Rent control sweeping the nation ?

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Russell BrazilBusiness Member

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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

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Moderator Note: Political discussions are against forum rules. So keep any responses on the subject and how it relates to real estate. No left v right stuff allowed.

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Jay HinrichsBusiness Member

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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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@Greg Scott depends on the market and asset class of course.. you take markets were Hud rents dominate the space and well the govmit is setting the rental rates.. and landlords are renting to folks that in many instance in a market rent situation they would not qualify to rent.. IE for income or FICO or job stability etc..

so in essence in those markets you already have rent control..

but in markets that are dominated by free market rents and have very little subsidized rents.. These are the markets that are most affected.

and like in Portlandia were the new law has restriction on denying for income or criminal ( not sure the specifics) but I think your going to see a clog in the court systems or who ever takes complaints against landlord discrimination.. its those renters that will scream the loudest.

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Jay HinrichsBusiness Member

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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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Originally posted by @Russell Brazil:

@Jay Hinrichs Im not sure how true this is or not, but the discussion gets brought up in our board circles. What I hear a lot is that where local Realtor boards are week, you have a greater chance of rent control being implemented, and where local boards are powerful, you have a lower chance of it being implemented or if it is, with it being a lot less restrictive. We are an extremely blue state, but we have very powerful boards who have a large say in who gets elected, and have our elected officials begging us for our support. So when talk of rent control enters the public conversation, we shut that down quickly here.

Good friend of mine is one of the top lobbyist in Oregon and represents the board of realtors and builders association.. we were at dinner last night and I asked him how the heck did this get passed.. the Public in this state just did not stand up.. the associations of course screamed but to no avail. so here we are with some really wild rent control measures.. However like all things real estate we probably have a disruptor then landlords figure out how to work it then they are back to business.. Rents in most sub markets here are about as high as they can be. Your already seeing A class high rents suffer as those renters are now my clients buying new construction or used homes.. when rent and mortgage gets on parity.. and in this market which is not FICO challenged ..

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Dennis Tierney

Investor · Omaha, NE · Member since 2011 · 475 posts · 211 votes

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@Jay Hinrichs It is definitely a trend in many areas of the country. I'm in Omaha and we recently had a rental unit registration and inspection program passed by the city council and the organizations backing it and lobbying the council members have clearly stated to their members this is but a first step and their eventual goal is rent control. It's a very slippery slope landlords are on.

Jay HinrichsBusiness Member

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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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Originally posted by @Dennis Tierney:

@Jay Hinrichs It is definitely a trend in many areas of the country. I'm in Omaha and we recently had a rental unit registration and inspection program passed by the city council and the organizations backing it and lobbying the council members have clearly stated to their members this is but a first step and their eventual goal is rent control. It's a very slippery slope landlords are on.

out in our area there is no inspections for rentals.. just permits for normal construction.. but market rent homes need no further inspection.. there is a tax to do business in Portlandia.

we do some stuff in Cleveland and that place can be a mind field.. with inspections and CO just to put tenants in.. OUCH in some instances.. I suspect within 10 years 80% of major MSAs will have some form or fashion of rent control and or inspection controls for landlords..

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Alex Smith

Property Manager · Chattanooga, TN · Member since 2018 · 179 posts · 92 votes

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There is a town in Birmingham, AL that requires inspections before a tenant moves in. There isn't anything in TN like that, particularly Chattanooga, that I know of thankfully.

Steve K.

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

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@Jay Hinrichs Colorado prohibited rent control statewide in 1981. A bill that would have allowed local jurisdictions to impose rent control was tabled earlier this year but did not pass (Senate Bill 19-225). Although it did not move forward this time I expect this bill or something similar to resurface as the reason it didn’t pass was simply that legislators didn’t have time to hear from both sides. Colorado, like many states across America, has a real problem with affordable housing. However everything I have read shows that rent control has the opposite effect of what is intended. Rather than increasing the availability of affordable and low-income housing it instead reduces rental housing supplies in all income categories and drives up rents. Hopefully more politicians will realize this and find better ways to deal with the housing crisis.

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Jay HinrichsBusiness Member

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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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Originally posted by @Alex Smith:

There is a town in Birmingham, AL that requires inspections before a tenant moves in. There isn't anything in TN like that, particularly Chattanooga, that I know of thankfully.

I think rent control in the deep south is already done with Section 8 setting the market prices .. landlords in c class need section 8 so whatever section 8 pays is the going rent.. nothing more nothing less. its a form of rent control I guess.

Market rent for those same renters would be lower and collections a night mare.

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Jay HinrichsBusiness Member

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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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Originally posted by @Steve K.:

@Jay Hinrichs Colorado prohibited rent control statewide in 1981. A bill that would have allowed local jurisdictions to impose rent control was tabled earlier this year but did not pass (Senate Bill 19-225). Although it did not move forward this time I expect this bill or something similar to resurface as the reason it didn’t pass was simply that legislators didn’t have time to hear from both sides. Colorado, like many states across America, has a real problem with affordable housing. However everything I have read shows that rent control has the opposite effect of what is intended. Rather than increasing the availability of affordable and low-income housing it instead reduces rental housing supplies in all income categories and drives up rents. Hopefully more politicians will realize this and find better ways to deal with the housing crisis.

Yes that's why I am thinking its sweeping across the country..

as a new home builder Granted small time.. but affordable housing and new build simply is an oxymoron.. given the restrictions cost of permitting. I mean in our market your not going to force land owners to sell for less than market.. permits alone are 35 to 50k a house and that's before land or any vertical.. so when I see folks talk about building a whole house in say parts of texas for 60 to 70k its astonishing to me.. about 220k is the cheapest you can build anything here all in and that includes no profit.

So the only way I see this stuff happening is through non profits and MAJOR tax credits that banks buy back .. and of course there Is some of that going on but not NEAR enough.. in our area land use laws are SO tough you simply cant buy the land.. no matter if you have the money or not.. so same city passing laws their rules are so tough that its impossible to fit a round peg into a square hole.

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Jim K.

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

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I haven't seen a measure yet that didn't have an obvious workaround or eventual benefit for us as little-guy operators with long-term tenants. I do see restrictions against some obvious abuses, like setting a cap on 7% annual rent increases in NY statewide. Who raises rent more than 7% annually and survives over the long haul? Nobody in our C/D market segment here in the 'Burgh except perhaps organized crime. Closer to home, the City proper here wants the right to inspect rentals annually, our landlord associations here are fighting it. If that passes then half the C/D rentals within the City will shut down and there will be a selloff. Most of my rentals are right over the border. I'll buy and fix within the City, so will others like me. Eventually, property values will rise sustainably, which will ultimately be great for me exchanging out of my portfolio. Adapt and overcome, keep adapting and keep overcoming.

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Jay HinrichsBusiness Member

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Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

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Originally posted by @Jim K.:

I haven't seen a measure yet that didn't have an obvious workaround or eventual benefit for us as little-guy operators with long-term tenants. I do see restrictions against some obvious abuses, like setting a cap on 7% annual rent increases in NY statewide. Who raises rent more than 7% annually and survives over the long haul? Nobody in our C/D market segment here in the 'Burgh except perhaps organized crime. Closer to home, the City proper here wants the right to inspect rentals annually, our landlord associations here are fighting it. If that passes then half the C/D rentals within the City will shut down and there will be a selloff. Most of my rentals are right over the border. I'll buy and fix within the City, so will others like me. Eventually, property values will rise sustainably, which will ultimately be great for me exchanging out of my portfolio. Adapt and overcome, keep adapting and keep overcoming.

agreed folks adapt.. or move on to something else.. it could cause social and functional obsolescence and you would end up Like Detroit areas were they bull dozed whole blocks of homes since they were no longer feasible as housing units..

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Patrick M.

Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes

7y

I was very fortunate in my town, about a year or so after acquisitions they eliminated rent control on vacancy.

The difference is night and day. The days of the deferred maintenance landlord started slipping away. I still have 2 units that are rent controlled and but for me doing my own work, the other units would have subsidized them. I cannot invest rehab in these units.

It is a contagion that has taken the town... a cycle of prosperity... New buildings are going up, multi-families are being rehabbed, neglectful landlords are selling.

My buildings which were seriously neglected and could be renovated very nicely and provide a return on the investment. Our rent control is abysmal compared to the 4+% some areas are implementing. I don't know if there will be a statewide in NJ. Tenants already have great statutory protections- it seems that we are happy letting municipalities deal with it, and where I am at they appreciate the slippery slope for now.

Patrick M.

Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes

7y

@Alex Smith I have to get:

1. the fire marshall to inspect with new/new charged fire extinguisher (on new lease)

2. CO by code enforcement (on new lease)

3. Fill out a financial with the county tax board every year

4. Have the State come in every 5 years to do a thorough multi-family inspection... and when you are justifying state inspector jobs, you can expect to get dinged on something to warrant a re-inspection.

Alex Smith

Property Manager · Chattanooga, TN · Member since 2018 · 179 posts · 92 votes

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@Patrick M. you can count me out

Michael G.

Rental Property Investor · Brooklyn, NY · Member since 2013 · 272 posts · 165 votes

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We know from experience what happens when ignorant (even if well-meaning) politicians angling for extra votes get involved in markets they don't understand : Disastrous unintended consequences.

Often, the road to hell is paved with good intention.

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Judy Parker

Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes

7y

Rent controls will result in the decline of the housing stock, as the low rents don't keep pace with inflation, increasing costs for maintenance, repairs, insurance premiums, utilities and PROPERTY TAXES. Shame on any politicians interfering in the private sector. They are ensuring there will be deferred maintenance on residential properties. The way to fight back? File tax appeals. Towns hate tax appeals.

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John Clark

Member since 2018 · 1k+ posts · 1k+ votes

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"Often, the road to hell is paved with good intentions."

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Reminds me of an old New Yorker cartoon. A highway is being built in Hell (flames all around, devils overseeing the work crews) and at the side of the road is a sign that reads: "Your good intentions at work."

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Patrick M.

Rental Property Investor · Red Bank, NJ · Member since 2017 · 1k+ posts · 1k+ votes

7y

I liked this quote from @mitch messer

"But here's my REAL question: When did we as a nation deputize landlords to be the last line of defense for addressing all the ills of poverty in our society? Did I miss a meeting?"

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Dennis M.

Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes

7y

Interesting topic but sadly impossible to comment on because it’s a political based problem . Sadly There are certain parties pushing this horrid idea that are the root cause of the issue at hand .all I can say is remember this fact during the next election cycle folks . Elections have consequences

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Ronald Starusnak

Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes

7y

In NY it is up to the Counties I think whether they enact the rent control and I don't think most counties will. I can understand their reasoning for it. NYC / CALI / OREGON / WASHING / TX and other hot markets have high rents and people are being priced out of their rentals when their leases expire. It just seems like the Government is stepping in too much, you should be able to charge whatever you like and the market should control the rents. No one is raising rents for no reason, it's simple supply and demand and if you're over priced then you're not going to get tenants. People are willing to pay these higher prices and to force property owner's to keep their rents low will ultimately in my opinion cause many to leave the areas.

Bill B.

Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes

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Nevada has dipped its toes in this mine field as we are flooded with people moving away from the disaster in California and then instantly trying to pass the same laws. Owning only SFR, this is my prediction.

You make it too difficult or unprofitable for the little guy like me (less than 50 properties) and we sell to homeowners and go somewhere else or do something else.This means the SFR market is reduced by say 50%. People who want to rent a house will see rents rise even faster as choices are reduced and it will become a market for homeowners and apartment dwellers.

The big guys who can afford “compliance officers” and lobbyists will do ok. Imagine Dodd-frank for real estate. (The big banks have soared since it’s passing, while small banks have merged or stagnated.)

Robert C.

Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes

7y

@Jay Hinrichs, Just a few comments:

1.) California now has a rent control law similar to Oregon that passed the assembly and is awaiting a vote from the state senate.

2.) My biggest annoyance with rent control enactment is the timing of it all. Local jurisdictions in the Bay Area are enacting rent control at the top of the market, so a.) They are helping only after the fact a much smaller group of people. b.) They are really only hurting the smaller time landlords at this point who were the ones being nice to their tenants by not raising rents in the first place. c.) I suppose it will prevent another run-up in rents like we had this past decade, but when will we ever see this kind of up swing again really? I can at least sympathize with people who want to "help the little guy out"... but it's just way past the point where it would have mattered to the majority of renters here. The push for rent control is having the opposite affect of having landlords raise their rents faster before they get trapped.

3.) I know a lot of people view California and particularly the Bay Area as this bizarro world compared to the rest of the country where we pay absurd prices, get appreciation in values/rents, booms and busts, etc, etc. But I generally get this sense (from reading BP actually) that this last boom cycle since the great recession has been much more national. That's great for us real estate investors, but some of the problems that used be more of a California/coastal/urban thing seems to be hitting the rest of the country too. And with those similar problems, politicians are pushing rent control as one of the common solutions.

Dan Bryskin

Investor · Minneapolis, MN · Member since 2015 · 252 posts · 263 votes

7y

@Jay Hinrichs I can't speak for entire nation but here in Minneapolis, it seems pure politics. Take one example: Problem: Section 8 renters can't find houses. There are 2 ways to solve this problem. Make section 8 attractive or legislate acceptance. Making program attractive requires time, treasure & effort. Proper effort will yield results over time, probably way after current people in power are long gone. Legislating acceptance will go well with someone's constituency & generate immediate buzz - look we are addressing a real problem, but it won't make section 8 any more attractive or appealing. Take another issue - tenant screening. Limiting ability to screen tenants will result in increase in cost of doing business for the landlords. Increased cost will be passed directly to tenants resulting in higher rents ... But what I find really appalling - political gain will be momentous but damage long lasting .... And this people are not dumb, most of them are also well educated. With all of that being said - I am selling my traditional rentals in MPLS, plan B - STR's and if they outlaw that - I will convert STR's to a boarding houses :)