A Portrait In Ellis: Inner Richmond Tenants Face Eviction Threat From Investor Who Admits To Real Estate Conspiracy

Four more rent-controlled San Francisco apartments might be culled from the city’s cutthroat housing market — this time, by a landlord who admits to participation in a conspiracy to purchase San Francisco properties for far less than fair market value.

Real estate investor Craig Lipton and his associates Keith Goodman and Craig Mallery recently purchased a four unit residential apartment building at 2405 Anza St. They have, Lipton admits, made it clear to the current tenants that if they cannot flip the property for at least $1,599,000 million, they plan to evict the current tenants and convert the building into a tenancy-in-common.

Current residents at the 90-year-old building — it was built in 1923 — include a single parent and two seniors, who have been living at the location for 36 years. According to Paragon Real Estate Group, residents of the one bedroom, one bath units (two of which include parking spaces) pay between $716 and $1,478 a month in rent. Buyers can expect as much as $2,900 in rent for each unit, Paragon suggests.

Much like the well publicized Ellis act eviction of Lee family — an elderly family who resided in a rent controlled apartment in Chinatown for decades — displacement would leave the Anza tenants unable to relocate amidst a hostile rental market that shows few signs of abatement, according to a tenant who spoke on the condition of anonymity due to an ongoing legal battle.

The tenant said that Lipton and his associates have been pressuring tenants to leave from the moment the property changed hands in September. Eviction notices have yet to be served, but negotiations between the landlord and tenants over a move-out payout — required in the event of an Ellis eviction — have broken down.

Lipton said he has offered tenants “double” what is required by the Ellis Act to relocate. “In some cases over $30,000,” Lipton wrote during an email conversation with the Appeal.

The tenant, speaking anonymously, confirmed that Lipton’s offer was above what was required, but not by enough to make a departure economically feasible. The tenant was unable to confirm that anyone in the building was offered “over $30,000.”

On October 15 of this year, the current tenants unanimously rejected Lipton’s offer as “substantially inadequate.” But, should the tenants choose to engage in a legal battle, their options are limited.

“There’s really no defense for this type of eviction,” Omar Calibas, an attorney with the Asian Law Caucus told the San Francisco Examiner last month.

Although Lipton insists that he is proceeding with the matter legally, he admits that he has not always been above-board in his real estate dealings. In 2011, Lipton pled guilty to participating in a “conspiracy to rig bids” to obtain real estate at public real estate foreclosure auctions in San Francisco, according to federal court documents. The purpose of the conspiracy was to “suppress and restrain competition to obtain title” of real estate within the city — essentially buying properties for less than their fair market value.

The charges included violating the Sherman Antitrust Act and Mail Fraud, carrying maximum sentences of 10 and 30 years respectively, as well as fines. Since Lipton made a plea agreement with the federal prosecutor, he will likely serve little, if any, time in prison. He was fined $13,416.50 in restitution, according to the plea agreement, a fine Lipton says he intends to pay.

“I have accepted responsibility for my involvement in the illegal activities at the steps [where foreclosure auctions are done in the city],” Lipton told the Appeal.

He went on to note that he has been a real estate professional in San Francisco for decades, and that “my name has been tarnished over a few thousand dollars.” Lipton said his investors are aware, and have chosen to continue to do business with him.

Bill Bryan, one of Lipton’s investors in the MF Fund II, LP — the limited partnership under which such real estate purchases are made — confirmed that he knew about Lipton’s felony charges, but said that he has confidence in Lipton’s current investment activity.

A spokesman for the Department of Justice declined to comment in detail about the case because the investigation into the conspiracy is ongoing.

Lipton has been involved in several other eviction-related legal battles, one of which was recently dismissed due to lack of merit, according to federal court documents. Such fights are common when investors purchase foreclosed properties, according to Lipton. Though Lipton says that he evicted some squatters from a commercial lot in SOMA in the mid 1990s, this would be his first Ellis Act eviction.

Ellis evictions have long been a controversial topic in the city. Many believe doing so damages the fabric of neighborhoods because they tend to target long-term tenants protected by rent control laws — and as a result the properties tend to be relatively inexpensive. Critics also say that Ellis evictions rise sharply during times of economic growth, and that it is unjust to allow market speculation to have such a great impact on the city.

116 Ellis act notices were served in fiscal year 2012/2013, a figure that has more than doubled since 2010/2011, according to Rent Board Documents. Thus far in calendar year 2013 there have been 147 Ellis notices served, suggesting that fiscal year 2013/2014 will be a banner year for such evictions.

The Inner Richmond neighborhood, where 2405 Anza is located, has one of the highest rate of no fault evictions in the city — including Ellis withdrawals — said district one supervisor Eric Mar in a written statement. Mar called Ellis evictions “devastating” because they empty entire buildings at a time.

Supervisors are currently drafting legislation, and searching for other ways to bolster tenant protections, Mar said, including efforts to amend or eliminate the Ellis Act.

“Personally,” Mar said, “I believe that housing is a human right and that keeping long-term residents housed and communities intact is the best way to keep San Francisco vibrant and diverse.”

Mar’s not the only city official who has expressed concern over the current wave of Ellis act evictions. As you might recall, San Francisco Mayor Ed Lee intervened to help the Lees locate new housing. However, the Mayor’s office did not return phone calls requesting comment for this report.

Lipton defended his Ellis activity, saying that the evictions will actually be an employment boon for some.

“… one of the driving forces in my life today is to generate work for my maintenance company, so my crews can remain fully employed,” he told the Appeal.

“This is the basic bargain I have [with] my guys. Work hard for me and I will always provide you with work. This property [2405 Anza St.] represents a fair amount of work.”

The building was also being pursued by “several” tenancy-in-common developers, according to Lipton. He says that if he had not made the purchase, others would have “executed from the same playbook.” A TIC conversion was the only way to turn a profit from the property at that asking price, he said.

Louis Neff, the real estate agent who made the original sale to Lipton and his associates said there was only one formal offer — from Lipton, who made it before a listing was published. He acknowledged that the property, given the economics, is unlikely to be profitable unless it became a TIC conversion.

Meanwhile, the tenants of 2405 Anza St. have put signs in the windows of the building — warning neighbors of the possible eviction, as well as Lipton’s past.

“BLDG OWNED BY CONVICTED REAL ESTATE FELON THREATENING ELLIS ACT EVICTION OF TENANTS” reads one of the signs.

Lipton asserts. however, that since the Ellis Act is state law, he’s only acting within his rights as a property owner.

“When the sellers made the decision to sell this property,” Lipton said, “that was the day the tenants’ rent control apartments were at risk.”

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  • cedichou

    This is unfortunate. Obviously the investors are greedy scumbag who could not care less about the tenants and just want to flip houses.

    But the response of the elected people is no better.

    – Supervisor Eric Mar is DIRECTLY RESPONSIBLE for the current wave of Ellis. Ellis act notices have doubled this year from the last, and will significantly increase again this year. Why? Because Supervisor Mar VOTED FOR A MORATORIUM ON CONDO CONVERSION until 2023. This building does not satisfy the condo conversion bypass requirement (not owner occupied as of April 2013) so has been denied any hope of condo conversion until the lottery starts again, in over 10 years, at which point there will be a huge backlog of buildings waiting and the odds of winning will be ridiculously low. CONDO CONVERSION IS AN INCENTIVE TO BE NICE TO TENANTS. Eric Mar basically killed this incentive. And now acts surprised that landlords react to the incentive and go Elllis. Again: why not Ellis, you won’t be able to condo convert until at least 2023?

    – The response of Eric Mar is even more disingenuous. He wants to prohibit Ellis Acts. This is just grandstanding, as property rights are protected by the consitution. This can’t go anywhere.

    – The proper response from Eric Mar would be to:
    1) admit responsibility in this debacle. He created the situation that led to these evictions.

    2) admit that the rent control laws are hurting tenants by not protecting the poor, but by protecting those who have been in a unit a long time. Fact: there are more rich protected tenants (making over $100k), than poor ones.

    3) understand that the rent control laws are hurting landlords. This building sold to this shady investor because, well, do the (back of the envelope) math. Put 25% down for $1.6million, you have $1.2mil of loan at 4% interest +1.2% property tax + $5k insurance= $70,000/year just for those. Garbage: $5k/year. Water: $3k/year. Is there a central heating where the landlord pays the gas bill? Another $5k. Renting the empty 1BR for $2.9k, you get under $6.7k/month. That’s $80k/year. So you have nothing left from the rents to maintain a 4,000sq ft appartment building. You just can’t. And at a sales price of $400/sq ft, it’s extremely low value already. So the owner gets hurt. Now, if it’s a large corporation, they can take a loss on one building with the rents of another. The average rent is what matters to them. But in the Richmond, it’s pretty much mom and pop’s owners. I wouldn’t be surprised if the empty units was vacated by the previous owners. So they are hurt by the rent control, and turn to shady investors, who are the only ones who would take the building off their hands.

    4) What’s the solution? No rent control and subsidies to low income renters. This would allow the people in this story to get a new unit (at market rate, they would receive help from the city). This allows new low income people to move into the city. This does not shift the cost of the subsidy onto mom-and-pop building owners, this does not force them to sell to shady investors. This allows twitter millionaire in their rent protected noe units to pay fair rate. Oh, and get rid of Eric Mar and his terrible policies who hurt the poor and elderly.

    • Mike

      The previous owners probably had the building for so long that they were paying 1970’s property taxes. They probably bought it for a fraction of its current price, and have long since paid off the mortgage.

      The fact is that they cashed out, and now the new owner wants to cash out. When people speculate on property, everyone wins… except tenants. None of the people involved in owning this piece of real estate are oppressed.

      • cedichou

        I’m talking about the next owners. The property is for sale at $1.6million. The previous owners sold it recently to this shady investor, probably for much less (or the investor would not see a return). Assuming the next owner would buy the building WITH the leases and the tenants.

        So the previous owner “cashed out” by selling way below value just because they were unlucky with their tenants. It’s not fair to them. You see the pressure it puts on people to not rent to people who might stay long term! There’s a million dollar loss here for the previous owner (assuming they sold for around $1.2mil for an empty value of $2.2mil).

        And the duty of preserving the neighborhood fabric should not fall disproportionally on some unlucky mom-and-pop Richmond building owners. Why them, and not the (hypothetical) neighbors who only rent to USF students?

        • Mike

          Pressure, my ass. Unlucky with their tenants?

          Let’s see. The property has been in the hands of the same family since at least 1995, and possibly earlier. In 2003, there was a death in the family:

          http://www.criis.com/cgi-bin/new_get_recorded.cgi?l_doc_ref_no=3436325&COUNTY=sanfrancisco&YEARSEGMENT=current&SEARCH_TYPE=DETAIL_N

          The property was subsequently deeded to a whole bunch of surviving relatives:

          http://www.criis.com/cgi-bin/new_get_recorded.cgi?l_doc_ref_no=3445691&COUNTY=sanfrancisco&YEARSEGMENT=current&SEARCH_TYPE=DETAIL_N

          Who then deeded it back to an LLC:

          http://www.criis.com/cgi-bin/new_get_recorded.cgi?l_doc_ref_no=3546784&COUNTY=sanfrancisco&YEARSEGMENT=current&SEARCH_TYPE=DETAIL_N

          This is a typical strategy to avoid a Prop 13 reassessment. And it worked: the last assessed value of the house was $136,628. Taxes were a paltry $2,322 a year.

          Think back to the last time a multi-unit building in the Inner Richmond went for $136,628, and you can get a pretty good idea of when it last sold, and what mortgage payments (if any) would still be getting made on the property.

          So, going back to those tenants, now. With a monthly income of $3,850 from the three tenants in the building, plus a projected $2,900 from renting the vacant unit, the family is looking at $6,750 a month in income.

          With $193.50 a month in property taxes. And probably no debt service.

          Remind me again how sitting on something that basically just shits out $80K/year in profit makes one “unlucky”.

          Fact is, the family wanted to cash out on their property, which they’d enjoyed for a long time (and on which they were paying minimal taxes). And, under capitalism, their right to make a windfall profit (and the subsequent investor’s right to do the same, by evicting all the tenants), is more important than anyone’s interest in, you know, remaining housed.

          Talk about luck.

          • cedichou

            They sold for $1.35 million. That $330/sq ft. Average price per sq ft in San Francisco is $750. The lost 50% of their value by having these tenants. I’m sure if you were a landlord, you’d avoid potential long term tenants (say, a 50yo single teacher) like the pest.

            They had a cost structure that brought them, according to the property statement and considering $2,000 in taxes, roughly $60k with a $1,000 reserve/year. A more reasonable number would be $50k/year if they intend to paint the house, change appliances or redo the roof once in a while. It’s better than nothing, but split it among the family, and it won’t get you too far.

            In short, the family inherited something worth $1.35mil and would get a 3.70% return on this. It’s a no brainer to divest and pay off your own mortgage that’s probably a higher rate, or invest in a fund with higher return.

            Yes, they’re unlucky, in that if instead of having 3 long term tenants, they had none, they’d double what they take home. I can’t believe you don’t see the incentive to maximize turnover there.

          • Sigmarlin

            Mike, you’re good with research! You should join us at the anti-eviction mapping project. We’re currently investigating the shadowy figures behind LLCs. Send an email there if you’re interested…

          • Harry Mann

            “Shady” investors; “Shadowy” figures… let me guess… um, you’re white?

          • Harry Mann

            Wow. It sounds like you are looking over the owner’s shoulder in order to count how many beans are on their plate. Been living in Cuba lately?

  • cedichou

    Oh, I see that there is an expense sheet in the statement. The expenses are $35k/year, excluding debt service. You are left with $45k (rent income minus expenses). So if you carry that $1.2million loan at 4% = $48k (jumbo rate at wells fargo today) you are in the red. You lose money. This work only if you’re willing to do an all cash deal and then your rate of return is a measly 2%. It’s below inflation. It’s just not worth it.

  • Marina Francisco

    Even if there were no condo conversions in the city, rental property can still be converted to TIC. But from what I understand when a group buys an occupied building to convert to TIC, they can only evict one tenant for an owner move-in – limiting the desirability of the property. However, if the building is Ellis Acted then sold (or sold then Ellis Acted) the new owners could move in. Of course, the Ellis Act goes on the title for 10 years so it could not then be rented out as income property for 10 years after that – but if the new owners genuinely want to move in and live there for 10 years that shouldn’t bother them. (I’m going on fuzzy memory of the law so don’t trust everything I say here!)

    • cedichou

      You are right, you can always create a TIC. But only one owner can move it. One unit is empty here. So that leaves two units that can’t be owner-occupied under an owner-move-in (OMI).

      You’re also right that under Ellis Act, you can’t rent for 5 years and for the next 5 years, you have to offer the unit back to the tenant at the current rate. But a perverse effect of rent control is that, since tenants here pay so little (here $1,000/mo on average), there is little financial loss by evicting them.

      Regarding the Owner-Move-In: Eric Mar voted for a new law (condo lottery bypass) that ensures that this building cannot be condo converted if the next buyers do an OMI. For instance, under Eric Mar’s new rules:
      – they can condo convert until the condo conversion moratorium ends in 2023 at the earliest;
      – then they will participate in the lottery with all the TIC created between 2013 and 2023. The backlog then will be worst than it was this year (when you routinely had to wait 7 years to win the lottery).
      – If they do an OMI, they will be disqualified from the lottery post-moratorium for having evicted a tenant. So it’s damned if you do evict (you’re disqualified from lottery because of the eviction), and damned if you don’t (you’re disqualified because of ownership requirements you can’t meet).

      So Eric Mar voted for a law that in essence dared owners to Ellis Act! Then he goes around lamenting that landlords Ellis Act!

      • Marina Francisco

        My head hurts! So if a group of 4 people buys a 4-unit building and Ellis Acts it, then all four move in to the building, is that considered an OMI eviction? What about if they offer the tenants a financial incentive to move out but don’t actually evict them, and don’t Ellis Act the building?

        I imagine that financial incentive would have to be HUGE though.

        I myself live in a rent-controlled one-bedroom apartment (with two parking spaces) for which I pay $900. The landlord recently gutted and remodeled an identical unit in my building and is renting it out for $2700 with one parking space.

        I doubt the landlord would offer me anything to move out even if I suggested it (he’s on record saying that when tenants ask for a buy-out he tells them he’s looking forward to outliving them). But I have been thinking recently about what I would accept to move out and frankly I don’t think there’s a number high enough. I mean, think about it. My per-month rent is $1800 below market (actually closer to $2000 with the value of second parking space). That’s $24,000 a year in AFTER-TAX INCOME that I am saving. Before taxes. I would have to earn an additional $40K to $45K PER YEAR in gross income to afford to live in a comparable apartment if I had to move.

        So if the landlord offered me $250,000? That’s TAXABLE. I would clear maybe $180,000 after taxes, and if I moved to a comparable unit, that $180,000 would be gone in seven years.

        Of course, if I took that money and used it toward the purchase of a condo at maybe $600K – … not sure how the math would work out then, but I would certainly be paying much more per month than I am now, with mortgage, taxes and condo fees.

        I don’t even believe in rent control … I just happened to move into an apartment and stay for a long time, and now I’m in this situation where I can’t move and the landlord probably hates me because my rent is so low and I’m costing him $20,000 a year.

        And as for that $250,000 number? No way in hell any landlord pays a tenant that much to move. Yes, it actually kind of makes sense from the landlord’s point of view because he gets it back in 10 years and I am likely to stay longer than that … but I don’t think a landlord in this town could stomach the thought of buying out a rent-controlled tenant – they would think of it as a form of theft by the tenant.

        • cedichou

          No. If 4 TIC partners Ellis act and move-in, it’s an Ellis Act. It comes with a certain set of restriction (no renting for 5 years, and no condo conversion). An OMI (owner-move-in) is when only one of the owners do it. Then this unit becomes the OMI unit and OMIs can only happen there afterwards. OMI comes with restrictions as well (owner has to live there a period of time, I believe 3 years). Both OMI and Ellis Acts have to be registered with the city (or the rent board, not sure which).

          As for your situation: if no one asks you to move, then you should stay put. As you calculate, moving to another similar place would cost you an extra $20,000/year. Your landlord has no intent to sell, so why should you move?

          No one will ever give you $250,000. From an owner perspective, the cost of Ellis acting would reduce the value of the property by some amount. It’s debated how much. Some say in the current market, it’s 5%. Others say it’s 20%. Say it’s 10%. For a 1BR in SF with value $600,000, the owner would take a hit of $60,000 from the Ellis Act. So giving you $60,000 or Ellis acting make no difference.

          For you, as you calculate, the cost of moving out is high. But under an Ellis act, you get $5,000. So splitting the difference gets you in the $30k~$50k range which is the reasonable buy-out in the city nowadays.

          If you do get such a buy-out, you are better off getting that $600,000 1BR condo for yourself. Actually, one way to make it non taxable is to buy your unit and just reduce the price by the buy-out amount. But if you buy some other 1BR, with a $40k buy-out and some other money that you saved while you were paying below market rents (hoping you could!), the monthly cost would be $600 of property taxes, something like $300 of HoA, and $2,000 of interest. You get a tax rebate on $2,600, so you actually pay $2,300/mo to own your place. Compare with $2,700 for renting a new one, and it’s no debate.

          • Marina Francisco

            I am fortunately not in danger of any of the usual things that have seriously below-market tenants looking over their shoulder. I live in a 24 unit building that was constructed in 1950. It’s ugly, although in a great neighborhood. It has 12 studios and 12 one-bedroom apartments. They have efficiency kitchens and the building is not well-maintained and was architecturally ugly to begin with. There is ZERO danger of OMI (he has no children and lives in a 3-story mansion in Pacific Heights). If he did want to move in to a one-bedroom in my building he wouldn’t evict me, as there is frequent turnover AND I have the lowest rent in the building. There is zero danger of TIC because nobody buys a 24 unit building for TIC. Ditto zero danger of Ellis Act. Unless there’s some weird version of Ellis Act where you can then rent out the units for tourists for less than 30 days or something, which I doubt. Also zero danger of condo conversion – nobody would want to BUY one of these units! So basically the only way that the landlord would get me out would be to buy me out, and frankly I don’t think he needs the money that much. He bought the building in 1994 for $1.7 million, has to my certain knowledge been paying down the mortgage faster than he has to, so it may well be paid off by now. It’s probably worth $15 million. Gradually all of the long-term tenants have moved out or died or gone to retirement homes, and now I would say of all 24 units there are only three tenants who have been here 10 years or more, maybe 5 tenants who have been here 5 years or more. The landlord only rents to young people, I have not seen anybody under 40 move in here in over a decade unless you count the woman who moved here for a temporary assignment and was gone within a year.

            So, 12 studios probably renting on average for $1200 a month (newly vacant studios go for $1700) and 12 one-bedrooms probably renting on average for $2000 a month (newly vacant one-bedrooms going for $2700). He’s pulling in $38K a month x 12 = $460000 a year on a building that cost him only $1.7 million and which is in all likelihood paid off.

            He doesn’t need the extra income on my apartment! This is not like some small building where the owner is incentivized to get a tenant out either to increase eventual cash flow, or to make the building worth more for resale.

            By the way, by my calculations my annual rent is $24,000 below market for a comparable apartment with two parking spaces in this neighborhood. In order to afford that, however, I would have to earn at least $40,000 a year more in pre-tax income.

            So the only way I move out is if I buy something. And frankly even then it would make more sense to rent out whatever I bought, and stay put here. Although I’m not sure I would want to be a landlord in San Francisco!

          • Marina Francisco

            PS What I meant by “he wouldn’t evict me” and “I have the lowest rent in the building” is that he would be afraid that if he did evict me to “move in” I would claim he targeted me because I had the lowest rent.

          • Dan

            You can’t OMI for retribution but you’d have a hard time proving this because of your low rent. I wouldn’t worry about him moving in, but a nephew etc? Or he sells the building and that owner wants to OMI. I agree that it sounds very unlikely and with such net-worth, he might be one of those guys that
            a) doesn’t need the money-diff of market rents (he has $15m what diff is another $20k a year)
            b) didn’t get to where he was today giving people concessions.

          • Marina Francisco

            The landlord cannot evict a tenant to move in a nephew. In fact the landlord cannot evict a tenant to move in ANY relative unless the landlord lives in the building. So, the only way the landlord could evict me would be if he himself wanted to move into my unit, since he doesn’t live in my building. Here’s the language of the OMI from the Rent Statute:

            http://www.sfrb.org/index.aspx?page=1261

            [snip]

            (8) The landlord seeks to recover possession in good faith, without ulterior reasons and with honest intent;

            (i) For the landlords use or occupancy as his or her principal residence for a period of at least 36 continuous months;

            (ii) For the use or occupancy of the landlords grandparents, grandchildren, parents, children, brother or sister, or the landlords spouse or the spouses of such relations, as their principal place of residency for a period of at least 36 months, in the same building in which
            the landlord resides as his or her principal place of residency, or in a building in which the landlord is simultaneously seeking possession of a rental
            unit under 37.9(a)(8)(i).”

            [/snip]

            And (http://www.sftu.org/omi.html):

            [snip]

            “Landlord Must Offer Tenant Other Units—OMI evictions are prohibited if the landlord has a vacant “comparable” unit in any building owned by the landlord in San Francisco and if it becomes available at any time up to the point of the tenant losing in court (or vacating voluntarily).”

            [/snip]

            So it seems to me if the owner tried an OMI I could fight it in court and drag it out as long as possible and if at any point in that process a comparable unit opened up in my building or another building he owned, I would be saved.

            And, tenants over 60 who have lived in the building 10+ years cannot be evicted at all. That doesn’t apply to me and won’t for many years. But eventually it might!

          • Marina Francisco

            But yes, you’re right that if he sold the building and the new owner wanted to move in, I might be targeted. The two other long-term tenants with low rent are over 60 so they can’t be evicted, so I’d be the prime target!

          • Dan

            The could Ellis units if they just wish to take them off the market (e.g. the cost of upkeep is more than the rent). With capital pass-through this is unlikely but still could happen.

          • cedichou

            They cannot Ellis act units, they have to Ellis act the whole building. That’s why Ellis acting is a nuclear option in the case of a 24 unit building.

            To win a successful OMI, the landlord would need to NOT have another similar property that is available. Since the landlord is renting to young people, then there’s always going to be some churn and one of the other 1BR open. That will keep you safe.

            But again, the risk he’d try this is pretty low, someone pulling half a million of rent per year might not necessarily want to move in a 1BR in an ugly 50s building.

          • Marina Francisco

            Right, I know they can’t Ellis Act individual units. And there’s no way they’d Ellis Act a 24-unit building. That’s a half million dollar a year “cut off your nose to spite your face.”

            And yes, I believe I’m safe from OMI.

            There have been many times over the years when I have wanted to move out, but have stayed put for various reasons. In hindsight, even though living here has its drawbacks (thin walls, russian roulette every couple of years when apartment above me turns over, hardwood floors and the landlord doesn’t require tenants to carpet their floors) … I feel like I have dodged a bullet in so many ways. If I had traded up over the years when I thought about it, I could have moved into a nicer building, or a duplex, and had it go condo, OMI, Ellis Act, TIA, you name it. Even a large building like mine is not immune from going condo – my luck is to live in a building where the units aren’t nice enough to be attractive to condo buyers. Though I’m not 100% sure of that … is there a way to check whether the landlord has entered the building into the condo lottery? I should probably double-check that!

            So anyway, in the general scheme of things, I have gotten lucky. And I guess you could say I’m lucky to be paying $2000 below market but for some reason I don’t FEEL lucky on that score. I feel … scared, trapped, and like I have a big target on my back. It’s like I’m living in this little artificial bubble and if anything happened to this building, I would have to find an extra $40K a year in income – or leave my home city that I grew up in.

            I should tell you the story about the mold. But I’d break my keyboard!

          • Marina Francisco

            OK, found the condo lottery. You can check results by street.

            http://bsm.sfdpw.org/subdivision/lottery/

            It doesn’t appear that they let buildngs as big as 24 units apply for the lottery. But I’m not 100% sure.

          • cedichou

            Nope, 24 units can go condo. It used to be up to 6 units building, and after the moratorium ends, it will be up to 4 units only.

          • Marina Francisco

            I just can’t see how any landlord would take a 24-unit building off the rental market! He’s raking in about a half million a year in rents!

          • Dan

            Ye of course :)
            I think the only likely way you would get evicted if they went and did capital improvements – gutted the place or even demo’d and rebuilt. That’s probably the most likely but still outlandish scenario. Make sure you save what you can in this situation. It might not last forever but I’m sure you’re happy.

          • Marina Francisco

            I am not really happy because I feel trapped. Plus, I can’t say that I am banking the money I am saving on rent. If I had to pay $2700 a month in rent I’d be out there hustling like crazy and probably making that money plus a lot more. As it is, I am a bit laid back about growing my business (I’m self-employed) because my overhead is so low. I would have a rude awakening if as you say, they demo’d the building. I don’t think tenants have a right to move back in if it’s torn down and there’s new construction. But every time someone moves out they gut the apartment and renovate it (albeit cheaply) so they are investing in the present building. And crappy as it seems to ME with the sub-standard maintenance, it’s in a great neighborhood and people ARE willing to pay $2700 a month to live here!

          • Dan

            I’m no where near the level of below market rent that you are but I feel trapped too. Greener grass etc

          • Harry Mann

            It is funny that you keep saying the building looks like crap and was built to look like crap and yet you don’t want to move because your rent is relatively and absolutely low in comparison to today’s rental market; only, because of your intransigence you are losing perhaps as much money as your landlord is because you have become economically complacent. Good personal insight.

          • Marina Francisco

            I would have to earn an additional $40,000 a year in gross income to afford an equivalent apartment in my neighborhood if I moved out. To actually upgrade my living conditions would take a heck of a lot more than that. So, rent control has given me a strong disincentive to move as in these economic times I don’t think I would want to put myself in the perilous situation of HAVING to make that additional $40-60K a year JUST for housing. But you know that old adage “if you want something done, give it to a busy man?” I think that would kick in if I did find myself in that situation. I would just generally become more productive in every aspect of my life. Out of sheer panic if nothing else :-)

          • cedichou

            You make a striking point why rent control laws are terrible: “The landlord only rents to young people, I have not seen anybody under 40 move in here in over a decade unless you count the woman who moved here for a temporary assignment and was gone w ithin a year.”

            There’s a nasty case of discrimination there, but good luck demonstrating it in court. Here’s a landlord who rents only to people who he knows will be gone within a relatively short period of time: temporary assignments and young people. It’s pretty typical. It’s a direct consequence of the laws that are intended to protect people, but end up screwing them over.

          • Harry Mann

            You sound like you would make a decent on site property manager for the owner.

          • Marina Francisco

            The offsite property manager has publicly blogged about how he doesn’t believe in the California law that says you have to have an on-site manager, and since the law (a) doesn’t say the on-site manager actually has to DO anything and (b) there are no penalties if you violate the law, he has an “in-name-only” resident manager who does NOTHING.

            So, if you’re locked out, don’t call them – call a locksmith and pay $100. If your bathtub overflows, call a plumber or, if it’s a non-emergency, call them and they’ll send a plumber out the next day. If a lightbulb in the hallway is burned out? Call them and they’ll have someone come over and replace it. They are off-site but they handle EVERYTHING.

            So when our defective building fire alarm goes off at 2 am? We have to call the fire department, or go down and turn it off and then call the alarm company to come and turn it back on.

            I used to walk the building to check for smoke or fire before going down and turning it off … then I thought that I was probably exposing myself to liability by doing that so now I don’t touch it.

            When new tenants move in, the off-site manager doesn’t even tell them where the garbage chute or recycling bins are. So the recycling rate is low.

            The tenants keep their own apartments pristine but don’t pick up after themselves otherwise so if they come home drunk with an open container of beer and spill it? The stairs stay stained for several days until the cleaning people come (and they’re crappy at their job).

            Worst example of the effect of this hands-off policy? A couple of months ago a tenant over the driveway that leads back to the carport, had a friend and his mother visiting from India. His window over the fire escape was the old two-pane sash window with a broken pull cord. He forgot to tell them that. So the mother one afternoon unlocked the window and it went crashing down – the pane of glass shatterered and went raining down onto the driveway cement. Except, we have pigeon netting so a lot of it got stuck in that. One shard, about 2 feet long, was dangling through the pigeon netting about 10′ above the driveway like a guillotine.

            I heard this but didn’t know what it was. Then about 4:30 pm I went down to my car and saw all the glass. I called the off-site manager (who ONLY has voicemail which he checks twice a day, you can’t reach him in person) and left a message that this was urgent – potential damage to car tires, and also dangerous for people walking underneath the dangling glass.

            No response of course.

            So I went back upstairs, made up signs on my printer, found two cardboard boxes in the recycling bin, put the signs on the boxes, then placed one box at the entry to the driveway and the other at the back so that tenants would not drive (or walk) down the driveway. Fortunately the building next door has an identical carport and there’s no fence so we could go in and out their driveway.

            If I had not done that? I hesitate to think how angry the other tenants would have been. And of course the guy whose window it was – it never occurred to him to go down and sweep up the glass. Nor could he have reached the glass that was dangling (and it would have been dangerous for him to try).

            The landlord sent someone out the next day at NOON. They did a horrible job sweeping up the glass so I had to walk around through the neighbor’s driveway because – well, my dog doesn’t wear shoes! Then I went out myself and spent an hour with a broom and a flashlight (to light up the glass pieces and make them visible) and swept everything up.

            I got so sick of new tenants leaving their garbage in the wrong places (one girl seemed to survive on take-out chinese food and was too dumb to find the garbage chute so she just started leaving her garbage in the main garage) … so I put up signs.

            I swear, most of the other tenants know me and I’m the one they turn to when they have questions or problems (I drove one neighbor to the airport at 6 am on Xmas morning in my pajamas when SuperShuttle didn’t show up). But as the building turns over and young inconsiderate yuppies move in who scream in the hallway, smoke pot, have loud sex and invite their idiot friends over for parties until 4 am, I get less and less interested in being neighborly, which is a pity.

          • Marina Francisco

            PS Harry you might wonder why I didn’t just sweep up the glass when I found it. I was very tempted, but I couldn’t reach the shard hanging down and I thought it was unsafe for people to walk under it – so I left everything the way it was and improvised with the boxes (which worked great, nobody drove or walked down as I wrote on the boxes “USE #### DRIVEWAY NEXT DOOR”).

            Plus, it’s not my job to fill in for an absentee property manager. Although since I do like to live in a clean environment, I do sometimes clean stuff up. One night I was out at 3:30 am letting my dog pee, and our compost bin was out at curbside for pickup and a couple of drunk guys came by and knocked it over, spilling it all over the sidewalk. I put on some rubber gloves and put the compost back in the bin then got a bucket and washed down the sidewalk so you couldn’t tell it had happened.

            If everybody in San Francisco just picked up after themselves, and kept just the sidewalk outside their building clean, this city would sparkle.

          • Harry Mann

            Marina, you sound like you should be in business for yourself. As you have noticed, many people seem to go around in a mental fog day in and day out. I am out of the country right now and staying in a youth hostel. All of the reckless, irresponsible and inconsiderate behaviors you have described are daily apparent here as well. But at least these are relative youth on vacation who intend on being drunk and stoned much of the time and who will take whatever they can find out to eat, knowing they never bought it. If they borrow your lighter and walk off with it you will have to track them down in order to determine where they left it. They lost their own, they will lose yours just as readily. No. You sound very responsible, which is an important trait that many people do not have. I worked as a security guard for a year, because I could afford to. I took a massive pay cut to do so. I was stationed in a luxury condo building. The majority of the people living there were well educated, intelligent, thoughtful people and they kept on top of things by electing a representative to look after their common interests. The elected representative did not receive any compensation and it was a thankless job that brought them into conflicts between condo owners. Your fellow tenants, though, sound more along the lines of my coworkers, most of whom were recent immigrants and who lacked higher education. You are right to leave the fire alarm alone and to let the fire department handle it, by the way. When we turned off the fire alarm it was clear that we were opening up the security company and the property management company to liability. But, yes, the tenants in your building seem to exercise the same lack of common sense many of my coworkers exhibited. It was an interesting contrast, the security officers and the condo owners. When I first arrived, there were cockroaches coming out of the cabinets at the security desk! This was in a luxury building and the security desk was located in the lobby! People were occasionally being locked into the elevators when they failed to work properly. Everyone knew the elevators had a mind of their own and so there was always that possibility. And yes, never expose yourself to liability by turning off the fire alarm. Call the fire alarm company or the fire department. Those who take on responsibility are held as being responsible by the irresponsible.

          • Marina Francisco

            But your point is taken. It only makes sense to (a) buy and (b) rent it out if I have a below-market unit I can live in, such as I do now. But if for some reason I had to move (I mean, the building could burn down!) … it would make sense to buy. Not just in terms of after-tax cash flow, but in terms of the fact that I would have appreciation potential and could build equity, something you have ZERO chance of doing as a renter! However, I am temperamentally unsuited to living in a condo building as I’m an independent type and wouldn’t want other people imposing rules on me (or hiking up my member dues without my consent). So, maybe buy a house in Portland Oregon and move there – your money goes a lot farther in Portland!

        • Harry Mann

          Got to ask you something there. If you have two parking spaces, each of which is valued at about $200 per month, what are you storing there that is worth $2,400 per year to hold onto, or $4,800 per year for both spaces? Do you own one car and have a lot of worthless junk taking up the other space, but that’s ok because it’s not costing YOU money?

          • Marina Francisco

            I used to have two cars – my mom bought a vintage sports car and gave it to me (money pit, I eventually sold it). That’s why I got two spaces. Then when I sold the sport car, I kept the second space because I have frequent visitors and in this neighborhood, people can’t park more than 2 hours without moving their car between 8 am to 6 pm, Monday to Friday. I work from home on a project basis and when I am prepping a project I have people come over and help me and it’s not very efficient to have them have to go out and move their cars every two hours.

            The spaces are open carport spaces – we are not allowed to store anything in them, and if we did it would get stolen.

            I often lend the second space to neighbors in the building (or the neighborhood). Like, when they have family visiting who rent a car, etc.

            But yeah, it doesn’t cost me much and it’s worth its weight in gold for the convenience of having a second space. Another consequence of rent control.

          • Harry Mann

            Marina, it is a damn shame what the City is doing in that regard. I have noticed that the City is taking claim of the streets in every neighborhood in order to gain revenue; they are putting up signs limiting parking to two hours in residential neighborhoods and then sending out a force of young, uneducated employees in three wheeled vehicles to ticket every vehicle they can. It adds to the stress in the liberal / progressive City when you know that from the moment you park the “meter” is running. It’s as if they were saying that they offer you two hours of free parking in front of your own home, after that, it is going to cost you dearly.

  • sfsoma

    “Personally,” Mar said, “I believe that housing is a human right and that keeping long-term residents housed and communities intact is the best way to keep San Francisco vibrant and diverse.”
    Well, that’s a policy decision for the voters of SF to make, but they shouldn’t be able to force individual building owners to pay for it. If they want this kind of system let the taxpayers put out several hundred million dollars of rent subsidy checks for market rate apartments. That could accomplish this goal in a way that doesn’t trample on our capitalistic system. What Mar and the pseudo-progressives propose and sustain with the rent control laws is just absurd and self defeating.

    • dawdler

      Or relax the strict limits on density so that more rental units can be built.

    • Harry Mann

      I don’t think they would support a ballot measure which would add a paltry .025% tax on their pay checks in order to support affordable housing. They will not put their OWN money where their mouths are.

  • sebra leaves

    A number of marches and rallies were held over the last couple of weeks in Mission SOMA and the Castro. Time for some action on the Western side of town now.

  • Harry Mann

    The first rental apartment I ever had, when I moved in the walls were freshly painted with yellowish paint and the wall furnace was painted brown. I repainted the place so that it was all light pastel and painted the bathroom a blue/gray; there were vinyl stick on floor tile in the kitchen cabinet. I prepped the floor and pasted them. It would have been a nice studio accept for the fact that a neighbor down the street was obsessed about controlling the woman in the apartment next door; his ex-wife. Meanwhile, he was camped out half a block away, shacked up with his girlfriend. The neighbor upstairs occasionally slapped his exquisitely tall wife around. A very unique and beautiful cousin of mine had been strangled to death not more than a block away, and everyone had strong suspicions that her ex was the perpetrator. I moved and later on the maintenance crew leader accused me of driving up everyone’s rent, because the property owner had seen what I did with my unit and had then made cosmetic improvements on other units as they turned over, and raised the rent. I hardly consider it something to feel bad about, though. I moved into the apartments near SFSU. I paid a year’s rent in advance to the finance office. On move in day, I noticed someone else was occupying the unit. I was later told that I didn’t qualify to rent there. By that point they’d had my money for two weeks. All of my business checks, cards, documents of all kinds listed that address. I ended up taking the dumpier unit next door. I should have had them reduce the rent amount. The two units were quite different in aesthetic appearance, one was much cleaner than the other. After I opened the apartments front door, a neighbor showed up right away to let me know that he lived in the apartment below mine and that any sound from my apartment could be heard in his apartment; and then he gave me what amounted like a bitter and begrudging welcome. Do you know that turd was either drunk, drugged or high 3 to 4 days out of the week? I am talking about a guy who thought he could keep his stereo or TV way up, as if it were going to drown out the sound of him shouting, screaming, pleading, crying, begging, slamming doors and beating doors with his fists. Now, the neighborhood itself was quite beautiful. The setting, near the lake, not far from the ocean, lots of beautiful golf courses in the area and woods. In every setting I have rented in I have soon discovered that I had plenty of neighbors who were trash. People pull drama out of their rectums just to have something to do. When you run into some of these aggressive extroverts, it’s like they are spilling their trash everywhere whenever they open their mouths. Personally, I’d be ashamed to behave the way they do, not because I am timid, but out of plain and simple self respect and with regards and consideration towards other human beings. But neighbors who tend to be nasty, trashy, loud and aggressive, basically stunted in their mental and emotional development; I guess you could say that once they are “grown up adults” they believe that they can let their inner child lose on the world. No one seems to be striving towards emotional and psychological maturity any more. Far too many of the elderly are also embracing their diabolical inner child.

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