overlooked reason why homes cost more today is the cost of materials and fees...
Not unusual to pay 100k in permit and hook up fees... have you priced a 2x4 recently?
Labor is off the charts... the fires in the North Bay drove demand...
My 1957 home is nothing compared to a 2018 home just built in my neighborhood... but it is still 1725 square feet...
My sellers built it for 28k including the lot in 1957... I bought it basically all original in 2004 for 598k... in 2009 my appeal was granted and the value had dropped to 380k...
In 2018 it would sell for 825k...
This is the real life market at work...
Rent Control is artificial... tenants are free to go... housing providers not... especially if Just Cause is put in... which often means owners pay tenants cash for keys... just think about that?
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