Oakland Landlords lose appeal

Here is a summary what happened:

• Nice enlisted Airforce couple gets transferred to Washington DC for two years.

• They decide to rent their home out while they are gone, so they can return to the neighborhood they love when the term is up.

• When they get back, the tenants refused to leave, & they had to pay $6500 to the tenants to be allowed to move back into their own home.

Ok, $6500 isn’t that much in terms of what rents are here in Oakland. But I have recently seen buyouts in similar situations as high as $55,000 (And I’m sure someone, somewhere has paid WAY more). I had to leave my own home in Oakland in 2019 because the tenants I rented my inlaw to- at a reduced price- decided they changed their mind about it being temporary and wanted to stay or get a big buyout.

Ok, fine, rules are rules.

However, In both the case of the above mentioned couple and my own situation, the rules changed AFTER the property was rented. It was like the rug being pulled out from under homeowners.

Fine, rules change, housing values are up, why should landlords be the only ones who benefit from rising prices?

One of the reasons I wanted to go to law school was to gain a better understanding of public policy, lawmaking and the sometimes unintended consequences of laws that are passed. Many - probably most - homeowners- who have to leave to work or choose to travel for a year or two, are not going to want to rent their homes out because of Oakland policy. Many homes now sit vacant because so many homeowners are afraid of high eviction fees. Many landlords are charging insane rents to cover the cost of doing business, and they are still losing money.

Fact is, if you buy a duplex or fourplex in Oakland with 20% down and rent all four units, you will likely still go into debt every month with market rents. In many cases, the only way real estate investing in multifamily homes works is if corporations buy housing with a large percentage down and are able to absorb or even benefit a loss.

Is this what anyone intended? An unintended result of this policy is the end of the small mom and pop landlord who really genuinely wants to take good care of their tenants can no longer afford to do business in Oakland.

Individual homeowners are going to be more likely to opt for more profitable short-term airbnb businesses where eviction isn’t an issue. Or they may find it less risky to leave the house vacant for a year. The city enacted a $6,000 vacancy tax to combat this- but that tax is still much cheaper than having to evict someone from your home.

To be clear, I am not saying I have the answers or that this is an easy problem to solve, but creating policies without thinking critically about the unintended consequences is something Oakland City Council is really, really good at. I want to leave this article here without judgment or commentary on how it went down. Rather I want to consider the unintended consequences of Bay Area policies around housing. My intent is not to say what the policies should be, or that landlords are right or tenants are right, but that carelessly written policy can have unintended results.

(if that link doesn’t work for you, try this)