Landlords are supposed to want tenants to stay. Right?
Welcome to San Francisco, where things don't always make perfect sense. Rent-controlled apartments, where city laws prevent the price of rent increasing by too much, don't come along every day in S.F. If a person has one and they've lived there for years, motivation to move out can be low. Why leave a place with below-market rent in a booming city where new residents are paying through the nose?
Some landlords, eager to get long-term tenants out so they can raise the rent on a new tenant, are offering residents tens of thousands of dollars to hit the bricks, the San Francisco Chronicle reports. While the practice isn't new, it is seeing a renaissance in light of the recent influx of tech workers willing and able to pay more rent.
This is a controversial topic in San Francisco, where the city has become divided over whether the resurgence of tech workers is hurting the city's culture.
So what is a rent-controlled apartment and how does it work? Residents of cities like San Francisco and New York are familiar with the phenomenon. Certain rental properties are deemed rent controlled, which means landlords can, by law, raise rents by only a certain percentage each year. if the market is booming (as it is in San Francisco) a landlord is unable to charge what he or she may feel is market rate.
The solution, at least for some landlords, is to give the tenants cash to get out. The Chronicle reports that some residents in rent controlled units are being offered as much as $50,000 to leave their units. At first blush that may seem like a heckuva deal — but it isn't a no-brainer for tenants.
Via the Chronicle:
There's $50,000 on the table if the Reyes family is willing to leave the Mission District apartment that has been home for 24 years.
"It seems like a lot of money, it does, but when you think about it, when you think about your future, it doesn't go as far as you think it does," said Jacqueline Reyes, 19, who has lived in the studio with her parents all of her life.
The rent-controlled space costs the family $549 a month — a nearly impossible price to match in today's scorching real estate market.
In New York, similar tactics can occur, sometimes to outrageous ends. One longtime resident of an apartment on Central Park West was reportedly offered an incredible $17 million to get out of his place by a pair of developers. Not surprisingly, in this case the tenant took the deal.
The "pay somebody to leave" technique has also been picking up steam in the business world. Amazon.com employees are reportedly offered up to $5,000 to leave their jobs as a way to test whether or not they really want to work at the e-commerce giant.
Follow Mike Krumboltz on Twitter (@mikekrumboltz).
- Real Estate
- Rental Properties
- San Francisco