Berkeley Investment Property=A Hornet's Nest

Why would anyone want to own investment property in a city that has stringent rent control?

Ask the hundreds of Berkeley landlords. Many have owned their property for many years and even with rent control, they can make a decent cash flow. Some have bought recently and are struggling with the sometimes subtleties of tenant/owner relationships.

A new owner of investment property in Berkeley is treated like a substitute teacher in a classroom of wild children. The established relationship with the previous owner took the tenant as far as they could go and now, fresh opportunity. The tenant in Berkeley enjoys a protected status even when they have the means to buy a home or buy their own investment property. Measure Y protects tenants even further: Seniors, the disabled and low income tenants have what is essentially a "Life Estate" under rent control. Most newer owners cannot afford to upgrade their properties with the "wet blanket" of rent control.

In a city where 33 thousand students vote to make the rules, where the rent arbitration board consists of only rent control enthusiasts, and where everyone else is too ashamed to publicly decry the unhealthy and unfair aspects of the present rent control ordinance, why would someone want to submit to such frustration? Hope springs eternal. Many investors believe that the demographics of Berkeley will eventually change and we will see a change in housing policy that allows supply and demand to determine price (the supply is higher than the demand at the present time, but the allowable rent increase is close to 0%/year). Some even think that the composition of the rent board will change with the changing demographic or that the population will vote to alter or dismantle the present rent control system - that in the privacy of the polling booth, people will vote their true beliefs rather than their guilt driven beliefs. It has been nearly 27 years since Berkeley enacted rent control and no one knows to this day how many available units exist in Berkeley. The city never did a real survey - so we will never know how rent control has affected the number of available housing units for rent. My hunch is that that number is measurably lower than in 1979. Hope springs eternal.