Growing a RE portfolio without displacing low(er) income folks?

[DG A.]

Hi Folks, 

I'm wondering if anyone else out there has pondered this. 

In Oakland, if an owner moves into a property, and that property is 3 units or fewer, then after 2 years of the owner living in one of the units, the property is no longer subject to rent control and all rents can be adjusted to market rate. I am going to be exempt from rent control pretty soon here, so I'm going to be able to raise the rents in my duplex to market rate. Market rate is nearly double what the tenant is paying now, and I suspect the tenant will choose to leave when that happens. 

If I want to invest in real estate, the only strategy I've identified that works for me with my level of income is to buy fully tenant occupied duplexes or triplexes at a small discount, then move into one of the units, live there for 2 years and increase the rents to market rate. Then repeat this process. The only problem is I don't want to leave a trail of displaced families in my wake, as I go on buying more units over time. 

Question: Is there a way that I could transition my existing tenants into a subsidized rent program? For a hypothetical example, let's say my tenants are paying $750/month for a 1 bedroom, and the market rate is $1500/month. Is there any way a program like section 8 could come in, transition my existing tenants to their program and cover the gap between what they pay now and what market rate is? 

I actually like my tenants, they're chill people, they don't bother me and they even pitch in doing yard work. They're great. I just don't want to pay more of my own money towards the mortgage to subsidize their living there. 

[Robert Gilstrap]

@DG A. my comments are going to sound harsh but I promise none of this is personal so keep an open mind...

You can't be serious that your investment strategy is to move into a property and actually live there for 2 years so you can go up on rent? Lets see...take two years out of your life to satisfy some BS leftist law in California just so I can buy an artificially overpriced property? Uh NO, would be my answer.  How about investing somewhere else and making money right from day one? There are hundreds of markets around the country that can provide exponentially better returns than you will find in California AND without the BS rules and regs.  Vote with your $$ and invest somewhere else.

As to your question regarding these "displaced" tenants;   I find it astonishing that your solution is to take people who have been paying an artificially, non-market based low rent (because of failed leftist CA laws) and instead have taxpayers step in to provide a handout  to them? This is why California is bankrupt now and why the state continues to lose population.

How about this solution? You raise their rent and they either figure it out or they move on to somewhere else and they support themselves without my tax dollars? If you genuinely feel bad then take money out of your own pocket and give it to them as charity but lets not further perpetuate the culture of entitlement that pervades much of this country. 

Again, I reiterate none of this is meant as any sleight on you personally just trying to give an alternative view. I hope you make a mint in real estate so good luck.