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To Landlords: Transform yourself in to a conscious, compassion Landlord. Remember it’s People, Planet then Profit! These are just reminders for myself, which I am hoping to share with other fellow landlords.
I’ll be the first to admit that for a long time I had this all wrong! Because I’d grown up as a first generation American in a survival-oriented household, I conveniently forgot my own humble beginnings, with my mother struggling to keep a roof over our heads. Looking back, I recall my mother quietly pleading with Mr. Murphy that our plumbing was leaking or our air conditioning needed repair. I would cringe to see his disregard, as if we were to blame for the wear and tear of his building. My mother and I both were deeply impacted by this kind of shame and we both fought diligently to become property owners.
With good fortune on our sides, she helped us develop the security that comes with home ownership, and as an adult, I followed in her footsteps.
I wish I could say that I remembered the shameful lessons taught to me by Mr. Murphy’s callousness, but I managed my first multi-unit property just like Mr. Murphy. I was a young man proving his worth by treating my tenants as if they were lucky I didn’t throw them out on the street for complaining if the building’s washing machine broke down. I thought I was a big deal, making big real estate decisions and not caring about the feelings of those around me, especially my tenants. I was completely unconscious and not in touch with the tension I carried in my body.
Several years later, in my mid 30s, I made some bad development decisions and hit rock bottom, losing everything I’d fought so hard to gain. In those first few months I thought that this was the worst thing that could have happened to me, and I’d never recover what I’d “lost.” However, after a whole lot of soul searching, I realized I had not been happy with my life and woke to find I didn’t even like the person I’d become. Sure I had known a little success, but I didn’t know how to be compassionate to others and how to stay in touch with my inner compass.
People / Planet / Profit
Of course it was a struggle both mentally and financially to rebuild my real estate holdings, but I stayed in real estate development and consciously chose a path where I could cultivate a deeper, mindful and triple bottom line orientation. This is not easy to do in the capitalistic system where the market determines the value of a rental space. Because there are so few properties on the market, tenants are forced to bid in an ever-increasing rental market, and home ownership is slipping further and further from our grasp. Rent control, which was once meant as a protection for tenants, has now meant that huge rent increases incur before the rents are locked in for their ‘protection.’ This displaces more and more tenants every year. Many of these homes are then filled with high tech millennial who work around the clock to make the rent. I’m sure you see it every day!
While I am a businessman, and I am all for maximizing profits, I refuse to gouge my tenants, cheat my vendors, or short pay the hardworking immigrant laborers whose sweat and labor have led to my success.
The housing crisis is undoubtedly one of the biggest issues facing Governor Newsom. Here are some facts to consider for all of us who live here in California:
The rising cost of housing has emerged as a threat to the state’s future economy and the well-being of its citizens. Indeed, when housing costs are accounted for, California has one of the highest poverty rates in the nation. According to the PPIC Statewide Survey (May and September 2017), 47 percent of Californians—including 61 percent of renters—say housing costs are a financial strain.
California is home to the ten least-affordable major markets in the country and ranks near the top in cost-burdened households—second among homeowners and fourth among renters. Californians spend disproportionate shares of their income on housing.
It also has the second highest homelessness rate, the second lowest home ownership rate, and the second-lowest number of housing units per capita. Of course, housing markets vary widely across the state. For example, housing is especially unaffordable in coastal areas, and homelessness is highest in Los Angeles.
Our state has six of the nation’s fifteen most-expensive large metropolitan rental markets: San Francisco (number one), San Jose, Oakland, Orange County, San Diego, and Los Angeles. Since 2015, rents have risen from 25 percent to 50 percent in these areas. According to estimates by the US Department of Housing and Urban Development (HUD), the median fair-market rent for a two-bedroom apartment in these areas ranges from $1,934 in Los Angeles to $3,085 in San Francisco.
Among homeowners with mortgages, median monthly housing costs are 50 percent higher in California than in the nation as a whole. California renters pay 43 percent above the nationwide median—while California’s median household income is only 19 percent higher than the nationwide median. This means that the share of Californians with excessive housing costs is quite high: 38.4 percent of mortgaged homeowners and 55.3 percent of renters spend more than 30 percent of their total household income on housing, compared with 27.5 percent and 49.5 percent nationwide.
What Can Landlords Do?
Learn The Laws
The Department of Fair Employment and Housing (DFEH) is responsible for enforcing state fair housing laws that make it illegal to discriminate based upon race, color, ancestry or national origin; religion; mental or physical disability; sex, gender, sexual orientation, gender identity, or gender expression; genetic information; marital status or familial status; and source of income. The law applies to landlords, real estate agents, home sellers, builders, mortgage lenders, and others. The law prohibits discrimination in all aspects of the housing business, including: renting or leasing; sales and mortgage lending and insurance; advertising; practices such as restrictive covenants and on new construction. To learn more about this go to CA.gov.
Set Standards
As a landlord, you are obligated to set standards or requirements for anyone interested in renting out your property. That means the qualities you look for in a tenant should only be based on factors such as income, criminal record, references, length of stay and credit score. These standards should apply for everyone and anyone who meets those standards should be considered to become a potential tenant.
Don’t Make Assumptions
While you do hold the cards as a landlord, you do not have the right to assume what a tenant needs, what they can or cannot afford, or what neighborhood would suit them best. Do your due diligence and vette each and every qualified tenant with the same care.
Just Because You CAN Doesn’t Mean You Should
Everyone knows the rents are already high and are only expected to increase further. But maybe your costs are somewhat fixed, or the rent you currently make more than adequately covers the costs of running the property. If that is your situation, consider not taking advantage of the situation and leaving the rent as it is right now. The difference it makes to you may be minimal while the difference to an existing tenant or a new tenant means a hardship. Would you rather have a happy tenant that appreciates you, or an overworked tenant that knows you are bilking them?
Will share more in Part 6.