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San Diego and Orange County to adopt rent control
Originally posted by @Chris A Godbolt:
I have been reading and listening to local news here in San Diego. I am still a rookie looking to invest in my first deal this year. But while I was researching I found that 55 % of voters support the implementation of rent control and 60% support for the state as a whole! From what I have read and listened to now audio books this is a very bad thing for the local markets. I was wondering if anyone had any experiences they would like to share if they live or invest in areas that already have implemented rent control. Is this something SoCal investors should worry about or are there strategies to turn this into a great thing. Thanks all for your opinions in advance.
It's not the end all for investing, but it does cause more red tape and make it more difficult. It also scares a way a lot of investors so it could be an opportunity
but you can also fight it locally
They're also spreading to Portland, San Francisco, Sacramento, Irvine, Los Angeles, Seattle, Boston and other cites They're trying to fight it in Long Beach and Santa Ana now. Inglewood and Glendale just passed them under the table behind closed doors without votes. Most home owners are against it because of blight and red tapehttp://www.tenantstogether.org/resources/housing-long-beach tenant union group with big money from unions promoting rent control
OC Santa Ana
Thanks Chris. So Orange county is going to try to do some sweeping rent controls. Especially because in 2020 the state senate is going to be a super majority.
Contact local reps and council that you do not want rent controls. They lower the amount of affordable housing and disincenctivize investments!
Some municipalities have an exception from rent control if a building was built after a certain date. But going forward, who knows if this will be the case? I always thought rent contol was a lazy, short-sighted way to deal with the lack of housing in a community. It is basically the local city government saying -"we don't want to deal with this issue so lets just make the private investor pay for it- who cares how it affects the housing shortage going forward?".
Speaking from NYC experience, when rent controls are in place, they end up driving the cost of de-controlled rentals higher. That is because the rent-controlled apartment dwellers tend to stay in their cocoons for extended periods of time, thereby increasing demand for any available units.
Before you panic, find out exactly how the city/state proposed laws will work, then find a workaround.
It always becomes sticky when the government wants to regulate, but hey, what else do they have to do except continuously overreach. You know it's time to run when you hear these words: "I'm from the government, and I'm here to help!"
Originally posted by @Chris A Godbolt:
I have been reading and listening to local news here in San Diego. I am still a rookie looking to invest in my first deal this year. But while I was researching I found that 55 % of voters support the implementation of rent control and 60% support for the state as a whole! From what I have read and listened to now audio books this is a very bad thing for the local markets. I was wondering if anyone had any experiences they would like to share if they live or invest in areas that already have implemented rent control. Is this something SoCal investors should worry about or are there strategies to turn this into a great thing. Thanks all for your opinions in advance.
I do not know where you get your numbers but prop 10 recently got whooped on a state level and that proposition was not to institute rent control but simply to allow municipalities to institute rent control where it is now banned on the state level (biggest aspect is no rent control on units built after 1995 and exempts SFR and condos from rent control state wide). See Costa Hawkins for current state wide limitations on rent control.
So on a state level this would seem to indicate Californian voters are soundly against rent control. However, there are pockets of areas where this is not the case. Los Angeles' RSO and the various San Francisco rent control laws demonstrate that rent control has some significant advocates in certain areas in CA.
San Diego at this time is not one of those areas. The city council has never come close to placing rent control regulations. STR regulations are a different issue as the San Diego city council has passed and later rescinded STR regulations.
In San Diego, I would not worry about rent control regulations in the near term. A decade from now may be a different story.
Note the same is not true for STR regulations. Those could be coming in as short as a year or two and to purchase in San Diego relying on STR is a risky endeavor.
This is why we need to be politically active and contact our local city councils and state politicians. In 2020 the tenants groups will be pushing for statewide rent controls..
Her's some rent control study
https://www.nmhc.org/globalassets/knowledge-library/rent-control-literature-review-final2.pdf
THE ECONOMIST 2018