I’m dating myself here, but I loved “choose your own adventure books” when I was growing up. There was an element of drama, surprise and control that I couldn’t find through other media.
Californians are now in a position to choose our own fate with Proposition 10. As the popular slogan states, “Proposition 10 makes a bad problem worse.” As an investor in a nearly-uninhabitable rental property in Berkeley, I want to describe how Proposition 10 would have removed several affordable housing units off the market.
I bought a four-unit property in Berkeley nearly two years ago. The elderly landlord had neglected the property for years, to the point where plumbing lines had broken, and sewage was flowing into the basement. Because of all the wet sewage, there was a mold infestation in one of the units, and it was starting to creep into other units.
If the neglect had continued much longer, one of the units would have been deemed uninhabitable, soon followed by the other three units. But seeing a turnaround opportunity, I bought the property before it deteriorated further. I invested tens of thousands of dollars into the property to fix the plumbing, remove the mold, and then bring the units up to modern standards with dishwashers, garbage disposals, updated electricity, a drought-resistant lawn, and more.
Two of the four renters remain, where they still pay rents well below market rates. And they enjoy much nicer units than what they had under the old landlord. Two of the other renters left of their own accord and those units were raised to market rents. This turned out to be a good investment for me, and it improved one little corner of one Berkeley neighborhood.
I have one tenant who has lived on the property for more than 40 years. He tells me stories of Berkeley from the 70s, 80s and 90s, when vacancy control was still in place. Apparently, there was a drug dealer in the neighborhood and a couple addicts next to the property. The neighborhood did not feel safe then.
Investors are not going to choose to improve properties that are under vacancy control. These units would risk becoming so dilapidated that they get removed from the housing stock, or you’d see more “entrepreneurial” investors trying to AirBnB their units. And who benefits from vacancy control? Someone will get a lower price at the expense of a landlord, but these poorly-maintained units will not be widely available.
If you want some California neighborhoods to suffer from under-investment and dilapidation, you may want to consider Proposition 10. As for me, I already saw a preview, and I’ll be choosing the other story! Vote no on Proposition 10!