rent-neg_lede.jpgI don’t want to argue the merits of rent control per se. But, what I would like to know is why does every single tenant advocacy group, person, attorney, legislator etc just assume that a landlord, just being a landlord, is rich?

Some are wealthy and some are not. Some large corporations are doing fabulously well today and some small businesses are suffering greatly.

Maybe we should means test landlords as a way to exempt some from the rent ordinances of SF & Berkeley? Would you consider that fair?

It’s interesting that your list of those who assume that landlords are rich practically encompasses the entire population. Could that assumption simply be true? Duh. In the Bay Area, all landlords are rich.

It’s very easy to come to that conclusion. If you’re a landlord, you own at least two units, right? (Generally, a landlord who rents a room to a boarder in his own house is exempt from rent control.)

According to HUD, for the 12 months ending March 2010, the median sales price was $647,300 in the city of San Francisco. I believe the price has increased in the last year.

But before you blow a gasket, I understand that the single family home sales price is not necessarily indicative of the value of a given unit. Those figures are harder to find. But is there a two-unit building in San Francisco that is worth less than $400,000? If there is one, it’s probably uninhabitable.

Is it fair to say that all San Francisco landlords have assets valued at least $400,000.00? Landlords who own more units than in this hypothetical San Francisco shack are worth considerably more.

Is that rich enough for you?

Anyone who didn’t come in with yesterday’s rain knows that rich people always complain about not having enough. It’s in their nature.

One of the reasons corporations do so well is that we subsidize them with tax breaks and write-offs. Interestingly, we also subsidize landlords the same way. Landlords can deduct their mortgage interest, maintenance costs, property taxes, property management costs and on and on.

I don’t even get my frickin’ $62.00 renters credit anymore.

I’m sorry. The poor landlord who deserves a means test to opt out of rent control is like the small company, say Bechtel with annual revenue of $30.8 billion, that deserves a tax break.

Of course you want to argue the merits of rent control–you want to argue the merits in a passive/aggressive manner so typical of apologists for landlords.

To paraphrase Bill Maher, “The next landlord who publicly complains about being vilified by tenant advocates for being too rich must be publicly vilified by tenant advocates for being too rich.

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Dave Crow is an attorney who specializes in San Francisco landlord tenant law. However, the opinions expressed in these articles are those of the author, do not constitute legal advice, and the information is general in nature. Consult the advice of an attorney for any specific problem. You understand that no attorney-client relationship will exist with Dave Crow or his firm, Crow & Rose unless they have agreed to represent you. You should not respond to this site with any information that you believe is highly confidential.

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  • netopia

    I’m a renter and I’m NOT a landlord apologist – I believe regardless of the landlord’s financial situation, they should follow the law and I’d be the first to sue any landlord who was not treating me legally and fairly. After all, they bought into a market that had rent control, so it’s basically their problem. But when you put forth such a poorly-constructed, snarky argument, it really hurts your own case.

    You claim that any landlord must be worth at least as much as the value of the building in question. First of all, you forgot about a little thing called mortgage debt. And another little thing called a declining (or declined) housing market. And that thing about how San Francisco is one of the best places to rent rather than buy. And so you easily end up with landlords who are underwater on whatever properties they own and receiving rent that is much less than their mortgage payment. They certainly don’t earn the right to mistreat tenants, but they are by no means rich.

  • netopia

    I’m a renter and I’m NOT a landlord apologist – I believe regardless of the landlord’s financial situation, they should follow the law and I’d be the first to sue any landlord who was not treating me legally and fairly. After all, they bought into a market that had rent control, so it’s basically their problem. But when you put forth such a poorly-constructed, snarky argument, it really hurts your own case.

    You claim that any landlord must be worth at least as much as the value of the building in question. First of all, you forgot about a little thing called mortgage debt. And another little thing called a declining (or declined) housing market. And that thing about how San Francisco is one of the best places to rent rather than buy. And so you easily end up with landlords who are underwater on whatever properties they own and receiving rent that is much less than their mortgage payment. They certainly don’t earn the right to mistreat tenants, but they are by no means rich.

  • Luba Muzichenko

    Wow. That is some serious bitterness.

    Here’s the deal. The law is the law is the law is the law. No one is above the law. All landlords must follow the letter of the law (this means no harassment, no illegal rent hikes, no illegal evictions, providing a safe and habitable space, paying interest on the security deposits, etc). All tenants should as well (this means paying rent on time, not causing damage to a property and reporting problems with the property to the landlord or manager promptly so they can be addressed right away, etc.)

    But here’s the real deal.

    Not every landlord is rich. Not every tenant is poor.

    Here’s two *TRUE* short stories.

    Story one…..

    A woman marries a man. He’s an older man. He has owned a rental property since the 1960’s. It’s a single family house, under rent control based on Costa Hawkins details. The husband gets sick. He stays sick for years, and the woman takes out a mortgage on this house to take care of him. Seven years later, the man dies. She inherits the rental property. She owes exactly what it is worth today, given its tenant occupied status. Rent received is $1,100 a month. But mortgage is $1,875. Plus taxes. Plus insurance. This woman is not rich. But, she still keeps the property. She takes a loss every single month and will continue to do so until she is able to sell (for a loss after real estate commissions, transfer tax and capital gains taxes.)

    Story two…..

    A tenant lives in a property. This tenant has lived there for 30 years. This tenant still pays $660 a month for a 5 bedroom Victorian flat. Meanwhile, this tenant has bought and FULLY paid off a vacation home (in just four short years.) This vacation home is now worth $180,000, debt free.

    Can you answer which person is rich – the landlord of the tenant?

    Answers are not always black/white, right/wrong, rich/poor. Remember to see each person as an individual, with individual circumstances and individual experiences, be it landlord or tenant, and I bet you the world won’t seem so one-sided anymore.

  • Luba Muzichenko

    Wow. That is some serious bitterness.

    Here’s the deal. The law is the law is the law is the law. No one is above the law. All landlords must follow the letter of the law (this means no harassment, no illegal rent hikes, no illegal evictions, providing a safe and habitable space, paying interest on the security deposits, etc). All tenants should as well (this means paying rent on time, not causing damage to a property and reporting problems with the property to the landlord or manager promptly so they can be addressed right away, etc.)

    But here’s the real deal.

    Not every landlord is rich. Not every tenant is poor.

    Here’s two *TRUE* short stories.

    Story one…..

    A woman marries a man. He’s an older man. He has owned a rental property since the 1960’s. It’s a single family house, under rent control based on Costa Hawkins details. The husband gets sick. He stays sick for years, and the woman takes out a mortgage on this house to take care of him. Seven years later, the man dies. She inherits the rental property. She owes exactly what it is worth today, given its tenant occupied status. Rent received is $1,100 a month. But mortgage is $1,875. Plus taxes. Plus insurance. This woman is not rich. But, she still keeps the property. She takes a loss every single month and will continue to do so until she is able to sell (for a loss after real estate commissions, transfer tax and capital gains taxes.)

    Story two…..

    A tenant lives in a property. This tenant has lived there for 30 years. This tenant still pays $660 a month for a 5 bedroom Victorian flat. Meanwhile, this tenant has bought and FULLY paid off a vacation home (in just four short years.) This vacation home is now worth $180,000, debt free.

    Can you answer which person is rich – the landlord of the tenant?

    Answers are not always black/white, right/wrong, rich/poor. Remember to see each person as an individual, with individual circumstances and individual experiences, be it landlord or tenant, and I bet you the world won’t seem so one-sided anymore.

  • piratesnack

    ” Landlords can deduct their mortgage interest, maintenance costs, property taxes, property management costs and on and on.”

    Just wanted to point out that all those things are costs of doing business, i.e., what has to be deducted before you can determine a business’s profit. Costs of doing business are not taxed for any business. Otherwise, it would be a tax on revenue, not income or profit.

    With that said, of course a means test for rent control is unwise. The only result will be a shift of lower income investor’s assets toward rental property and higher income investor’s assets toward other investments, such as stocks. I can’t see why that would be a net gain for anybody.

  • piratesnack

    ” Landlords can deduct their mortgage interest, maintenance costs, property taxes, property management costs and on and on.”

    Just wanted to point out that all those things are costs of doing business, i.e., what has to be deducted before you can determine a business’s profit. Costs of doing business are not taxed for any business. Otherwise, it would be a tax on revenue, not income or profit.

    With that said, of course a means test for rent control is unwise. The only result will be a shift of lower income investor’s assets toward rental property and higher income investor’s assets toward other investments, such as stocks. I can’t see why that would be a net gain for anybody.

  • Samuel

    Rent control artificially reduces vacancy which leads to higher rent and higher rate of homelessness. It is the reason why any new entrant to San Francisco, including myself, has to pay exorbitant high rent. Rent control helps renters who stay in one place a long time and hurts renters who are new to the city or don’t tend to live in one place for very long.

    So yes, rent control is a bad law. This coming from a renter. My estimate is that I’d easily be paying a couple hundred bucks less per month if there is no rent control.

    As for the question of rich landlord, I’m pretty sure some landlords don’t even have $400,000 in assets when you factor in the outstanding mortgage, in fact it is really ignorant to assume that all landlords own their properties free and clear. It’s the banks who own most of the rental properties. It’s the banks dummy.

  • Samuel

    Rent control artificially reduces vacancy which leads to higher rent and higher rate of homelessness. It is the reason why any new entrant to San Francisco, including myself, has to pay exorbitant high rent. Rent control helps renters who stay in one place a long time and hurts renters who are new to the city or don’t tend to live in one place for very long.

    So yes, rent control is a bad law. This coming from a renter. My estimate is that I’d easily be paying a couple hundred bucks less per month if there is no rent control.

    As for the question of rich landlord, I’m pretty sure some landlords don’t even have $400,000 in assets when you factor in the outstanding mortgage, in fact it is really ignorant to assume that all landlords own their properties free and clear. It’s the banks who own most of the rental properties. It’s the banks dummy.

  • Larry Nusbaum

    “Is it fair to say that all San Francisco landlords have assets valued at least $400,000.00? Landlords who own more units than in this hypothetical San Francisco shack are worth considerably more. ”

    Clever. Answer a question with a question. Looks like your readers have a handle on the answer even if you don’t.

    Someone said, “the law is the law”. But that wasn’t the question I sent via email. However, the law must be followed by tenants as well. I bet there are no free landlord legal advocacy groups who work for free to help struggling landlords, right? Didn’t think so.

    Now someone else reminded you that owning property doesn’t make you rich. If I owned $20 million in AV apartments, but owed $25 million in debt I then I might be a lot poorer than my tenants, right? Unless the blogger considers having a net-worth of minus $5 million “rich” by the mere fact of property ownership.

    So, my question: why does the blogger consider all landlords rich just because they are landlords?

  • Larry Nusbaum

    “Is it fair to say that all San Francisco landlords have assets valued at least $400,000.00? Landlords who own more units than in this hypothetical San Francisco shack are worth considerably more. ”

    Clever. Answer a question with a question. Looks like your readers have a handle on the answer even if you don’t.

    Someone said, “the law is the law”. But that wasn’t the question I sent via email. However, the law must be followed by tenants as well. I bet there are no free landlord legal advocacy groups who work for free to help struggling landlords, right? Didn’t think so.

    Now someone else reminded you that owning property doesn’t make you rich. If I owned $20 million in AV apartments, but owed $25 million in debt I then I might be a lot poorer than my tenants, right? Unless the blogger considers having a net-worth of minus $5 million “rich” by the mere fact of property ownership.

    So, my question: why does the blogger consider all landlords rich just because they are landlords?

  • KWillets

    Of course landlords are rich. How else can they support their tenants?

    (Actually the short-term tenants support the long term ones, on average. Mixing housing and options trading is so much fun.)

  • KWillets

    Of course landlords are rich. How else can they support their tenants?

    (Actually the short-term tenants support the long term ones, on average. Mixing housing and options trading is so much fun.)

  • Al

    So if I have $80,000 and use it as a downpayment on a two unit building, I’m a landlord and am suddenly worth at least $400,000? Nice to know.

  • Al

    So if I have $80,000 and use it as a downpayment on a two unit building, I’m a landlord and am suddenly worth at least $400,000? Nice to know.

  • Larry Nusbaum

    On the other hand, if I make let’s say $20,000 – $40,000 per month and live in a rent controlled apartment, paying $5,000 per month, I should be considered down-trotten, poor and in need of free legal services to fight my rich/greedy landlord, who may have zero equity in his 4 unit building he bought in 2007?

    Sounds about right…in the lopsided view of the blogger.

  • Larry Nusbaum

    On the other hand, if I make let’s say $20,000 – $40,000 per month and live in a rent controlled apartment, paying $5,000 per month, I should be considered down-trotten, poor and in need of free legal services to fight my rich/greedy landlord, who may have zero equity in his 4 unit building he bought in 2007?

    Sounds about right…in the lopsided view of the blogger.