or those who don't need appealing price tags. Landlords
it, rent control can become have no incentive to make
an addiction, resulting improvements when they collect
from too many years of a sweet rents below market-rate.
deal. It can leave the real
estate muscles paralyzed and the It didn't matter that these
investment portfolio sick. "Penny tenants had higher incomes than
wise" might have a "pound their landlords, qualified three
foolish" problem. times over for a loan, or
possessed the down payment to
Don't get me wrong. I'm not purchase rentals of their own. It
talking about those who live in didn't even matter that they were
rent-controlled apartments losing thousands of dollars in
because they cannot afford to tax write-offs and hundreds of
move; I'm referring to the thousands in equity. They were
thousands of well-heeled ones. proud bingo winners, and under no
The affluent --with greater job circumstances would they
stability—move less frequently sacrifice that for a bigger pot.
than the needy, thus retain the
treasured units. Those who can Three years ago, I almost
least afford it must re-rent at convinced Anne to buy. She was
higher rates. living in a $509 per month rental
in West L.A., having assumed a
I stumbled upon this "housing new identity in order to dupe the
disorder" as a Los Angeles building's owner. He still
Realtor, when encountering dozens thought Gwendolyn--who lived
of well-to-do Westsiders tucked there prior to James, Henry,
away in dilapidated Erica and now Anne —was the
rent-controlled apartments, tenant. Most L.A. landlords
determined to stay for the cannot raise the rent more than
three percent a year until the
unit becomes vacant; and some To date, Lindy is the only "rent
tenants succeed in pretending control client" who has closed an
they are someone else just to escrow with me. In 1993, she
keep the price low. agreed to abandon her unit in
Santa Monica in order to buy a
Anne refused to buy the $280,000 six bedroom, tennis court estate
townhouse in Burbank we had for $600,000. To afford the
selected for her purchase. First, mortgage, she rented rooms,
it was in the Valley, and many transforming the property into a
Westsiders have convulsions about virtual dormitory. The income
investing "over the hill." sustained her unemployed status
Secondly, she planned to put until 2004 when she sold the
tenants in her new place, but property for $1.8 million.
worried that they couldn't be
trusted. Property values have risen an
average of 425% in California
"Now why would you think that, since 1980 and 115% in Los
Gwendolyn? Sorry, I mean Anne." Angeles since 2000. If you have
the means, escape the "perpetual
That townhouse is now worth tenant syndrome" and enter the
$550,000, a loss of $270,000 in rent control rehab program before
equity, and her apartment—where it's too late.
she remains a psychological
prisoner--has saved her a grand Got property?
total of $18,000.
About the Author:
Charlotte Laws is a member of the Greater Valley Glen Council, a Realtor and an author. Her websites are http://www.CharlotteLaws.org and http://www.YourTopBroker.com Her Blog is http://charlottelaws.typepad.com
Source: www.isnare.com
