In the past ten years San Francisco has become the most expensive city in the United States and one of the three most expensive cities in the world. Most of our cost of living elevation is based on cost of real property, both in terms of buying it and renting it. Put simply, we cost more than Paris or London, Rome or Beijing, Sydney or New York. Only in Singapore or Hong Kong does one encounter either rents or purchase prices similar to San Francisco.

As an aside, there is a tendency during an inflationary market for those to forget that periods of extreme inflation often are followed by long periods of no change or even decline. Historically, over the past eighty years, San Francisco property has increased by eight to ten percent annually. One must understand that these increases are usually averaged out from periods of great inflation, such as the 1850's, the 1880's, the 1950's, and this long period between the late 1980's to the present time. Quite often, property actually declined in value and many alive still may recall the stagnant property values of the 60's. One should not race to purchase property assuming that property will continue to appreciate as seen in the last ten years.

Commercial property in the Bay Area has actually declined in the past year and many experts in the field fully expect a reduction in the value of residential real property to occur soon. Long term, however, real property will slowly and surely appreciate in this area and if one is buying for a ten to twenty year investment, real property is probably a safer way to do it than any other margin investment. Good advice from professionals such as financial advisors, accountants, real estate brokers and attorneys is recommended strongly: do not assume because you own property now that you have all the various expertise needed to determine what property makes good economic sense.

The fact remains, however, that the average small investor and the bulk of new immigrants to this nation see real property as the safest and easiest to manage investment. That is not necessarily true since in a city with scarce housing facilities, such as San Francisco, the government has taken means to assure access to affordable housing for its citizens by passing various Rent Control Ordinances which drastically restrict freedom of action for landlords in their relationships with tenants-and even in their ability to reclaim rental property for their own use or convert same to condominiums. It is vital, whether you are a tenant or land lord to know these restrictions since severe penalties apply to the violating landlord.



If one is a landlord, one's ability to evict a tenant, raise the rent, make certain improvements, or convert the property to other uses is restricted by a series of local ordnances and the decisions of the San Francisco Rent Board. Failure to follow their procedures or violation of their prescriptions can not only result in penalties and fines, but in significant payments being made to the tenant. The landlord cannot ignore these restrictions and must take the time to learn them and adhere to them or faces significant liability.

If you are a tenant, you probably have far more rights than you imagine and your landlord, no matter how apparently confident, is quite worried about whether you will utilize your rights, for recall that the landlord faces significant legal costs and delay if you can demonstrate violation of these rules and far too many landlords hope to ignore the rules, angry that any governmental authority would interfere with their "freedom of property."

The State Supreme Court routinely hears legal appeals brought to them by various landlord organizations and tenant groups and has ruled that "reasonable" restrictions on freedom of property rights is allowed if there is a good public reason. One must assume that the various rent control laws will continue to be enforced and if one is in this particular rental market, one must adjust.

San Francisco and Berkeley both have rent control. Most Bay Area communities do not.

The links below are invaluable sources of information and the reader is strongly advised to read the information contained in them before taking any significant actions involving one's tenant or landlord and if one is considering purchasing rental property or converting a condominium, one must carefully and fully acquire the knowledge necessary to work within this market. Recall that rent control normally reduces the value of property to which it applies and the wise buyer will carefully learn the difficulties that he or she may confront before buying property in these areas.

The links below are to the San Francisco Rent Board and the San Francisco Apartment Association (SFAA) . Both links describe in detail the various restrictions that apply and the SFAA site is a vital one for landlords to examine before taking action involving buying, selling or evicting.

Hobbes, the great English philosopher, wrote, "Knowledge is Power." That is particularly true in the area of the law, where ignorance can lead to disaster since ignorance of the law is no defense to its violation. For instance, the current allowed rental increase in San Francisco for property subject to the ordinance is 2.7%. If you have faced higher increases and your landlord has no authority, there is a violation of the ordinance.

One client likens owning San Francisco real estate to entering the mazes famous in the classic English garden. "With one difference," he said, smiling. "One gets a tremendous profit if one just learns how to walk the maze."

The two links: