This guest post is written by Melissa Bosworth.
When I was 8 years old, my best friend was a poor businessman who let me start every Monopoly game with the entire stack of five-hundreds in my bank. The experience taught me a valuable lesson about success:
It helps to start with a stack of these.
Winning by cheating totally doesn’t get boring.
That was the pinnacle of my career as a capitalist.
These days, I’ve abandoned Park Place for a crowded, rent-controlled apartment. My greedy, hand-wringing landlord occasionally shows up to remind me that other tenants in my neighborhood pay five hundred gazillion dollars a month and I’m basically stealing from him by living here. To my untrained ear, his enthusiastic use of the buzzer sounds a lot like an emergency evacuation alert system. My gut instinct tells me to bolt for the back door in my pajamas. It’s all pretty awkward.
Just my November rent check, no big deal
Last week, my broke-ass housemate and and I went to a workshop geared toward those on the other side of the housing war. You know, the ones starting the game with a big stack of money. We went in hopes of learning how my asshole landlord thinks. OK fine, we were also motivated by the chance to win a free tchotchke in the door-prize raffle.
The event was put on by a law firm called Bornstein & Bornstein and sponsored by the Bay Property Group. It was called: San Francisco Rent Control – Boot Camp. Daniel Bornstein, Esq., a Bay Area real-estate attorney who, to my delight, described himself as “agnostic as to the character of the people who are involved,” put on a pretty good show.
What the other (significantly less than) half does for fun
If you’re wondering, we didn’t win an American Express gift card or a corporate-branded baseball cap, but we did get to stuff our faces with free cookies that made us sorta nauseous. I don’t even like cookies. I just did it to feel like I was stealing something.
Anyway, after the feeding we were treated to a 90-minute PowerPoint presentation that was actually pretty damned informative, in addition to being an illuminating glimpse into the seedy underbelly of the landlord community.
There’s another workshop coming up in January (linked below), but for those who don’t want to spend an evening trekking up to Fort Mason for free cookies, a peek at the folks who want to squeeze you out of this fine city, and a few harrowing moments of righteous outrage, here are some of the things I learned.
Let’s start with some background on the San Francisco Rent Ordinance:
San Francisco has rules to protect tenants living in buildings that were originally occupied before 1979. If you live in a place built after that, you probably know it because you pay $50,000 a month in rent and you take an elevator 30 floors to your apartment.
Housing that is covered by the Rent Ordinance falls into one of two categories: single-family homes or condos, and multi-unit dwellings. In both cases, tenants can’t be evicted without just cause, but generally only multi-unit dwellings are subject to rent control. An in-law unit effectively turns a single-family home into a multi-unit dwelling, but if it is illegal (as many are) kicking out the tenants and demolishing it qualifies as just cause for eviction.
If your building looks like this, you probably don’t have rent control
And now, for the evil schemes:
(By the way, Bornstein has a rather telling habit of referring to tenants as “a problem.”)
Evil Scheme 1: How to throw somebody’s grandma out on the street and feel really good about it.
If you buy a two-unit place that comes infested with a pesky old person in the main house and a couple living in an illegal in-law unit in the back, there’s a quick fix to eradicate the problem.
First, you demo the in-law unit according to just-cause regulations under the Rent Ordinance. Then all you have to do is remodel the place into a lovely single-family home, which won’t be subject to rent control, the whole time letting Grandma think that you’re spiffying it up just for her. As soon as the renovations are done you can jack up the rent to market rates and Grandma, unable to afford the doubled or tripled rent cost, will move to the ghetto, or the streets or wherever – who cares?
Don’t worry Grandma, you’ll find a new place
Evil Scheme 2: How to manipulate and screw over tenants living in a “boarding house”
This is a twist on Evil Scheme 1. The property is a building with seven tenants in separate rooms. That makes it a multi-unit building, which means it is subject to rent control, but it is originally zoned as a single-family home.
The first move is to talk the tenants into signing a single lease, on the grounds that the house isn’t zoned for multi-unit occupancy. A few months later, you can close in for the final blow.
Bornstein tells the story as he’d like to see it: “I’ve of course taken off the numbers on each of those bedrooms. I’ve unlocked those rooms because you can’t lock these things up, and what do I have? I have seven people in a single-family home, and their tenancy commenced when? After 1996. What can I do after that? Raise the rent to market rate. It’s not easy, but if you can buy that property for a quarter million dollars less than what it’s worth vacant, you may have enough room to negotiate with the tenants to cooperate, and what I like to do is use money to make money.”
I’ve got it! You guys can turn this place into a happy household so I can get rid of you!
Evil Scheme 3: How to write a lease that makes it easy to kick out your tenants
It pays to set yourself up for the greatest possible likelihood of being able to evict your tenants for breaching the terms of the lease, once they no longer serve your financial interests. Bornstein & Bornstein can offer you the resources to have the most up-to-date lease possible.
Make sure you include strict language around modifications to the building. That way, if your tenants have made a change that breaks the lease, you can move to evict if they can’t get rid of it fast. Also, stipulate that tenants can’t have pets, even if you don’t care whether they have pets, because then if they do have pets you might be able to kick them out for having pets and lying about it.
Quick, Spot, go hide in the yard!
Bornstein closed the presentation with a nugget of advice for investors: San Francisco is tricky and expensive. Check out opportunities in the East Bay.
Are you picturing what I’m picturing? Let me verify: Bornstein & Bornstein are sitting in a smoky room sipping fine wine from golden goblets, grinning with dark pleasure. “You’ve done a fine job, Mr. Bornstein,” says Bornstein to Bornstein, pausing to light his cigar. “San Francisco is fully gentrified.”
“It is, Mr. Bornstein. Our plan is complete. Next, we take the East Bay.”
Oakland, lock your doors.
Note: If you, like me, enjoy being bored and pissed off at the same time, you can see the PowerPoint slides of the presentation here.
You can also sign up here for the next workshop, taking place January 16th, 2014. Just go easy on the free cookies. You’ve been warned.
About the author: Melissa Bosworth is a freelance journalist, which by definition means she lives on the margins. When she’s not writing informative articles about sustainable energy or self-indulgent blog posts about her bohemianism, she spends an inordinate amount of time reverse-engineering recipes from restaurants she can’t afford and giving herself experimental haircuts, but ideally not at the same time because that plan’s guaranteed to end badly. She also enjoys hanging around the park at night, being outraged about consumer culture, and telling herself that wearing the same outfit all the time makes her a superhero, not a slob. She doesn’t love her cats.
photos from the author and pixbay.