- Studios $4,250 a month
- One Bedroom $5,300
- Two Bedroom $7,000
Why would anybody pay $7,000 a month rent for a 2 bedroom apartment? I know several people who bought houses in San Francisco within the past couple of years, and all of them are spending a lot less than $7,000 a month for housing, and they all have mortgages. To be fair, the Jasper really is a luxury building. The apartments are large, and the building has a lot of amenities. Most of the apartments have balconies; however, I don’t know how much time I would spend on a balcony next to the Bay Bridge on-ramp at rush hour, especially on a hot, dry day. Breathing air like that can’t be healthy.
The minimum wage in San Francisco is now $12.25 an hour, which I think is too low. I ask you – how can anyone live in San Francisco who works at minimum wage? According to Zillow, the average apartment in San Francisco rents for $3,950 a month. That means that a worker would need to make $79 an hour, or $153,000 a year, to rent the average apartment in San Francisco without spending more than 30% of his pre-tax income on rent. I don’t know how much McDonalds pays their hamburger flippers in San Francisco, but I’m pretty sure that it is considerably less than $153,000 a year. There are a lot of people working for minimum wage in San Francisco, but where do they live? I really can’t figure that out. The people who work at McDonalds and Walgreens in the City must live someplace – but where?
Do You Rent To Cats? Many years ago, I rented an apartment in Oakland. The day after I posted my listing, I got a phone call from a woman who said: “I saw your ad for a one-bedroom apartment on McAuley Street. I have a question. Do you rent to cats?” I thought that was an oddly worded question so I was careful how I answered her. I said: “No, I don’t rent apartments to cats, but I do rent apartments to people with cats.” The woman said, in a dejected tone of voice: “Oh, that’s too bad” and hung up the phone. I never heard from her again. Although this happened many years ago, I still think about that woman every now and then and wonder what was on her mind.
If 10 years ago an applicant for an apartment asked me to show him evidence that I owned the building I was renting, I would have thought that he was some kind of nut, but Craigslist rental scams are now so common that I don’t think that a request like this is unreasonable. I told this guy that I would bring a copy of my current property tax bill with me when I showed him the apartment, which I did. I think requests like this are going to become more and more common in the future. I am sure that there are landlords who would be offended by a request like this, but not me. Craigslist provides a wonderful service for both landlords and tenants, and a free service at that; however, Craigslist does not vet the listings on their web site, and unfortunately, there are a lot of very smart people in this world who spend their lives figuring out new ways to cheat and rob other people, and it seems like almost all of them know how to use Craigslist.
Your rent is due on the first of the month. That is written into all my leases. This means that I am supposed to receive your rent by the first of the month. I usually don’t ask my tenants for the rent until the third day of the month. As a result, some people mistakenly assume that that there is a 3 day grace period; however, there is no grace period on the payment of rent, like there is on credit card statements. If I receive your rent after the first of the month, it is late. This is not just the way that I do business. This is the way rent works everywhere. I have never seen a lease that contained a grace period for the payment of rent. If you are mailing your rent check to me, you should send it at least 3 days before it is due. If I receive a rent check from you before the first of the month, I will not deposit it before the rent is due without your permission.
Every now and then, a tenant will ask me if he can pay his rent with a credit card. My answer is No. All of my leases state that the rent must be paid by check or money order. I don’t accept credit cards. Why? My reason is quite simple. I don’t want to pay the bank fees.
Some apartment houses in Berkeley and San Francisco allow tenants to pay their rent with credit cards, but invariably, its the buildings that get top-of-the-market rent. Many of the new apartment houses in downtown Berkeley allow tenants to pay the rent with credit cards; however, those buildings charge $2,500 to $3,000 a month for small 1 bedroom apartments. I get $1,700 to $1,800 a month for my 1 bedroom apartments. If I was getting $3,000 a month for 1 bedroom apartments, I would accept credit cards too!
“We’re Interns.” I recently rented a 4 bedroom apartment in Berkeley’s South Campus. The first application I got came from a group of 4 guys who had all just graduated from a small (but pricey) liberal arts college back East. All 4 of them just starting working for an environmental organization based in downtown Berkeley. After reviewing their applications, I said: “None of you filled in the income section on your application forms.” The leader of the group said: “We didn’t fill in that section because we are all interns.” I said: “I am not sure I know what you mean by the word ‘intern.’ Does that mean that you don’t get paid?” He said: “Yes.” I said: “Do any of you have secondary jobs or some other source of income?” They all shook their heads No. I said: “You know, the rent on this apartment is $3,500 a month.” They shook their heads Yes. I said: “Well, I don’t understand. If you are all unpaid interns, how do you plan to pay the rent?” The leader of the group (the brains of this outfit) said: “We are going to pay you by check. We all have checking accounts.” He showed me his checkbook. I said: “I don’t think I am making myself clear. I am not concerned right now with the method by which you plan to pay me the rent. What I want to know is where the money will come from.” The leader of the group said: “Bank of America. We all have checking accounts at Bank of America. That where the money will come from.” I said: “I still don’t think I am making myself clear. The rent is $3,500 a month – every month – but your gross income – between all 4 of you – is zero. Do you see the problem?” They looked at each other in confused silence and then looked at me and shook their heads No. I never did find out how they planned to pay the rent. I thanked them for their applications and sent them on their way.
I have run into this situation before. There are a lot of non-profit organizations based in Berkeley. Most of them have very little money, so they rely on volunteers and unpaid interns to do their work. I have met quite a few of these interns. Some of them have been working for years and years without pay for environmental or political organizations. I often wonder what they live on, but I haven’t figured it out.
The average 1 bedroom apartment in the Financial District of San Francisco is now $3,500 a month, making it the most expensive rental housing market in the United States, even beating Manhattan. Despite the high rent, the vacancy rate in downtown San Francisco is almost zero. San Francisco has been expensive for a long time, but what’s driving the current rent explosion? It’s the dot-coms. Internet companies in the Bay Area are growing rapidly, and unlike the dot-com boom of the 1990s, this time they are making money, and lots of it. Bay area internet companies are having a hard time finding enough employees. They all need young, smart, well educated, tech savvy people, and lots of them, and they can’t find them in Silicon Valley. The problem is that the kind of people they need don’t want to live in Silicon Valley. While Palo Alto is undeniably clean and safe, it is also dull. Young, tech savvy people want to live in San Francisco, so the dot-coms are expanding there. They have to. Besides, not all the dot-coms are based in Silicon Valley. A lot of internet companies are headquartered in San Francisco and always have been, and they are also growing. This includes Twitter, Yelp, Craigslist, Salesforce, Digg, and dozens of others. There is a limited supply of new rental housing being built in San Francisco, and a lot of well-paid techies are competing for it.
Berkeley Central. Berkeley is getting the spillover effect from all this. Rents in Berkeley are lower than downtown San Francisco, and San Francisco is only a 20 minute subway ride away. The newest apartment houses in Berkeley used to cater to college students, but now they are targeting San Francisco commuters, and commuters can afford to pay higher rent than college students. Berkeley’s newest apartment house is Berkeley Central. It is located at 2055 Center Street, just a few steps away from the downtown Berkeley BART station. 1 bedroom apartments rent for $3,000 a month, and 2 bedrooms start at $3,500 a month. Larger 2 bedroom units go for up to $6,000 a month. Parking is extra.
Windowless bedrooms. A lot of the apartments at Berkeley Central have windowless bedrooms. This is an architectural trend that I don’t like. Actually, the bedrooms aren’t windowless. They have windows, but the windows are not on exterior walls and don’t face outside. The windows face into the apartment. This means that when someone is in the kitchen washing the dishes, he is looking into your bedroom through the window separating the 2 rooms! It seems to me that if someone is paying $3,000 a month for a 1 bedroom apartment, the bedroom should have a window that faces outdoors. Berkeley Central isn’t the only building like this. A lot of new buildings in this area have bedrooms with windows that face inside the apartment. As I said, it’s a trend that I don’t like.
Last month I said that San Francisco is now the most expensive rental housing market in the United States, beating even Manhattan; however, that doesn’t mean that it costs more to live in San Francisco than New York City. No, it is still more expensive to live in New York City than San Francisco. That is because even though rent is slightly higher in San Francisco, the cost of nearly everything else is higher in New York City. For example, a t-bone steak at D’Agostino’s, one of Manhattan’s biggest supermarket chains, costs $18 a pound. At Safeway in San Francisco, the same steak costs $10 a pound.