From the real estate investor website, BiggerPockets.com, comes this story of a horrible idea being floated in Newark, NJ:
Besides the mentions of changes that needed to be in our leases going forward, there was a moment during the presentation that caught my attention, and that of everyone else in the room.
They mentioned two words that have been my bane since I started investing in Real Estate: Rent Control.
I am not a fan of rent control. I never understood how its beneficial to any market.
I know that it was recently mentioned on Podcast 66 with Michael Blank who mentioned it, saying that there are cases where it can be beneficial, but (and no offense to Michael) I personally have never seen a case where its been beneficial to anyone including the tenant!
My personal opinion is that it destroys markets instead of protecting them. So when attorney Derek Reed said those two words, yes it grabbed my attention!
According to most recent news there is much talk about Newark, NJ changing its rent control ordinance. The proposal, should it pass, will in my opinion immediately cause investors to look away from this market.
In fact it will probably make them run away from it. Derek was kind enough to share a handout to anyone that was interested.
The writer, a real estate investor, goes on to detail the proposal being floated. And at every step, he points out how it makes little sense for the property owner to update the rental property, to maintain it, and ultimately, to buy property at all.
At Voice For Texas, we have to agree with the writer from New Jersey:
If overall property ownership is decreasing nationwide and more people are renting, its a threat that language like this can get adopted anywhere. We landlords it seems, will consistently be portrayed as bad people, taking advantage of others however that’s not the case.
The majority of us aren’t large holders with hundreds of rental units. We just people like anyone else trying to do our best and make a decent living.
Right now Newark is experiencing a boom of investment in places like downtown and the Ironbound section. This area is now being sought after by those who like great food and an easy commute into New York City.
Housing prices have increased sharply over the past couple of years as demand for the area has gone up. Its helping revive neighborhoods and the city itself.
While there may be bad landlords here and there, fact is that there are other ways to deal with such individuals. Rent control not only violates private property rights, it is horrible economic policy that will end up hurting those it intends to help: the tenants. Rental units will be converted into condos, fewer rental units will be available to the market, and the ones in place will be maintained at a bare minimum to meet legal requirements, rather than at a higher level to compete in the market for rentals. Plus, rent control drives out affordable housing.
Investors and landlords are part of the community, and part of the housing market. Their demand increases the value of every homeowner in the area; conversely, when investor demand falls off, it hurts every homeowner in the area.
So yes, put us on the side of opposing rent control. It violates the rights of property owners. It is terrible policy. It results in lower economic growth, housing shortages, and a distorted market for everyone from renters to buyers to sellers.
We’re glad that Texans wouldn’t entertain such economic tomfoolery. And Texas is booming. Once again, proof that private property rights is a pillar of economic well-being.