I hope to get some advice on Oakland rent control laws. I am considering purchasing a SFH in Oakland as an investment property. It has existing tenants who are paying low rent, about $1000/month. The market rate for this home is about $2500/month. If I purchase the house, is it okay to increase the rent to market rate of $2500/month? I don’t think rent control applies to SFH in Oakland but I am not sure. What other factors do I need to consider? Is there a good resource to understand rent control requirements in Oakland, etc? Any help or direction is appreciated. Thank you.
Rent control doesn’t apply to SFH anywhere in CA, not just in Oakland. However Oakland has something called Just Cause Eviction. It basically says you can’t kick the tenant out except when they are not paying rent or violating the lease terms. It doesn’t say anything about how much you can raise rent though.
Theoretically you can raise rent to market rate in one fell swoop. There have been debates here whether that’s a good idea or not. I am in the “gradual” camp, and believe it’s better for landlords to gradually raise rent in a number of years so tenants can cope. But it seems I am the only guy here who thinks that way. Everybody else seems inclined to just raise it in one go.
“Just cause” does not apply to SFHs either. But Oakland now has a relocation bonus, so you’ll need to pay them roughly $10K to vacate. A small price to pay.
In Oakland all residential units including SFHs are covered under just cause eviction. The coverage is wider than what rent control (RAP) covers. Manch is correct. You can google this and see for yourself.
You only need to pay tenant if you want him to move out. If you only want to raise rent to market level there is no such penalty.
Oakland also has vacancy tax. Forgot the rate and don’t know how they go about enforcing it.
@manch, you believe in gradual rent increase, however with such a rent differential (from $1000 to $2500), how would you increase the rent gradually? $500/month increase every year?
Yeah I would do a $500 every year. But as I said we have debated this issue a little while ago. People also have good reasons to just rip the bandaid and hike it in one fell swoop.
How the rental price is controlled by the government or public of that area?
I have an Oakland tenant who came with the house (SFH). He is a good guy with a good family. He actually owned a house before and got foreclosed on. Although I don’t think he’ll have any problem paying a higher rent (he does landscaping work and seems to be doing ok), I still raised rent from 1500 to 2100 over 3 hikes (roughly 10% each, took 3 years) to soften the blow.
The last 10% hike was done this year, but toward the end of last year before Costa Hawkins repeal was voted on, I was thinking to myself that if the repeal passed, it would take me roughly 3 years to accomplish that 10% hike I had planned. It would still have been ok with me if it was going to take 3 more years in this particular case since it was already close to market, but the situation got me thinking. If I were to do it all over again I would’ve done it in one shot, simply because of the threat of the Costa Hawkins repeal. I like my tenant and he is a good guy, but I have to protect my own interest too. If my freedom is going to be limited by external force, I have to do everything in my power to try to protect myself, even if I would need to do something seemingly “heartless”.
Costa Hawkins repeal didn’t pass, but that didn’t stop the latest rent control bill from passing. So I can assure you the repeal is going to come back, and it will pass. It may not be a direct appeal like last time, but they’ll think of something and make it work.
The irony is even though we live in a capitalist society, we want to have an environment that’s humane and full of compassion for the less fortunate. We actually have a lot of compassion and humanity in our existing housing structure (of course not everywhere), but these policies will take that away. The more strict these policies become, there is less and less room for any compassion to exist. In the end we achieve pure capitalism where landlords and tenants only form a business relationship and everything is done “according to the books”.
I believe the single family homes are not under rent control law only if not owned by a corporation. What does that mean?
You purchase and increase rents like that, this is what you can expect:
Notice that no arrests were made, despite the open and notorious illegal entry covered by the press. That’s Oakland for you and the current anti-landlord mood around there.
More coverage - some nationwide.
Am I wrong to be absolutely disgusted by this?
I am saddened to read all this.
what was the last tme the rent was raised on the exisitng tenant? If the landlord hasn’t raised the rent for a long time, the tenant will fight tooth and nail with you if you ever raise his rent. Are you willing to fight tooth and nail with the tenant and the tenant association?
Two homeless mothers in Oakland, California on Monday moved into a vacant house and proclaimed their intentions to stay there until the premise is either sold to their organization, “Moms for Housing,” at a fraction of the cost or given back to the community.
is justified because…
“This home was stolen from the Black community in the subprime mortgage crisis, and it’s been sitting vacant for nearly years,” said Mom for Housing’s Dominique Walker.
"Corporations basically bought up space on foreclosed properties and are holding these spaces for ransom.