Wow, a Master Tenant Tells KQED He Rents Out Room for More Than Allowed by Rent Control – WTF? Plus, a Simple Solution

All right here we go:

In San Francisco, Rooms for $1,000/Month Are Now Scarce - Sam Harnett | April 2, 2014

“Brian Harrigan is on the other side of the equation. He is on the lease of an iconic four-bedroom Victorian in the Lower Haight. He could probably rent the rooms out for as much as $1,500 each, but he doesn’t want to be greedy. At the same time, he said, ‘If I was to rent it out at like $500 I would have hundreds of emails. You would get everyone applying for it, and it wouldn’t be manageable.’ Harrigan recently had a room open up in the apartment and he decided to put it up at $1,000 — about double the rent-controlled rate and $500 below what he could have charged. Even with the inflated price, he received about 50 applications for the one room.”

What what what – the rent for the room is “about double the rent-controlled rate?”

Non non non! You can’t do it that way in SF.

Here are the three rules, IIRC:

1. Total rent paid by the subtenants may not exceed the rent paid by the master tenant to the landlord.

2. Rent paid by subtenants to the master must be proportional to the total rent – so if the rent controlled rate is for a two-bedroom is $1000 per month to the landlord and the master and sub each share 50-50 (like the rooms and everything else are identical) then the rent charged to the sub should be $500, or close enough to $500.

3. The rent paid by the master to the landlord shall be disclosed in writing to the sub before the sub moves in in the first place.

Those are the rules – live it love it learn it.

Now, can a subtenant get back money from the master if the rent charged is deemed to be disproportionate? Hell yes, going back years.

So is it wise to tell KQED how you set the rate for a room in rent-controlled San Francisco if you’re not sure you’re doin it right? No.

So what should master tenants do then? ‘Cause if you advertise a room for $400 a month on craigslist the world will beat a path to your door, right?

Here’s what you do, you figure what the rent should be for a room but you keep it a secret at first. Then you advertise the room at a market rate, $1400, whatever – and that will cut down on the riff-raff, that will avoid a 50-person beauty contest from every state in the nation, right? And then after you pick somebody to be your new roomie, then comes The Reveal, which is actually the rent is only $400 a month are you cool with that. And it will be, I guarantee it.

What’s that, this strategy isn’t for you because ____? Well all right, have it your way. But just make sure* you split the rent proportionally, that’s what I’m saying.

*Heavy is the head what wears the master tenant crown, right? Of course, there are pros and cons to being a master tenant in rent controlled SF – it’s not for everyone. 

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One Response to “Wow, a Master Tenant Tells KQED He Rents Out Room for More Than Allowed by Rent Control – WTF? Plus, a Simple Solution”

  1. Alai says:

    Such is the conundrum of the tenant who decides to also be a landlord. Better just keep that room for your collection of knick-knacks.