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 Fred Schnaubelt |
San Diego Transcript Oct. 25, 2011
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Mrs. McDougal, 75 years old and living on Social Security, rented the same two-bedroom apartment on Illinois Street for nine years without a rent raise for the last five years. Other tenants in the building paid much more in rent. The landlord, in effect, is taking half her rent out of his pocket each month (the difference from what the other tenants pay) and giving it back to Mrs. McDougal. He’s been doing this for five years, privately subsidizing her by not raising her rent to “all the market will bear.”
Over the years, a little game has been played. Mrs. McDougal maintained that living on Social Security, she couldn’t afford higher rent, while the landlord, Mr. Giacalone, threatened that “one of these days” he simply would have to raise her rent. Mr. Giacalone knows his tenant can afford to pay more rent but also knows she’s retired on a limited income. So for five years, he lets her “con” him out of rent increases and spend the money on other things. Over this period of time, it cost him thousands of dollars to have Mrs. McDougal for a tenant.
Does she appreciate it? Apparently not. When I sold the property, she didn’t have many kind words for her landlord; in fact she told me he was pretty dumb. But that’s not important. Jesus Christ cured 10 lepers in one day and only one returned to thank Him, so why should you, I or Mr. Giacalone expect anything more for a lesser deed. No, this philanthropic deed on the part of this landlord was its own reward. It’s a source of immense psychic profit to him and his wife to know that they helped someone less fortunate live a little better (even if vilified these days).
Is this a unique case? Not at all. A cursory glance through multiple listings of apartment buildings for sale shows that thousands of apartments are rented for less than comparable units in the same buildings. Truth be known, few rental owners charge “all the market will bear” or keep their rents current. With the trillions of dollars the U.S. government is spending, tantamount to counterfeiting today (nothing to back them), when inflation finally takes off, rents will increase, and inevitably the politicians will blame the landlords and demand and implement rent controls. You can expect the media to unfairly portray landlords, singling out a few of the more sensational aberrations and tarring all as greedy landlords exploiting their tenants.
People needing a place to live have four choices: buy a home or condo with payments of $1,700 to $2,000 a month or more including taxes and insurance; wait for eight years for government housing; move in with relatives, friends or strangers; or rent an apartment for an average rent of $1,350 a month. Even more incredible, the deposit on a $120,000 apartment typically is only $500 to $1,350, whereas to buy requires 3 percent to 20 percent down — $10,000 to $66,000 for a $330,000 home. Landlords make it possible for millions of people to have a safe, decent, affordable place to live at an incredibly reasonable price. It’s amazing how they can do it.
Some landlords babysit for tenants, bake cookies and give modest gifts. Some drive their tenants to the store, visit them in the hospital. Many waive security deposits in tough times and carry the rent when a tenant loses his or her job while worrying about making their loan payments (all things most reporters have never heard of and if they did would not bother to do a story about anyway). Yes, there is a “psychic profit” in knowing you’re providing people a decent place to live at 1/2 to 1/4 what it costs the government to provide public housing.
Schnaubelt, president of Citizens for Private Property Rights, has been a commercial real estate broker
for 40 years and was a San Diego city councilman from 1977 to 1981.
Fred Schnaubelt, 2728 Adams Ave, S.D. 92116 Phone 619-280-2082
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