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Rent Control

An elderly couple might current live in an apartment in a popular area of San Francisco, New York City, Los Angeles, or Washington DC, and pay half as much as her new neighbors are paying—just because she’s been there for twenty years and her rent is locked in at a set price. Rent control protects the tenant but hurts the investor.  Take notice of the rent control laws in the areas you’re investigating.

Many times owners are allowed to raise rents a certain amount each year based on the Consumer Price Index or their costs-- or say there were some capital improvements that need to be passed on to the tenant.

Big cities, as mentioned above, are usually places where rent control is in place, where there’s a large base of renters.  Although smaller cities also have rent control in place, such as sections of West Hollywood and Berkley.

However, owners are often allowed to raise the rent if a tenant moves out, in something called vacancy decontrol

Then you'll also hear about owners paying off certain tenants just to get them to move out.  Longterm, paying off a long time tenant and allowing someone else to move will increase their cash flow overtime.  Rent control is often up for debate.  Is it really good for the local market?  Can it be gamed by landlords and developers?  

A majority of the time big cities have an ebb and flow of tenants, young people move in for a period of time and then leave, sort of a self run rent control.

Learn more at Wikipedia



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