The San Francisco Rent Board sets price controls on residential housing effectively acting as a price ceiling, except when an apartment becomes vacant. Then the owner/manager can bring rents up to market rate. If the unit was occupied for 10 or even 20 years, eventual increases to the prevailing market rate represents a spike in cash flow.
In fact when a building with long standing tenants comes up for sale it’s a great selling point. It’s not hard to see future value when you are looking at a few units renting for $350 that would easily rent in today’s market for $1,500.
Not Everything Is Rent Controlled
In San Francisco, limits to rent increases are mandated and administered by the Rent Board with some exceptions:
1. New Construction: Mandated by state law, all building constructed after June of 1979 are exempted
2. Subsidized Housing: such as HUD housing projects.
3. Dorms, monastery’s and nunnery’s
4. Residential Hotels: If you have less than 28 days of continuous tenancy.
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