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>you're forcing someone else to pick up your tab Circumstantial scarcity of housing aside, unless the landlord is paying more in building maintenance and prope

>you're forcing someone else to pick up your tab Circumstantial scarcity of housing aside, unless the landlord is paying more in building maintenance and property taxes, the assumed loss of revenue due to inflated land costs is not actually "costing" anything. If instead of rent control the federal government forced cities to build an ample supply of housing for the local population within commutable distance, causing the price of investment land / buildings to drop, the cost of maintaining that land remains the same.

Frozenlock 11y ago
> the assumed lost of revenue due to inflated land costs is not actually "costing" anything. Sure it is. It even has a name: opportunity cost. If I had the opportunity to sell my underwear for 1000$, but I chose not to, this decision cost me 1000$. Say you make $300 a day. One morning, I wave my gun in front of your front lawn and strongly suggest you don't go to work today. Your daily expenditure will be somewhat the same as every other day (mortgage, food, electricy, etc) ... Will you say I didn't cost you anything?
- timr 11y ago
  Opportunity cost is the loss of potential gains from other choices when you make a decision. It is not the theoretical amount you're pissed off about "losing" but for the existence of a law you don't happen to like. People who owned property with a certificate of occupancy prior to June 13, 1979 (i.e. a rent-controlled property in SF) can genuinely grouse that they bought an asset with a different expectation of return than what they got. Everyone else bought into a system knowing the rules of the game. It's no more "opportunity cost" than someone who buys a suburban property with land-use restrictions complaining that the laws prevent him from using his land to start a refinery. If you buy a rent-controlled building today, you know that you're buying a building with a defined revenue stream. It is not "opportunity cost", except in the sense that you chose to buy the building in the first place.
  - Frozenlock 11y ago
    Sure, but the parent comment wasn't arguing about when the owner bought the property, but whether we could say something has an increased cost even with a constant upkeep price. If you buy a property today, it's the same as if I warned you about my weekly visits with my gun waving prior to you moving in. You should have already calculated the stay-at-home-day in your weekly income. You can be pissed by my behavior and find it unjust, but you should still have factored it in.
    - simoncion 11y ago
      I don't see how your analogy does anything but bolster timr's point. Would you kindly try again with a different analogy? I'm not snarking; I'm genuinely curious and looking to understand what you're trying to say.
      - Frozenlock 11y ago
        Timr is right in that a very high probability foreseeable event doesn't really count as a opportunity cost. I made clear to what specific point my original response was. I expanded on my original analogy because Timr left me with the impression that he thought it wasn't an opportunity cost because it was a law (and that made it OK). Being a law isn't important. The predictability, when buying the property, is. My analogy also shows that even if the event is predictable, or as he would say, "the rules of the game", it doesn't mean it's just in any ways. Here's a different analogy. If you buy a farm land that gets flooded every single year on the last day of June (for the past 200 years, like clockwork), you can't really say you lost money when the next flood happens; you should already have factored this event in overall expenses... tho it still sucks that your land gets flooded.
        simoncion 11y ago
        Cool, thanks much for taking the time both explain your thinking and creating another analogy! Seriously, kudos! :) > My analogy also shows that even if the event is predictable, or as he would say, "the rules of the game", it doesn't mean it's just in any ways. I agree with your statement. However, in the specific case of being a landlord in a rent controlled district, I feel that -today- the rent controlled laws are entirely fair. In the late 1970s, there was good reason to complain about how you lost expected value in your "investment". Today? No. As timr said: > If you buy a rent-controlled building today, you know that you're buying a building with a defined revenue stream. It is not "opportunity cost", except in the sense that you chose to buy the building in the first place. I have no sympathy for landlords who purchase a currently occupied rent-controlled building with the expectation that they will be able to make money by removing the existing tenants. If the success of your business plan relies on very low probability events, or it relies on causing misery and human suffering, it's a bad fucking plan. :) To speak to the "lost opportunity cost" angle: If one purchases a rent-controlled apartment, the correct thing to do is to expect the value of that property to remain exactly the same for the next seventy years. Any opportunity to increase the rent in a unit should be seen as an unexpected windfall. It's completely unreasonable to think otherwise: when one bought the property, one either knew what one was getting in to, or one is so unaware that one has no business running a business. :)
tsotha 11y ago
>Circumstantial scarcity of housing aside, unless the landlord is paying more in building maintenance and property taxes, the assumed lost of revenue due to inflated land costs is not actually "costing" anything. Sure it did. It cost him risk and opportunity. People who buy property are at the mercy of changing economic conditions, whimsical government bureaucracies, and easily-led voters. They could have bought T-bills instead without any of the headache. I wouldn't buy rental property, especially in San Francisco. Nobody's going to come by and drop off a check if you lose money, but they'll certainly be there to collect if your property goes up in value.
- simoncion 11y ago
  > Nobody's going to come by and drop off a check if you lose money, but they'll certainly be there to collect if your property goes up in value. I mean this in the nicest way possible: Do you live in California, and/or rent in San Francisco? Prop 13 ensures that property values -and thus the taxes due on that property- are only reassessed when a property changes hands. If you've held on to a property since Prop 13's passage, your property taxes have not increased in 37 years. If you're a landlord in San Francisco, the following additional things apply: You can recover the 100% of the cost of any legally mandated building improvements from your tenants through rent increases. If you pay for your tenants' utilities, you can recover 100% of utilities cost increases from your tenants. You can recover either 100% or 50% (depending on the number of units in your building) of capital improvement costs from your tenants. In the case of increases in Operating and Maintenance expenses, you can permanently increase your tenants' base rent by up to 7%. Small landlords can do this every year. Large landlords can do this once every five years. Unlike the capitol improvements and legally-mandated-improvements recovery mechanisms (which end when the landlord has recovered what he can legally recover), this increase never goes away. There are even provisions for increasing rents, if they are extraordinarily below "market rate" for extraordinary reasons. Read this and be enlightened: http://www.sfrb.org/index.aspx?page=947 http://www.sfrb.org/index.aspx?page=947 In the five years I've been here, I've only ever a landlord ask for an O&M rent increase once. His petition included a wide variety of line items that even a child could have seen were inapplicable, [0] so his petition was denied. [1] Landlords who hang on to properties to provide housing see only slow, gradual changes in their operating costs, which can almost always be completely recovered from their tenants. Their property taxes will never go up for as long as they live. Frankly, they have a pretty sweet deal. [0] The landlord was clearly using an O&M petition to attempt to recover the cost of renovations whose primary purpose were to double the number of "bedrooms" in each newly vacated unit in the building so they could collect 1.5x to 1.75x the rent. [1] Given that a landlord can trivially recover increases in his O&M costs, why have I never had an O&M-related rent increase in five years? Is it -perhaps- that landlords in the city just don't see significant increases in their O&M expenses?

Frozenlock 11y ago

> the assumed lost of revenue due to inflated land costs is not actually "costing" anything. Sure it is. It even has a name: opportunity cost. If I had the opportunity to sell my underwear for 1000$, but I chose not to, this decision cost me 1000$. Say you make $300 a day. One morning, I wave my gun in front of your front lawn and strongly suggest you don't go to work today. Your daily expenditure will be somewhat the same as every other day (mortgage, food, electricy, etc) ... Will you say I didn't cost you anything?

timr 11y ago
Opportunity cost is the loss of potential gains from other choices when you make a decision. It is not the theoretical amount you're pissed off about "losing" but for the existence of a law you don't happen to like. People who owned property with a certificate of occupancy prior to June 13, 1979 (i.e. a rent-controlled property in SF) can genuinely grouse that they bought an asset with a different expectation of return than what they got. Everyone else bought into a system knowing the rules of the game. It's no more "opportunity cost" than someone who buys a suburban property with land-use restrictions complaining that the laws prevent him from using his land to start a refinery. If you buy a rent-controlled building today, you know that you're buying a building with a defined revenue stream. It is not "opportunity cost", except in the sense that you chose to buy the building in the first place.
- Frozenlock 11y ago
  Sure, but the parent comment wasn't arguing about when the owner bought the property, but whether we could say something has an increased cost even with a constant upkeep price. If you buy a property today, it's the same as if I warned you about my weekly visits with my gun waving prior to you moving in. You should have already calculated the stay-at-home-day in your weekly income. You can be pissed by my behavior and find it unjust, but you should still have factored it in.
  - simoncion 11y ago
    I don't see how your analogy does anything but bolster timr's point. Would you kindly try again with a different analogy? I'm not snarking; I'm genuinely curious and looking to understand what you're trying to say.
    - Frozenlock 11y ago
      Timr is right in that a very high probability foreseeable event doesn't really count as a opportunity cost. I made clear to what specific point my original response was. I expanded on my original analogy because Timr left me with the impression that he thought it wasn't an opportunity cost because it was a law (and that made it OK). Being a law isn't important. The predictability, when buying the property, is. My analogy also shows that even if the event is predictable, or as he would say, "the rules of the game", it doesn't mean it's just in any ways. Here's a different analogy. If you buy a farm land that gets flooded every single year on the last day of June (for the past 200 years, like clockwork), you can't really say you lost money when the next flood happens; you should already have factored this event in overall expenses... tho it still sucks that your land gets flooded.
      - simoncion 11y ago
        Cool, thanks much for taking the time both explain your thinking and creating another analogy! Seriously, kudos! :) > My analogy also shows that even if the event is predictable, or as he would say, "the rules of the game", it doesn't mean it's just in any ways. I agree with your statement. However, in the specific case of being a landlord in a rent controlled district, I feel that -today- the rent controlled laws are entirely fair. In the late 1970s, there was good reason to complain about how you lost expected value in your "investment". Today? No. As timr said: > If you buy a rent-controlled building today, you know that you're buying a building with a defined revenue stream. It is not "opportunity cost", except in the sense that you chose to buy the building in the first place. I have no sympathy for landlords who purchase a currently occupied rent-controlled building with the expectation that they will be able to make money by removing the existing tenants. If the success of your business plan relies on very low probability events, or it relies on causing misery and human suffering, it's a bad fucking plan. :) To speak to the "lost opportunity cost" angle: If one purchases a rent-controlled apartment, the correct thing to do is to expect the value of that property to remain exactly the same for the next seventy years. Any opportunity to increase the rent in a unit should be seen as an unexpected windfall. It's completely unreasonable to think otherwise: when one bought the property, one either knew what one was getting in to, or one is so unaware that one has no business running a business. :)

tsotha 11y ago

>Circumstantial scarcity of housing aside, unless the landlord is paying more in building maintenance and property taxes, the assumed lost of revenue due to inflated land costs is not actually "costing" anything. Sure it did. It cost him risk and opportunity. People who buy property are at the mercy of changing economic conditions, whimsical government bureaucracies, and easily-led voters. They could have bought T-bills instead without any of the headache. I wouldn't buy rental property, especially in San Francisco. Nobody's going to come by and drop off a check if you lose money, but they'll certainly be there to collect if your property goes up in value.

simoncion 11y ago
> Nobody's going to come by and drop off a check if you lose money, but they'll certainly be there to collect if your property goes up in value. I mean this in the nicest way possible: Do you live in California, and/or rent in San Francisco? Prop 13 ensures that property values -and thus the taxes due on that property- are only reassessed when a property changes hands. If you've held on to a property since Prop 13's passage, your property taxes have not increased in 37 years. If you're a landlord in San Francisco, the following additional things apply: You can recover the 100% of the cost of any legally mandated building improvements from your tenants through rent increases. If you pay for your tenants' utilities, you can recover 100% of utilities cost increases from your tenants. You can recover either 100% or 50% (depending on the number of units in your building) of capital improvement costs from your tenants. In the case of increases in Operating and Maintenance expenses, you can permanently increase your tenants' base rent by up to 7%. Small landlords can do this every year. Large landlords can do this once every five years. Unlike the capitol improvements and legally-mandated-improvements recovery mechanisms (which end when the landlord has recovered what he can legally recover), this increase never goes away. There are even provisions for increasing rents, if they are extraordinarily below "market rate" for extraordinary reasons. Read this and be enlightened: http://www.sfrb.org/index.aspx?page=947 http://www.sfrb.org/index.aspx?page=947 In the five years I've been here, I've only ever a landlord ask for an O&M rent increase once. His petition included a wide variety of line items that even a child could have seen were inapplicable, [0] so his petition was denied. [1] Landlords who hang on to properties to provide housing see only slow, gradual changes in their operating costs, which can almost always be completely recovered from their tenants. Their property taxes will never go up for as long as they live. Frankly, they have a pretty sweet deal. [0] The landlord was clearly using an O&M petition to attempt to recover the cost of renovations whose primary purpose were to double the number of "bedrooms" in each newly vacated unit in the building so they could collect 1.5x to 1.75x the rent. [1] Given that a landlord can trivially recover increases in his O&M costs, why have I never had an O&M-related rent increase in five years? Is it -perhaps- that landlords in the city just don't see significant increases in their O&M expenses?