Friday, July 25, 2014

I don't understand these housing protests at all

From ABC 7 News:

SAN FRANCISCO RESIDENTIAL SURTAX FACES OPPOSITION

(ALL CAPS belong to ABC 7, not me.)

If you click on the link you can see the whole boring video, in which they stuck poor Lyanne Melendez up on Twin Peaks for some reason.


Anyway, here's the crux of it:
Anyone buying two or more units without living there would be severely taxed if they sell the property within five years. They would be taxed 24 percent the first year and then less every year after that.
Mar got enough votes from the Board of Supervisors to put the measure on the November ballot.
"It's a small, narrow group of people that are flipping buildings so it's really narrowly tailored to only the handful of people that are making profits off people suffering and throwing our housing costs out of whack," Mar said.
The surtax will not be imposed if the property is sold at a loss.
So it's basically an anti-flipping ordinance.  If you buy a multi-unit building and then turn it into TICs (or sell it as is) without living there, you get hit with a tax.  Given that there's been a lot of Ellis Act evictions going on just to flip buildings into TICs, I can understand why this sounds good.

Now, if you want to protest this, FINE.  Stand up and be proud and say "HEY I'M A FLIPPER AND I WANT TO BUY BUILDINGS AND KICK OUT TENANTS AND SELL THEM AS TICs FOR A FAT PROFIT.  SO YOU SHOULD LET ME DO THIS WITHOUT PAYING EXTRA TAX BECAUSE AMERICA."  That I could at least respect for honesty.

But that's not what these protesters are saying.

The Chinese Real Estate Association of America opposes the measure. "Most of the Chinese or Asian people, we believe in purchasing property, owning a property and passing on the property to the next generation," spokesperson Tina Wong said.

WAIT WHAT.  Hey guess what, Chinese Real Estate Association of America? I HAVE GOT SOME AWESOME  NEWS FOR YOU.  If you purchase and own property and pass it on to the next generation, YOU WILL NOT BE SUBJECT TO THIS TAX.  So you can stand down.  You have nothing to worry about.

(Now, I'm not an idiot.  I know the CREAA actually wants to flip buildings and make money without paying more taxes.  Which, if that's your position, fine. Own it. Just don't pretend to be something you're not.)

In Protest #2, we have the Levins, who didn't read up on rent control before they bought their building.
Dan and Maria Levin bought a small home in the 400 block of Lombard St. It has two units, each with one bedroom. 
The person renting their other unit can't afford to move out. The only way is to pay them off - their attorney said it would cost more than $100,000.
"We want the extra unit for our family and friends because currently we have no room whatsoever in our one bedroom, small apartment and it would be great for when they come and visit," Maria Levin said.

In other words, they bought their building knowing there was a tenant in one of the units and that tenant can't just be kicked out because they need their own personal Airbnb, but despite knowing all that AHEAD OF TIME, they are stunned that the tenant won't just sheepishly pack up and go.

(If they weren't notified about the tenant, or the tenant was hiding in the closet when they did their inspections, that's another story but I doubt it.)

(Also, it will cost whatever you work out with the tenant.  If the tenant will move for $30K, then it'll cost that.  If the tenant will move for $26 and a Wade Boggs rookie card, so much the better.)

Advice for the Levins: if you don't want this problem, don't buy a building with a tenant.

5 comments:

GG said...

As to the Levins, I'm so goddamn sick of hearing this argument. I would like to propose an ordinance where anyone buying property in SF that has a rent-controlled unit in it has to sign something with the following in a very large font, kind of how you are forced to view multiple HUGE written warnings about the MANDATORY DEATH PENALTY FOR DRUG TRAFFICKING when you come through customs into Singapore:

"1. You are buying property that has a unit that is SUBJECT TO RENT CONTROL.
2. It will cost you a LOT of money, possibly more than you expect, if you ever want to evict the tenant.
3. Your tenant will have opportunities to object to and/or fight his or her eviction, and will have a higher likelihood of being successful if he or she is elderly or disabled.
4. If you try to make up illegal pretexts to evict your tenant, you will probably get sued.
5. This is the case EVEN IF YOU WANT TO USE THE UNIT for a reason you believe is defensible.
6. This is the case EVEN IF YOUR CIRCUMSTANCES HAVE CHANGED in ways you didn't expect, causing you to want to use the unit for your own purposes.
7. You have purchased this property at a discount to a property with a non-rent-controlled unit because you are assuming the risks stated above. You agree that this is the benefit of the bargain you have freely chosen."

Sorry for the rant but... ARGH.

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