I have owned a home in Culver City for 18 years. At times, I have lived in this house. At times, I have rented out my home. I am by definition a “mom and pop” landlord who owns and rents only one property.
I write in support of permanent rent control and tenant protections.
I strongly believe that we need to provide affordable housing to renters in order to protect the economic and ethnic diversity that is so essential to keeping our city a vibrant, accepting, and understanding community. Our school district is our pride and joy because of this diversity. However, as rents continue to rise, our school district suffers. Low income and minority students are forced to move out of the district. As it becomes increasingly impossible to afford to live in the district on a teacher’s salary, the school district struggles to retain excellent young teachers.
As a mom and pop landlord, I fully understand the costs of maintaining and keeping my property. Rising property taxes, replacing aging pipes/roofs, repairing broken water heaters and other appliances, covering rental vacancies, and all other capital expenditures are very real! But as a rental property owner, I continue to keep this business operational because the rent I collect allows me the profit margin to pay for these capital expenditures. With my fixed mortgage costs, and the caps on increases of property tax, a 3% yearly rent increase will more than cover my increasing operating costs.
I fear that my fellow landlords who oppose the permanent rent control and tenant protection measures are simply trying to avoid any limits on their potential profits. I fully understand that every business owner’s goal is to make as much money as possible. However, I believe some businesses like health care, housing, food production, and education should check their profit margins for the greater good of the society. This is the morally right decision!
I personally am willing to limit my profit margin and simply raise my rent by 3%/yr. This 3%/yr increase is sufficient to cover my capital expenditures. If I rent to a teacher or lower income family, they will ultimately pay my mortgage. Once my mortgage is fully paid, I will be left with much lower capital expenditures. In fact, once the mortgage principal and interest is paid off, the rent will turn into a very nice passive income. Maybe I’ll be able to retire on that passive income. Or maybe my adult children will have an affordable place to live in Culver City. The business model works! That is why so many wealthy people have invested in real estate.
Maybe I am a bad business owner! It’s definitely true that if the 3%/yr rent increase cap put my profit/loss statement into the red, this could potentially put me out of business. But even in that worst case scenario, where I would be forced to sell, I would still benefit from a huge sale price well over 65% of what I paid for my home! Equity in Culver City is amazing! Bottom line, even as a failed rental business owner, I would still walk away a winner! The business model works!
I urge you to protect the renters. Protect our lower income residents. Protect our diversity! My rental property business can survive with the 3%/yr rent increase! Thank you for your time and leadership on this matter.
Editor’s Note: These comments were originally delivered to a City Council meeting on June 11, 2020. They were submitted as a letter to the editor this week, July 6, 2020.