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Two Sides to Every Story: A Sympathetic View of San Francisco Landlords

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The September issue of San Francisco magazine features a story that may be a tough pill for tenants to swallow: "Sympathy for the Landlord." But San Franciscans ought to open their ears to the landlords' side of the story, if they want to protect our city's hallowed charm.

The article kindly reminds us that the San Francisco rental market is largely made up of small businesses -- to the tune of 75%. These mom-and-pop landlords are not all multi-million-dollar corporations rolling in cash from the rental boom. Quite the contrary: many of them are simply managing the properties they live in, trying to make their mortgages and put their kids through college, just like any other small business owner. And in some ways, they face more hurdles than others -- say restaurant or shop owners. Beyond the unavoidable pitfalls of disruptive or cheating customers, San Francisco landlords are bound by city ordinances (yes, we're talking about rent control) that not only hurt them, but also the entire residential community.

The numbers. The article offers up some figures that may surprise you about San Francisco's rental market. They're from 2003, but the author assures us that these are the most recent hard numbers available.
· 75% of the city's landlords own fewer than 10 units.
· 42% live in a building that they rent out.
· 80% of rent-controlled properties are owned by small business landlords.
These statistics, the author contents, should remind us that landlords aren't CEOs of monolithic corporations, taking home million dollar bonuses on top of million dollar salaries. They are the kind of small businesses honored in American lore. Sure, the rental boom has put them in a position of power. But that power is not as cut-and-dry as the Craigslist auctions make it seem. This is not to imply that the author is giving landlords a pass -- not at all. The author's point is to show how tenants can gain a better rental environment in the city as a whole by accepting landlords as people just like them, rather than blood-sucking, faceless monsters.

The flip side of rent control. Although rent control seems like one of the easiest laws to defend, the author scrutinizes the unintended consequences of artificial manipulation of rental prices. One landlord's analogy sums it up in a nutshell: "You can't go to the deli on the corner and say, 'I've lived in the neighborhood for 25 years—can I buy a burrito for $1.99?'"

Again, the author's point is that renting out property is a business like any other. It has to be able to absorb costs and changes in the marketplace. If prices are manipulated by law, it precludes a business owner from being able to make adjustments in their products necessary for their survival. And when landlords are fighting for their own financial survival -- including the ability to keep their own home -- the people who end up suffering are their tenants. Whether in the form of bad relations or straight-up criminal activity, landlords who can't survive on the income from rent-controlled tenants unfortunately resort to desperate measures.

Beyond the rent regulations, city ordinances also has staunch no-eviction laws, which can hurt small business landlords in several ways. These ordinances are like union laws -- they make it impossible to fire a tenant for anything but the most extreme of reasons. Yes, this protects residents who keep neighborhoods like Chinatown and the Mission the vibrant, diverse places that they are. But it also offers a disincentive to landlords to rent to the most protected classes of people -- the elderly and the disabled -- or to rent out their units at all. And we wonder why our rental inventory is shrinking.

Tenants have their flaws too. Perhaps the toughest pill for frustrated renters or prospective renters is the author's evidence that renters can be just as shady as landlords. A primary tenants gouging her roommates and a woman impersonating her deceased mother in order to keep her mother's rent-controlled unit are compelling examples.

While comparing stories of bad tenants to bad landlords may just evoke the chicken and the egg, the article's strength in its raw facts and tempered tone. It's a needed reminder that tenants and landlords alike would be best served to step off the ledge and realize that their relationship should be one of mutual support: businesses need customers and customers need businesses.
· Sympathy for the Landlord [San Francisco Magazine]