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In California the way this works is that a landlord takes a rental property off the market for 5 years, kicking out all of the existing tenants and leaving the

In California the way this works is that a landlord takes a rental property off the market for 5 years, kicking out all of the existing tenants and leaving the property vacant, then remodels the building and rents the new luxury units to new tenants at market rate. The process is called "Ellissing", after the Ellis Act that allows it. When a property is full of rent-controlled tenants paying far below market rate, it has a low value to most real estate investors. With the Ellis Act, however, the value of the property can actually go up as rents go out of sync with the market because it becomes an attractive investment to investors who would Ellis it.

rsj_hn 6y ago
The Ellis act allows you to convert the unit to a live in residence, and it can no longer be used as a rental. Thus it is not attractive to investors who are developing rental stock, it is attracted to investors who are developing homes for owner-occupants.
- refurb 6y ago
  Ellis Act allows you to remove the unit(s) from the rental market and remove the tenants. In an apartment building you may do this before condo conversation but cities like SF have almost stopped condo conversions. If you Ellis Act you can re-rent the units are market rate but only after 5 years (or else you have to rent it back to the original tenants at their old rate or new tenants at the old rate).
  - rsj_hn 6y ago
    <strike>Ellis act</strike> Owner movein is for moving yourself or a relative into the unit so you can live in it. Condo conversion is separate from Ellis act and Owner* Move in, it has to do with splitting off units to sell them independently, for example turning a TIC into a condo. Units that have been Ellised* or Owner Occupied* find it much more difficult to do a condo conversion, as there are laws about how long you need to wait and where you go in the lottery that determines if you get to condo or not. That lottery is itself a complex affair that involves giving more tickets to houses that failed in the past, and for all I know now, giving extra tickets based on victimhood points or something. Although right now I am hazy about the laws. SF housing laws are a labyrinth of absurdity, micromanagement, and graft. They are not even funny. *updated for correction
    - refurb 6y ago
      Ellis Act is different than Owner Move-In (which covers family members too). Ellis Act, named after the law, was created as the govt can’t compel you to rent - you have the right to remove your home from the rental market. ” The Ellis Act (California Government Code Chapter 12.75)[1] is a 1985 California state law that allows landlords to evict residential tenants to "go out of the rental business" in spite of desires by local governments to compel them to continue providing rental housing.”
      - rsj_hn 6y ago
        You are correct! I mixed up the Owner movein and Ellis. Thanks. https://andysirkin.com/tenancy-in-common-tic/san-francisco-rent-control-and-tenants-rights/owner-occupancy-and-ellis-act-evictions/ https://andysirkin.com/tenancy-in-common-tic/san-francisco-r...
        refurb 6y ago
        The only reason I know is because I thought the same thing! The rent control laws in CA are an absolute rabbit hole you can go down if you have the time!
      - bdowling 6y ago
        As an aside, Owner Move-In isn't always available. Around here I sometimes see listings for condos that are priced far below market. The reason is that the unit is occupied by a rent-controlled tenant who can't be evicted, even if the owner wants to move in. Sometimes the tenant will accept a large payment to move out, sometimes not.
imtringued 6y ago
The irony with rent control is that it ultimately benefits the landlord if he can stick around long enough. The worst enemy of a landlord is another landlord. If the housing market is less competitive and the landlord can eventually raise rents back to market rate his property will become a cash cow.
- kelnos 6y ago
  That's a bit of a weird thing to say. If I were a landlord, there is no situation in which I would prefer to own a rent-controlled unit vs. one where I'm free to increase the rent however much I like. When a tenant moves out of a rent-controlled apartment, the owner raises the rent to market rates, not above market. They've lost out on cash they could either keep or invest in improving the property (which would command higher rents, if they were allowed to raise it).

rsj_hn 6y ago

The Ellis act allows you to convert the unit to a live in residence, and it can no longer be used as a rental. Thus it is not attractive to investors who are developing rental stock, it is attracted to investors who are developing homes for owner-occupants.

refurb 6y ago
Ellis Act allows you to remove the unit(s) from the rental market and remove the tenants. In an apartment building you may do this before condo conversation but cities like SF have almost stopped condo conversions. If you Ellis Act you can re-rent the units are market rate but only after 5 years (or else you have to rent it back to the original tenants at their old rate or new tenants at the old rate).
- rsj_hn 6y ago
  <strike>Ellis act</strike> Owner movein is for moving yourself or a relative into the unit so you can live in it. Condo conversion is separate from Ellis act and Owner* Move in, it has to do with splitting off units to sell them independently, for example turning a TIC into a condo. Units that have been Ellised* or Owner Occupied* find it much more difficult to do a condo conversion, as there are laws about how long you need to wait and where you go in the lottery that determines if you get to condo or not. That lottery is itself a complex affair that involves giving more tickets to houses that failed in the past, and for all I know now, giving extra tickets based on victimhood points or something. Although right now I am hazy about the laws. SF housing laws are a labyrinth of absurdity, micromanagement, and graft. They are not even funny. *updated for correction
  - refurb 6y ago
    Ellis Act is different than Owner Move-In (which covers family members too). Ellis Act, named after the law, was created as the govt can’t compel you to rent - you have the right to remove your home from the rental market. ” The Ellis Act (California Government Code Chapter 12.75)[1] is a 1985 California state law that allows landlords to evict residential tenants to "go out of the rental business" in spite of desires by local governments to compel them to continue providing rental housing.”
    - rsj_hn 6y ago
      You are correct! I mixed up the Owner movein and Ellis. Thanks. https://andysirkin.com/tenancy-in-common-tic/san-francisco-rent-control-and-tenants-rights/owner-occupancy-and-ellis-act-evictions/ https://andysirkin.com/tenancy-in-common-tic/san-francisco-r...
      - refurb 6y ago
        The only reason I know is because I thought the same thing! The rent control laws in CA are an absolute rabbit hole you can go down if you have the time!
    - bdowling 6y ago
      As an aside, Owner Move-In isn't always available. Around here I sometimes see listings for condos that are priced far below market. The reason is that the unit is occupied by a rent-controlled tenant who can't be evicted, even if the owner wants to move in. Sometimes the tenant will accept a large payment to move out, sometimes not.

imtringued 6y ago

The irony with rent control is that it ultimately benefits the landlord if he can stick around long enough. The worst enemy of a landlord is another landlord. If the housing market is less competitive and the landlord can eventually raise rents back to market rate his property will become a cash cow.

kelnos 6y ago
That's a bit of a weird thing to say. If I were a landlord, there is no situation in which I would prefer to own a rent-controlled unit vs. one where I'm free to increase the rent however much I like. When a tenant moves out of a rent-controlled apartment, the owner raises the rent to market rates, not above market. They've lost out on cash they could either keep or invest in improving the property (which would command higher rents, if they were allowed to raise it).