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Updated over 6 years ago,

User Stats

196
Posts
181
Votes
DG A.
  • San Francisco Bay Area
181
Votes |
196
Posts

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

DG A.
  • San Francisco Bay Area
Posted

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. 

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