Austin Klar breaks down three things to know before buying a tenant-occupied building in San Francisco. You can't evict tenants to raise rent, rent control limits what you can charge, and required upgrades like electrical work force you to pay relocation costs.
3 things to be aware of if you're thinking of buying tenant-occupied properties in San Francisco. First, you can't evict tenants for any reason you want just because you're the new owner. You have to take the building subject to existing leases, and you can only evict for just cause. And this is true even if the leases are month-to-month. Number 2, and this one is huge, you need to figure out if the building is subject to rent control. It'll make a difference in how much and how often you can increase rent, and it's obviously going to impact your bottom line. And third, you need to figure out if any updates are going to be required in connection with you taking over the property. For example, if you can only get insurance on the building if you have to update old electrical, that presents an issue because you might have to temporarily evict the existing tenants in order to perform those repairs. And if you do have to evict them, you have to pay for relocation. Follow me for more Bay Area real estate.
