Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
When I first read about this law coming into to play, I simply went back to the chores I was doing and thought "no big deal"... who raises their rent 5% on an annual basis (not to mention this doesn't apply to single family homes like ours)? I happen to think articles like these are sensationalized and don't really think this kind of thing is widespread (even by corporations or real estate trusts). I've been a landlord for approaching 15 years now and can't recall a time where I ever raised the rent that much. In fact, there were many times where the rent wasn't raised at all for multiple years (albeit, this was for a property out of state). So when I read people crowing about greed and demagoguing landlords, I always have to scratch my head and wonder why people always have to get into their nastiness. Our property in the SF Bay Area went for $400 over market in 2017 when we left the state. The tenants appear to be taking good care of the place and have been timely on the rent. We didn't raise their rent last year and I don't anticipate doing it this year either. So there's your other side of the coin for those who want to spew hatred toward landlords. With that said, about the only thing I could see that would make us attempt a 5% increase on a yearly basis would be if Prop 13 was repealed for residential properties. At which point, all bets are off. Personally, I don't know why a renter would vote for this to happen (should it eventually become a ballot measure) as it will obviously have a direct impact on them, but there are quite a few misguided people who for some reason think this would be a good thing for them (disregarding government workers who obviously have a conflict of interest and an ulterior motive for this).
Agreed. We recently sold an out of state property after 13 years and had to do very little in terms of repairs to ready it for the sale. We were blessed with good tenants and a good property manager.
P.S. Please spare me the political stuff (I'm really not interested)
There are multiple issues with this rent cap. Before you had rent control areas and non rent control. The rent control went up like clockwork at 3% a year. I guarantee you no rent control LL is going to not raise rents to max allowed raise. The only reason people didn’t move was because rents were higher everywhere else.
So what exactly are people going to do when LLs out there raises their rates the highest allowed amount? Before you could negotiate with the LL on rent raises. I doubt those negotiations will work as much as before . And the LL will raise rents yearly because every year they don’t they can’t make that up by doing large rent increases or letting tenants go and rerenting. I guarantee you there will be a lot of people struggling more than before with rents.
I am exempt from this law, and I’ve never raise my rents that much. I make plenty of money without having to kill the golden goose
A split roll tax is not going to keep an 80 year old renter in their apartment. Landlords aren't giving them breaks on the rent, when new tenants are willing to pay more, they raise the rent - usually that means raising everyone's rent. At least in Sacramento it's resulting in large numbers of elderly renters being forced to rent a room or a garage rather than have their own apartment, or in some cases...becoming homeless.
I never said or implied that a split tax roll would keep an 80 year old renter in their apartment. Just find it amusing that many people that support rent control also want to do away with Prop 13. Even if Prop 13 is only changed for commercial properties, it's going to be the tenants that shoulder the majority of the increase.
You do realize that all the small businesses are on Triple Net leases which includes paying the annual increases to any property taxes, insurance and CAM costs. So many have already gone out of businesses or have been forced to move just from the rent increases alone. So don't you think think adding higher annual property tax increases will only exacerbate the problem? Do you feel the same way for those small business owners that maybe net only $100k/yr as you do for the 80 year old renter?
There are multiple issues with this rent cap. Before you had rent control areas and non rent control. The rent control went up like clockwork at 3% a year. I guarantee you no rent control LL is going to not raise rents to max allowed raise. The only reason people didn’t move was because rents were higher everywhere else.
So what exactly are people going to do when LLs out there raises their rates the highest allowed amount? Before you could negotiate with the LL on rent raises. I doubt those negotiations will work as much as before . And the LL will raise rents yearly because every year they don’t they can’t make that up by doing large rent increases or letting tenants go and rerenting. I guarantee you there will be a lot of people struggling more than before with rents.
I am exempt from this law, and I’ve never raise my rents that much. I make plenty of money without having to kill the golden goose
I honestly don't think you can guarantee anything of the sort, especially if you are talking about San Francisco since the traditional allowable amount was significantly less than 5% (not sure where you are getting the 3% number from). Here's a chart on the maximum allowable increases in San Francisco...
There's never been a time since 1993 that the maximum allowable rent has been 3% or higher and many times it was somewhere between 1% and 2%. In addition to that, if you go a series of years without increasing the rent, you use to be able to do a one time retroactive increase for the cumulative amount (that assumes you've had absolutely no increases). My Father-in-law hardly ever increased his rent. When my wife took over the financing, she went over the records and found that he had a 15 year period with no increase with the exception of one year. So basically the clock started after that increase. Unfortunately, it was right in the middle of the time frame so she could only go back 7 years. Without some punitive measure (i.e. taking away Prop 13 from residential owners and instantly appraising to market value), I'm simply not buying that a 5% increase would be customary at all for single family homes (perhaps apartments it would). Perhaps someone can supply a historical chart for single family homes in recessionary and non-recessionary periods to look at the average (I would think that would be the only fair way to analyze things...especially since we are 10 years into a recovery right now).
Our home rents for just under $4k. I couldn't see myself increase rent next year to $4200, and then the year after $4410 and so on. Without some uniformity from landlords, you would be replacing tenants fairly frequently and if you didn't find another tenant quick (say the house stays on the market for a couple of months), that's going to take 2+ years to breakeven on that one.
Addendum: I actually found this article on it (can't vouch for the accuracy of the numbers). But clearly, rent doesn't go up in a linear fashion. Based on this, there are certainly period of times when a recession hits, that rents took a number of years to get back to their high (approximately 2000-2012).
I honestly don't think you can guarantee anything of the sort, especially if you are talking about San Francisco since the traditional allowable amount was significantly less than 5% (not sure where you are getting the 3% number from). Here's a chart on the maximum allowable increases in San Francisco...
There's never been a time since 1993 that the maximum allowable rent has been 3% or higher and many times it was somewhere between 1% and 2%. In addition to that, if you go a series of years without increasing the rent, you use to be able to do a one time retroactive increase for the cumulative amount (that assumes you've had absolutely no increases). My Father-in-law hardly ever increased his rent. When my wife took over the financing, she went over the records and found that he had a 15 year period with no increase with the exception of one year. So basically the clock started after that increase. Unfortunately, it was right in the middle of the time frame so she could only go back 7 years. Without some punitive measure (i.e. taking away Prop 13 from residential owners and instantly appraising to market value), I'm simply not buying that a 5% increase would be customary at all for single family homes (perhaps apartments it would). Perhaps someone can supply a historical chart for single family homes in recessionary and non-recessionary periods to look at the average (I would think that would be the only fair way to analyze things...especially since we are 10 years into a recovery right now).
Our home rents for just under $4k. I couldn't see myself increase rent next year to $4200, and then the year after $4410 and so on. Without some uniformity from landlords, you would be replacing tenants fairly frequently and if you didn't find another tenant quick (say the house stays on the market for a couple of months), that's going to take 2+ years to breakeven on that one.
Addendum: I actually found this article on it (can't vouch for the accuracy of the numbers). But clearly, rent doesn't go up in a linear fashion. Based on this, there are certainly period of times when a recession hits, that rents took a number of years to get back to their high (approximately 2000-2012).
Not talking about SF. 3% is for LA. Well....was for LA. The new rent cap law changed that to 5%.
I don’t know what other LLs are gonna do. But if they fall under that rent cap law I guarantee you they will raise rents. And some LLs who may not be under that law may raise them simply because “everyone else” is raising them.
It doesn’t matter what you or I will do. It’s what the majority will do. Even in the recession times I never had to lower rent. When I raise my rents I do a lot of research and discovery before I raise rents. Granted I know LLs who just do 3% a year regardless of consequences but hey you can do whatever you want with your rentals.
There are a lot of nuances to this new RSO. Also this allows the LL to raise the deposit to stay in line with the monthly rent. I’m not subject to this RSO but I’m still reading through the whole thing trying to understand what it does.
I honestly don't think you can guarantee anything of the sort, especially if you are talking about San Francisco since the traditional allowable amount was significantly less than 5% (not sure where you are getting the 3% number from). Here's a chart on the maximum allowable increases in San Francisco...
There's never been a time since 1993 that the maximum allowable rent has been 3% or higher and many times it was somewhere between 1% and 2%. In addition to that, if you go a series of years without increasing the rent, you use to be able to do a one time retroactive increase for the cumulative amount (that assumes you've had absolutely no increases). My Father-in-law hardly ever increased his rent. When my wife took over the financing, she went over the records and found that he had a 15 year period with no increase with the exception of one year. So basically the clock started after that increase. Unfortunately, it was right in the middle of the time frame so she could only go back 7 years. Without some punitive measure (i.e. taking away Prop 13 from residential owners and instantly appraising to market value), I'm simply not buying that a 5% increase would be customary at all for single family homes (perhaps apartments it would). Perhaps someone can supply a historical chart for single family homes in recessionary and non-recessionary periods to look at the average (I would think that would be the only fair way to analyze things...especially since we are 10 years into a recovery right now).
Our home rents for just under $4k. I couldn't see myself increase rent next year to $4200, and then the year after $4410 and so on. Without some uniformity from landlords, you would be replacing tenants fairly frequently and if you didn't find another tenant quick (say the house stays on the market for a couple of months), that's going to take 2+ years to breakeven on that one.
Addendum: I actually found this article on it (can't vouch for the accuracy of the numbers). But clearly, rent doesn't go up in a linear fashion. Based on this, there are certainly period of times when a recession hits, that rents took a number of years to get back to their high (approximately 2000-2012).
Let's say your house rents for $4,000 per month on January 1 2019 for a 1 yr lease. Now it's December 1, 2019 and you're trying to determine if you're going to raise the rent.
If the market rent is 4200 (5% increase) you say you wouldn't raise it that much. Your hypothetical about a tenant leaving is completely specious. If market rent for your product is really 4200 your tenant is not going to pick up and leave. That costs a serious amount of time, money, and effort to go get qualified for another rental and all the pain in the ass moving issues.
Tenants (especially in houses as opposed to 1 BR apartments) are sticky. They don't just pick up and leave over the first rent increase. In addition if this is something you're worried about then just put it in the initial lease. For all my SFR's I have a 2 year minimum initial lease term with contractual rental increase of X% on month 13.
Let's say your house rents for $4,000 per month on January 1 2019 for a 1 yr lease. Now it's December 1, 2019 and you're trying to determine if you're going to raise the rent.
If the market rent is 4200 (5% increase) you say you wouldn't raise it that much. Your hypothetical about a tenant leaving is completely specious. If market rent for your product is really 4200 your tenant is not going to pick up and leave. That costs a serious amount of time, money, and effort to go get qualified for another rental and all the pain in the ass moving issues.
Tenants (especially in houses as opposed to 1 BR apartments) are sticky. They don't just pick up and leave over the first rent increase. In addition if this is something you're worried about then just put it in the initial lease. For all my SFR's I have a 2 year minimum initial lease term with contractual rental increase of X% on month 13.
I used to wonder if you actually read comments before replying to them....I no longer wonder.
Not talking about SF. 3% is for LA. Well....was for LA. The new rent cap law changed that to 5%.
I don’t know what other LLs are gonna do. But if they fall under that rent cap law I guarantee you they will raise rents. And some LLs who may not be under that law may raise them simply because “everyone else” is raising them.
It doesn’t matter what you or I will do. It’s what the majority will do. Even in the recession times I never had to lower rent. When I raise my rents I do a lot of research and discovery before I raise rents. Granted I know LLs who just do 3% a year regardless of consequences but hey you can do whatever you want with your rentals.
There are a lot of nuances to this new RSO. Also this allows the LL to raise the deposit to stay in line with the monthly rent. I’m not subject to this RSO but I’m still reading through the whole thing trying to understand what it does.
Well SF is part of CA, Electrician. And the obvious point I was making is that rent does not increase in a linear fashion. There will be years that people can increase it that much with little risk of losing a tenant, and then there will be times when they not only would be at serious risk, but they might actually need to decrease based on market demand (thus the reason I put up the link to the graph). Again, just look at differences between 2000-2012. Rent did not go up 5% per year. That's simply not feasible during recessionary times, and perhaps during recovery it can be raised higher (in situations without rent control). We are clearly at a high right now in regards to the Economy but that doesn't last forever. To make a blanket statement like that, I believe, is without merit.
Absolutely, I feel bad for anyone who signs a triple net lease, it's a great way to get screwed.
So what's your other option? Buy the building outright. Good luck raising capital for that or ever expanding your sandwich empire with those type of costs.
When it comes to negotiation it's all about the balance of power (or at least perceived power) and your BATNA.
Well SF is part of CA, Electrician. And the obvious point I was making is that rent does not increase in a linear fashion. There will be years that people can increase it that much with little risk of losing a tenant, and then there will be times when they not only would be at serious risk, but they might actually need to decrease based on market demand (thus the reason I put up the link to the graph). Again, just look at differences between 2000-2012. Rent did not go up 5% per year. That's simply not feasible during recessionary times, and perhaps during recovery it can be raised higher (in situations without rent control). We are clearly at a high right now in regards to the Economy but that doesn't last forever. To make a blanket statement like that, I believe, is without merit.
Think about this. A current tenant in a rent controlled building pays rent of $1,000/mo. (with the new cap of 5% + CPI) and the rent for a new tenant to rent in the building is $2,000/mo.
I don't care at all if we're in a recession or the biggest economic boom ever experienced. If the a tenant is under market I am going to raise rent by the rent cap (5% + CPI) every single year until there is parity between market and the rent control rate. If the tenant moves out that is great news to me. Now I can rent to a new tenant at market.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
