national rent control

[Jay Hinrichs]

did anyone catch Prez Bidens comments on how he wants to pass a national rent control at 5% max rent raise ??

my worry is there will be other stips in that if it was to pass..

Or do you all think its just pandering to that base.. ? 

[Gregory Schwartz]

**This is my 600th post**

My gut says rent control is inevitable. Seems to be the trend so do our best to fight it but be prepared to pivot as required. 

[Bruce Woodruff]

Quote from @John Clark:

The government already interfered: It offered financing on terms the market would not offer under unfettered conditions.

You and I can sing and dance all we want, but nobody put guns to our heads and forced us to take the financing that the government is now using as a club. Don’t like it? Don’t take Uncle Sam’s nickel.

I don't recall taking their money, did you?

[John Clark]

Quote from @Bruce Woodruff:

Quote from @John Clark:

The government already interfered: It offered financing on terms the market would not offer under unfettered conditions.

You and I can sing and dance all we want, but nobody put guns to our heads and forced us to take the financing that the government is now using as a club. Don’t like it? Don’t take Uncle Sam’s nickel.

I don't recall taking their money, did you?

Stepped up basis. Accelerated depreciation, $500k capital gains reduction. Mortgage interest charge deduction (how much did you deduct for your personal credit cards last year?), Etc. Are you Biden (Alzheimer’s) or Trump (general dementia) trolling this board?

To speak as a lawyer: does that refresh your recollection?

[John Clark]

[John Clark]

Quote from @James Hamling:

We have a nation where more than 50% live on some form of subsidy program and one of the primary reasons is the tax's being billed to pay for the stupid subsidies!!!!

 So, you don’t like farmers, you don’t like accelerated depreciation, you don’t like Starker (1031) exchanges, you don’t like capital gains avoidance of $500k on home residence long term gains. Anything else?

[Bruce Woodruff]

Quote from @John Clark:

Stepped up basis. Accelerated depreciation, $500k capital gains reduction. Mortgage interest charge deduction (how much did you deduct for your personal credit cards last year?), Etc. Are you Biden (Alzheimer’s) or Trump (general dementia) trolling this board?

To speak as a lawyer: does that refresh your recollection?

Yeah, I figgered that's where you was headed with your line of thought. Whether the Gov't should encourage RE for homeowners/investors is a whole other question (and I'm personally of two minds on that subject).

But I don't see how that ties into the original topic of national rent control much. Two different animals.

PS - No need to get all snarky with folks on here.....it doesn't become you.

[Robert Ellis]

Quote from @Chris Mercer:

Quote from @Alan Asriants:

Owning real estate in the future will be less and less lucrative. 

More privileges for the small landlord will continue to be stripped away, while the large corporations benefit from the existing capital. 

The real crime is leading large funds like Black rock, purchase, single-family real estate and take it from the people who deserve it most, our citizens. 

5% max would be crazy. people are locked in at 800/m for 2 beds when market is 1800/m. 

 The large corporate investors is who this would target. They are creating large build to rent communities in Utah, because they can, I’m ingested to see if this guidance affects only multi family properties or large corporations that own 50+ detached homes/units in a community. Black rock and those types of investors are buying MFH as well as detached housing and gaining the ability to manipulate local markets. 

 it's the free market it shouldn't' be permitted neither should zoning be restricted like you are talking about. those bills will never pass in landlord friendly states. I do business in ohio and florida (columbus and MIami) and in my next 50 year career I'll never see anything of what you talked about 

[James Wise]

BP needs more threads like this...........It's getting turnt up in here.

[James Hamling]

Quote from @John Clark:

Quote from @James Hamling:

We have a nation where more than 50% live on some form of subsidy program and one of the primary reasons is the tax's being billed to pay for the stupid subsidies!!!!

 So, you don’t like farmers, you don’t like accelerated depreciation, you don’t like Starker (1031) exchanges, you don’t like capital gains avoidance of $500k on home residence long term gains. Anything else?

[James Hamling]

Quote from @John Clark:

Quote from @Bruce Woodruff:

Quote from @John Clark:

To speak as a lawyer....

[Mary Jay]

Quote from @James Wise:

Quote from @Jay Hinrichs:

did anyone catch Prez Bidens comments on how he wants to pass a national rent control at 5% max rent raise ??

my worry is there will be other stips in that if it was to pass..

Or do you all think its just pandering to that base.. ? 

 Will a democratic administration eventually try to pass a national rent control? Most likely. However, after this situation, it's pretty clear there won't be anything other than a Republican administration in 2024, so the can on rent control gets kicked down the road for at least another 4 years. 

 Unless people will pick Kamala Harris. You would be surprised how many  people actually like her and would vote for her! (I am not one of them, but my God, some people are just blind. I want to shake them and say: "Dont you see all the wars that are happening in the world because of the dems!")

[James Hamling]

Quote from @Mary Jay:

Quote from @James Wise:

Quote from @Jay Hinrichs:

did anyone catch Prez Bidens comments on how he wants to pass a national rent control at 5% max rent raise ??

my worry is there will be other stips in that if it was to pass..

Or do you all think its just pandering to that base.. ? 

 Will a democratic administration eventually try to pass a national rent control? Most likely. However, after this situation, it's pretty clear there won't be anything other than a Republican administration in 2024, so the can on rent control gets kicked down the road for at least another 4 years. 

 Unless people will pick Kamala Harris. You would be surprised how many  people actually like her and would vote for her! (I am not one of them, but my God, some people are just blind. I want to shake them and say: "Dont you see all the wars that are happening in the world because of the dems!")

All poll's and various measure of "reads" has been saying as it has for many years now; there is people entrenched on the left who will never vote anything different, and those equally entrenched on the right of same mind and convictions. 

These entrenched persons on both sides, who would vote for a sock-puppet if it donned there party, are about 2/3 of the voting, or expected voting populace. 

It's that 1/4 - 1/3, and the non-voters that are the focus of difference. And those have not shown any attraction for K.H., not now and not years past. Probably because she is yet again being marketed as the alternative to D.T. and that's it, no reason FOR her just go for K.H. because she's not D.T.. 

That messaging is a partisan messaging, it does not pull in non-partisans in mass. 

D.T.'s messaging has evolved to a unity message, and that IS a powerful one, one that focuses on non-partisanship, it focuses on people. It's smart, very smart. They know they have partisans and there is no point to run a partisan messaging now. Smart. 

So who do the D.'s have that they could effectively move-in to race that would instantly effectively market a non-partisan messaging? Condensing a 1-2yr campaign into mere weeks? I don't see it happening. 

I believe every smart D. who has aspirations, intentions or ability for a future Presidential run will stay a mile away from 2024 because it's simply stupid to jump in, strategically speaking. 

And they know this, they all know this, these are masters of strategy we are talking about. 

So look to Congress and LOCAL offices, elections, positions because THAT is where the fight will now be for and against such policies as Rent Controls. 

Your Governors, Mayors, Representatives, City Councils.... DONT let them pull your focus with POTUS thinking all is safe n over, no no no, it just means the "action" has shifted point of deployment. 

I guarantee that IS the active action of conversation right now, focusing on Governors, how to win more, and how to start enacting there political agenda on local levels. Than in future national efforts, they will be used as proof of concept, stepping stones, to move from local deployment too national. 

It would take a miracle to beat D.T. now, they all know this. But they can "sand-bag" his 4yrs to nerf any positivity so that's exactly what will happen, head my words. And focus efforts locally and on 2028 and beyond. 

They gotta play up that there "fighting" for the image of such, but I assure that's not the focus anymore, it's on making this a dumping-ground potential to sandbag this administration incoming, move agenda forward locally, to than sell the 24-27 "failures" to buy a '28' national control, to then deploy at federal level. 

If you want to stop Rent Control, get active LOCALLY, now. Get to know all your local gov. levels and persons, and get ACTIVE.

[John Clark]

Quote from @James Hamling:

If you want to stop Rent Control, get active LOCALLY, now. Get to know all your local gov. levels and persons, and get ACTIVE.

This everyone can agree on.

[Tricia O'Brien]

Quote from @Gregory Schwartz:

**This is my 600th post**

My gut says rent control is inevitable. Seems to be the trend so do our best to fight it but be prepared to pivot as required.  

@Gregory Schwartz Good point!

[Peter W.]

That got spicy. To me the question is always what is and what will be, the rest (including right and wrong) is just noise (at least when it comes to politics). Figure out what is and will be and how to operate successfully in those environments.

For me it seems as though this won't affect the way I operate much anyways—I try to keep rent raises limited at 2-3% for good tenants. The only thing which worries me is the good cause renewal coupled with rent control means it will difficult to get folks out who are a nuisance. It also means I need to underwrite with CoC returns being more important as rent increases can't make up for a poor cash on cash return.

Folks who operate in rent controlled markets does it change how you operate both in terms of management and investment decisions?

[Dan H.]

Quote from @Peter W.:

That got spicy. To me the question is always what is and what will be, the rest (including right and wrong) is just noise (at least when it comes to politics). Figure out what is and will be and how to operate successfully in those environments.

For me it seems as though this won't affect the way I operate much anyways—I try to keep rent raises limited at 2-3% for good tenants. The only thing which worries me is the good cause renewal coupled with rent control means it will difficult to get folks out who are a nuisance. It also means I need to underwrite with CoC returns being more important as rent increases can't make up for a poor cash on cash return.

Folks who operate in rent controlled markets does it change how you operate both in terms of management and investment decisions?

>Folks who operate in rent controlled markets does it change how you operate both in terms of management and investment decisions?

screening is important in all markets but more so in rent control markets because there are few options to get rid of a poor tenant that pays on time. 

rent control should be wake up call for all LL that have let their rents get significantly below value.   Even though calue in duplex to quad is based on comps, this is not purely true if the rents are far below market rent.  Investors will not purchase these properties at market value as cash flow is likely impacted for years.  

after rent control is enacted, rents typically go up faster than historical and usually at max increase.  Rent control advocates blame this on greedy LL because they are very ignorant of economics.   The risk has just increased significantly.  Rents must reflect this risk.  California incorporated rent control quite a few years ago (my guess is 5 or 6 years ago).  Except for first year of COVID, this next year will be 1st that the majority of my tenants will not receive maximum rent increase (many will receive max rent increase but less than 50% of my tenants). 

in general my existing rent controlled tenants will not get any upgrades.  In the past I added mini splits to units, I upgraded a terrible kitchen with a tenant in place.  I have upgraded windows with tenant in place.  Those days are over.  I am replacing a carpet on a unit.  It was stained and old, but the reason I am replacing it is because it got wet and has some mold.  If it was just old, dirty, with holes it would not be getting replaced. Basically we repair broken items but do not paint, replace flooring, windows, etc. this basically means rent areas will slowly deteriorate.  

there is a reason virtually every economist believes rent control is bad policy. 

[Ryan Donohue]

Can't this be avoided by writing in your lease no renewals? Then just bump the rent to market value when a new tenant moves in. Or what if you do what restaurants do with an extra 3% for credit cards...charge a monthly fee for market rent? 

I'm sure it'll never pass but for us RE Investors, creativity is out specialty. We'll think outside the box, the government is too slow for us. 

[Robert Ruschak]

Quote from @Bill B.:

LISTEN TO THE EXPERTS!! We were told over and over. “But 100% of the ‘experts’ say rent control doesn’t work”. SHUT UP! They say.    

Why wouldn’t you start with food control?

Food control !

Government control 

[Becca F.]

Quote from @Dan H.:

Folks who operate in rent controlled markets does it change how you operate both in terms of management and investment decisions?

>Folks who operate in rent controlled markets does it change how you operate both in terms of management and investment decisions?

screening is important in all markets but more so in rent control markets because there are few options to get rid of a poor tenant that pays on time. 

rent control should be wake up call for all LL that have let their rents get significantly below value.   Even though calue in duplex to quad is based on comps, this is not purely true if the rents are far below market rent.  Investors will not purchase these properties at market value as cash flow is likely impacted for years.  

after rent control is enacted, rents typically go up faster than historical and usually at max increase.  Rent control advocates blame this on greedy LL because they are very ignorant of economics.   The risk has just increased significantly.  Rents must reflect this risk.  California incorporated rent control quite a few years ago (my guess is 5 or 6 years ago).  Except for first year of COVID, this next year will be 1st that the majority of my tenants will not receive maximum rent increase (many will receive max rent increase but less than 50% of my tenants). 

in general my existing rent controlled tenants will not get any upgrades.  In the past I added mini splits to units, I upgraded a terrible kitchen with a tenant in place.  I have upgraded windows with tenant in place.  Those days are over.  I am replacing a carpet on a unit.  It was stained and old, but the reason I am replacing it is because it got wet and has some mold.  If it was just old, dirty, with holes it would not be getting replaced. Basically we repair broken items but do not paint, replace flooring, windows, etc. this basically means rent areas will slowly deteriorate.  

there is a reason virtually every economist believes rent control is bad policy. 

Great point about always increasing rent even just a little. I know a few landlords here who have never raised the rent on their tenants in 10 years. Their reasoning was they acquired the property before 2008 or long ago when you could actually buy a Bay Area house for around under $250k and they say tenants never cause trouble. 

I'm doing a 10% or 8.8% increase on my SFH renters. My understanding is that SFH aren't under rent control and I've seen a few landlords increase rent by 30% to 50%  on a SFH but tenants would most likely complain to the Rent Board. This is what happens when you don't regularly raise rent and now you're 10 years behind. On my multi-unit, some are at market rate (new tenants moved in), some close to it and the remaining two are low from long term tenants. PM raises the rent the maximum allowed each year. 

I found this for my city: "For the units covered only under California rent control, annual rent increases are capped at 5 percent plus the cost of living increase or 10 percent, whichever is lower, for tenants who have occupied the unit for 12 months or more... You usually do not have full rent control protection if you live in a single family home (a single family home with an illegal in-law unit counts as a 2-unit building) or a condominium and you (and your roommates) moved in on or after January 1, 1996."

I don't do high increases even on my Indianapolis properties, did 4.8% on Class C (that was PM's input and it's market rate) and less than 2% on Class A (great tenant going on Year 4, takes care of property, house was built in 2005). I did a 6% increase last time. When I ran rental comps on Class A, theoretically I could have raised the rent 12 to 15% but I don't have an upgraded kitchen and bathrooms with granite countertops, new cabinets and new LVP floors). That would be an excessive increase and if tenant moves out, I have a vacancy. I'm not putting in a new kitchen and bathrooms when everything is functioning and still looks good.