As the World Turns: Owning Rental Property Today Has Its Challenges

In property management, as the World turns, so does the stomach. And oh boy, is the stomach turning today. There are so many attacks against our livelihoods, retirements, and security which each of us have worked so hard for.

Today, in addition to just “straight-up” rent control and “just-cause” eviction rules, we are under attack through eviction moratoria, rent increase “freezes,” proposed state legislation that will convert unpaid rent into consumer debt, 10-year repayment terms on past due rent, and now Propositions 15, 19 and 21. Make sure you know those numbers and that you understand them, and be sure to VOTE NO on Propositions 15, 19 and 21!

Regulation on top of regulation, and the hits just keep on coming until we in the rental housing business become regulated out of the rental housing business. Someday, perhaps 5, 10 or even 25 years from now, some newly elected local or state Socialist leaning bureaucrat will say, “Hey, wait a minute, where did all those landlords go?” Go we will and gone we will be seeking greener pastures in business sensitive states far from California. The apparent gold of our Golden State of California has been losing its luster for a long, long time. It’s sad, really!

While I was recently surprised, I’m not really surprised, by what’s happening in the Bay Area up in Northern California. Recent reports noted that rental rates for one-bedroom apartments are down 11.3% on a year-over-year basis as of June 2020, and at the same time, vacancy rates are also increasing (funny how that “supply thing” works in reducing pricing). COVID-19 and “stay at home” orders have now taught many companies, particularly San Francisco’s leading technology companies, that their employees can effectively work from home and in a home that can be located anywhere. So now, many of San Francisco’s renters, our Executive Director’s daughter included, are working from their “homes” as newly described “Digital Nomads.” If you have a computer, and access to Wi-Fi and online tools such as Zoom, you can set up office anywhere and interface with colleagues at work as if you were at the office.

But what “they” do not tell you about San Francisco’s dropping rents and increasing vacancies is that the increased vacancy rate is being driven by renters moving out of the newer, high amenity and more expensive rental units. These renters are downsizing and taking the older, sometimes smaller rent controlled units in the City, which are being vacancy de-controlled and priced at market, and the City’s traditional “affordable” rental housing stock is slowly being taken over by the City’s wealthy renters. The point here being is that by messing with economic forces inherent in our Capitalist economy, all our politicians do is lead us down the path of “unintended consequences.” Who of these elected political leaders ever thought that their rent regulations would lead to the protection of wealthy renters? None of them certainly predicted that nor the gentrification most rent regulated neighborhoods seem to have undergone in most major urban areas. And, we don’t even need to mention the severe housing shortages that have resulted from all of the overbearing, ill-conceived housing regulation we have here in California.

There is; however, much promise for relief in our recently filed lawsuits against the City of Los Angeles, one against the City’s trash hauling monopoly known as “RecycLA” or better known has the price gouging scheme and hidden tax scheme, and our latest lawsuit against the City’s illegal “taking” of our properties through its eviction and rent freeze moratoria. Unfortunately, these matters will take time to work their way through the courts, but I can assure you that we have hired the best and the brightest attorneys to pursue these matters on behalf of all our members. The City of Los Angeles is only the beginning with the eviction and rent freeze moratoria because once that City “tumbles,” we will go after the whole damn lot of them.

We will also go the distance on these lawsuits, I can assure you of that, and we will see them to the very end. We will also do the same with our 2 other lawsuits, one against the City of Los Angeles and one against the City of Beverly Hills attempting to overturn those city’s rental registration requirements. Just like with the City of Los Angeles lawsuit over the eviction and rent freeze moratoria, once we’ve prevailed over one of these cities, we will target others – Santa Monica would be next on my list for a rental registry lawsuit.

But listen folks, we cannot do this alone. Please consider assisting us with our very costly litigation by contributing to our legal fund. Any amount helps. Don’t expect our larger members to contribute your share or fail to give just because you don’t own property in one of the cities we are suing right now. When we win our lawsuits, cities that have similar regulations will be forced to stop or cities that may have put forth such regulations will be prohibited from doing the same. We are all in this together and all of us must support the general health and security of our industry. So, please give what you can to support our legal fund. Your contribution, any contribution, provides the resources we need to go the distance these litigation matters and to win. So, please give today at: https://aagla.org/legalfund/.