11:30am

Thu March 13, 2014
Housing

From a landlord's perspective: Small property owners feel slighted in extreme housing market

San Francisco’s real estate prices, rents and eviction rates are at an all-time high, causing real tension between tenants and landlords.  Frequently we hear from renters about the struggles of living in the city, but it’s not often that we hear from the owners of their buildings.

In San Francisco, about one third of the population are property owners. Those who are small-time landlords are struggling to maintain solvency in this explosive housing market.

The complexity of state and local rent laws are challenging for experienced lawyers, let alone mom and pop landlords, says Daniel Bornstein, an attorney who specializes in landlord cases.

Bornstein regularly holds free rent ordinance seminars at San Francisco’s Fort Mason Center for property owners and potential investors. He’s been doing this for 15 years – providing explanations of the Rent Ordinance’s nuances that are easy to digest for the average person.

“You want to make life easy for yourself? Only look for properties that were built after 1979,” Bornstein tells about 60 audience members at a seminar last January.

Many people know that San Francisco has rent control, but that it came into effect in 1979 and doesn’t apply to buildings built after is news to some of the people that come to hear Bornstein speak.

Owners who are trying to figure out everything on their own are the most vulnerable to litigation and liability expenses, he says. “My goal is to educate people to be able to make good decisions about their real estate investment and also to ensure compliance with the law because often times at the seminars I'm giving it's the first time people are finally understanding the rules and regulations of the ordinance.”

Yet many of them have owned property for a long time. Terry Hurley purchased his three-unit building in the Haight Ashbury District more than 40 years ago and he doesn’t know how to remove a problem tenant.

“There was a period of time when I was what you might call a hippie landlord,” Hurley says. “People moved in, I let them move in, we had no written agreements or anything.”

Like many small property owners, Hurley isn’t driven by profits. Most of the money hey collects from rent goes back into his building for maintenance. But he lives in his building also, so he hopes he has the right to remove a bothersome tenant. But he doesn’t think the Rent Ordinance will be on his side in this battle.

Josephine Zhao has a similar story. She moved to the Sunset District in 2008 to be closer to UCSF Children’s Hospital where one of her young daughters was being treated for kidney failure.

She also lives among tenants in a small building that she owns. So when the smell of smoke from one of her tenants interrupted her daughter’s recovery she was stumped. As a mother she wanted to do everything she could to help her daughter, but as a landlord the rent ordinance limited her ability to deal with it quickly, she says.

Although they purchased their properties more than four decades apart, Zhao and Hurley both say that if they knew when they were buying what they know now about San Francisco’s rent laws, they would not have invested in real estate here. At least not in a situation where they would have to be landlords. They think the city is unfair to small property owners.

When the housing market is strong, properties are less valuable with long-term, rent-controlled. This is fueling a spike in owner move-in and Ellis Act evictions – the kind where landlords are allowed to get rid of all their tenants when they take their building off the rental market.

“And that’s unfortunate,” Bornstein says. “Because I think in the end it terrorizes the community and puts the community in a position where compromise isn’t the fundamental goal.”

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