Solving The Housing Affordability Crisis By Providing Subsidized Housing

I've got an efficiency idea that could do my community some good: Provide subsidized housing to those who may need it the most. Given times are more difficult during a pandemic, being able to provide affordable housing may be very beneficial.

The remodeling in my new home is almost done. I could move into my new home and rent out my old home for a lower rate to help ameliorate the housing affordability crisis in San Francisco.

With the median house price at roughly $1.6 million and the median rent for a two-bedroom apartment at roughly $4,400, it is very hard for teachers and other essential workers to live in the City.

Spending at most 30% of your gross income on housing is usually what determines your affordable housing. Therefore, a teacher would need to earn roughly $128,000 a year just to afford a $3,200, one-bedroom apartment.

Given the average teacher's salary in San Francisco is closer to $70,000 – $80,000, what ends up happening is that teachers either rent a room in a multi-bedroom apartment, rent a studio, live 30-60 minutes away, share a space with a partner, or do a combination of the above.

Without affordable housing, it's hard to retain teachers over the long term. With higher turnover, our children and our communities tend to suffer.

Helping Solve The Housing Affordability Crisis

Since 2001, I've been to fundraisers that supported political candidates focused on building more affordable housing in the City. I've seen affordable housing legislation, passed years ago, that still hasn't broken ground. Housing change happens at a snail's pace in my hometown of San Francisco.

It seems to me like there is no strong will to fix the affordable housing crisis in San Francisco and in other expensive cities. Existing homeowners don't want more density, especially as the coronavirus rages on.

More supply also may suppress home prices. Further, it has become extremely expensive to build housing due to rising construction costs, city building requirements, rising property taxes, and permit fees.

Instead of donating to pro-housing candidates who aren't guaranteed to win or voting on pro-housing legislation that will get tied up in bureaucracy for years, I think I may have found a better idea.

Why not rent a portion or all of my existing primary residence to a couple preschool teachers at a subsidized rate?

Here are the benefits I see to providing subsidized housing:

  • The housing will fulfill an immediate need for housing to the very people I'd like to help most: teachers
  • The housing will be at a 40% – 50% discount to market rate
  • The housing will be of much higher quality than the existing housing inventory
  • The housing will be only a 5-7 minute commute by car or bike to school when it reopens
  • The housing will be rented to my son's preschool teachers and thus bring familiar faces to the neighborhood
  • The housing will create a support network for our family if the teachers would like to earn some side-hustle money providing childcare
  • Despite renting out my house at a subsidized price, the rent will still cover my property taxes, maintenance expenses, and general wear & tear

Subsidized Housing Rent Price

If I only rent out the top floor of my house, I would get about $4,400 a month in market rent. The top floor is completely remodeled, has about 1,350 square feet of space, two bedrooms, one bathroom, and panoramic ocean views. The tenants would have their own washer and dryer and parking in a great neighborhood.

To cover my basic costs (no profits + a maintenance buffer), I'd be willing to rent the place out for $2,400 a month, or a 45% discount to market rent.

With each teacher paying $1,200 a month, each would only need to earn $48,000 a year to be able to afford the place. Given I know they make closer to $70,000 – $80,000, I think this could be a win. It would help bring housing as a percentage of each person's gross income to under 20%.

Just to make sure $1,200 was indeed affordable rent for the city, I asked a burly softball buddy his thoughts. He is an after-school activity coordinator and responded, “Sam, for that price, I'd dance naked for you!

I passed but thanked him for his offer.

Average rent in San Francisco - provide subsidized housing or not
Source: Rent Jungle

The Cost To Me For Providing Subsidized Housing

The cost for me to forgo market rent and charge a subsidized rate would be $2,000 a month ($4,400 vs. $2,400). This equates to $24,000 a year.

Whoah, when I write it out, that's a lot of money! It's interesting because it feels easier to provide $24,000 a year in subsidized housing rather than write a check for $24,000 a year to charity, even though the amount is tax-deductible.

Further, $24,000 a year would go a long way towards helping me build more passive income. During times of uncertainty, more income is always good. Our passive income is what enables my wife and I to be stay at home parents. Two young children require a lot of care.

My family is everything to me. I want to earn enough passive income to spend as much time with my kids until they fly away.

If for some reason my prospective tenants find $2,400 a month to still be too expensive, perhaps I could lower the rate even further down to $2,000. In exchange, they could provide some childcare help.

Although my wife and I both don't have jobs, it would be nice to have our own time once in a while. It also takes several hours a day to write a post and maintain this site. Who better to care for our son than his preschool teacher?

Given both teachers would be in their late 20s, I have to imagine working an extra eight hours a month shouldn't be a big deal. When school was in session, they worked 40 hours a week + any overtime.

Heck, when I was in my 20s, I was regularly working 70 hours a week. But now I'm sounding like an old fart lecturing the younger generation.

The Downside To Providing Subsidized Housing

Here are the downsides to providing subsidized housing I can think of:

  • More time spent on managing and maintaining a property. Time gets more precious the older we get.
  • The property will slowly get worn down and damaged over time. Maybe the tenant breaks something by mistake, who knows.
  • What if my new tenants decide to stop paying rent, even after a 44% discount to market rate? That would sour our relationship with the teachers and the school.

Anything else? If so, please share.

Provide Subsidized Housing Or Not

According to the latest census data, there are supposedly over 11,000 empty homes in San Francisco.

In fact, there's one really nice $2.6 million home a block away. It was purchased by a foreign investor for his daughter. The daughter lived in the home for about six months while attending art school and hasn't returned in years. What a waste of space!

Solving The Housing Affordability Crisis By Providing Subsidized Housing

I have no intention of leaving my home empty once we move into our new home. Leaving homes empty when there is a housing shortage could be characterized as a moral failure.

However, I have also been toying with the idea of turning my old home into the Financial Samurai office. The home would have a writing studio and a recording studio. It could also be a place to relax in the hot tub and unwind.

I'm curious to know what you would do if you were me? Be a good citizen and offer $24,000 a year in subsidized housing by renting out the upstairs portion at a 45% discount? Rent out the the upstairs at market rent to continue building more passive income? Or don't rent out the house at all and use it as a place to work and unwind?

Worth A Shot

I'm leaning towards at least trying to offer my place to my son's preschool teachers. This is the first time where I feel I can directly make a difference in the community on a very important issue. It also feels good helping people who are helping the people most important in my life.

One of the few positives about the pandemic is that it has helped make housing more affordable in San Francisco and other expensive cities. Rents seem to be down about 5%, depending on property type, quality, and location.

However, paying $4,417 for an average two-bedroom apartment in San Francisco is still not that affordable. Whenever there is a visible problem, it's good to solve it if you can.

Related posts:

Housing Expense Guideline To Help You Achieve Financial Independence

What Percentage Of Your Income Should You Spend On Your Mortgage?


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44 thoughts on “Solving The Housing Affordability Crisis By Providing Subsidized Housing”

  1. Nice idea but I do wonder if you might not create resentment among the teachers if there are more than two. How will you decide and not show favoritism?

    1. There is only 1 teacher who needs housing right now, and he has a friend who was a teacher at the school and is now an EMT.

      But another teacher wouldn’t mind moving in with her boyfriend. But they have housing right now.

  2. Hi Sam. I wouldn’t do it. As a landlord I keep my relationship with tenants strictly professional.

    People are going to question your motives and things could get messy with your tenants in the scenario you outline.

    I say simply figure out market rent, (btw, rents in SF are in free fall!), & then reduce by 10-15%. You cover your costs, still make a profit and your new tenants feel like they are getting a deal.

    (The lottery system of subsidized Public housing in San Francisco is problematic in so many ways but that’s a topic for another time…)

    Good luck!

    1. Sounds good. Are you a landlord in SF? If so, I’d love to hear your experience. I know rents are down for condos downtown where there is the most density. But it seems to me that the demand for property out west where there is less density is much strongre as people move west.

      The $4,414/month figure for a 2-bedroom in June 2020 is after a ~5.6% decline in YoY rents.

      1. I am a landlord in Glen Park. I have long term tenants who are paying about 20% below the current market. Both work in Tech and it would not surprise me if they decided to leave and move to somewhere like Mill Valley or Lafayette. Anecdotally, I have a friend who was trying to rent a 1400 SF 2/2 condo in prime Noe. He started @ $5500 and was as low as $4500 with no takers so took it off the market and has decided to sell. I am bearish…SF long term is going to always be desirable but I can easily see a short term decline of 20% in pricing here, particularly with no national strategy to deal with covid, historic unemployment, civil unrest & the chronic homeless problem.

        1. Cool. Sounds like a buying opportunity! The more people who leave, the more desirable SF becomes IMO. I’m pretty confident things will bounce back if they do crash 20%. Even in 2008-2009, where housing was the main cause, prices weren’t down that much.

          20% below market rate is great for your tenants.

          Here’s a post where I’ve been tracking some single-family homes on the west side. Seems pretty good, but there are opportunities for sure.

          It’s just crazy how so many people have made so much money in the text stocks in the bay area this year. I don’t even on that much and my tech stocks are up over a couple hundred thousand dollars. Now imagine if you didn’t work at Apple, or Netflix, or Tesla so forth.

  3. What a commendable idea Sam! I definitely think you should go for it. It would be amazing to have the option for some extra tutoring or childcare available as well if needed, especially during the pandemic. Please keep writing and keep us updated, I’m really looking forward to seeing how this goes!

  4. I think you should advertise your subsidized place to teachers, but not your kid’s teachers. And try to get rid of any expectations you have about child care.there are too many things that can go wrong, so I think you should stay away from the teachers at your kid’s school as far as the rental pool goes.

  5. Plenty of other places for teachers to live in this great country. The coasts need much less density as it is. Teachers know the game…if they want to live in the highest rent city in CA on $70-$80k a year then that’s their choice. To me, that’s a poor choice because once you become credentialed, you can be a teacher anywhere.

    Create a teacher shortage and guess what? Salaries go up. So, no I don’t feel sorry for teachers in SF making $70-$80k/yr and having to drive 30-60 mins to get to their jobs everyday. I have candidates I place who do 90 min-2hr drives getting from Westchester to Long Island everyday. You do what it takes. And if you’ve had enough, move.

    I can see your quid pro quo scenario becoming ugly, especially if you get some bad tenants. Your expectations of babysitting and tutoring your kids etc. suddenly turn into various other duties and odd jobs because “hey, I’m giving you a great break on your rent”. It’s human nature.

  6. Canadian Reader

    Seems like renting out your place at a discount directly to your children’s preschool teachers would create a conflict of interest scenario. For example as an RN, I wasn’t ethically allowed to accept a free coffee from a patient because such things upset the balance of power. Teachers are legally bound to a similar code of ethics.
    The subsidized rental agreement could obviously be made on down low, but its unlikely to remain a secret for long once their co-workers find out and question how they are living in such a nice place. If the teachers are ultimately fired for accepting such an offer, what good will that do?

    Your second last bullet point about creating a network for your family seems to be the true motivation for this idea. Its convenient because your kids already know the teachers and you feel like you can trust them because you know where they work. So you are going to pay 20,000k a year for your kids to get to hang out in their cozy old house with their teachers for 8 hours a month? That’s definitely a discount to the 5k a month your were paying for a doula, but if a longer lasting support system is truly what is desired why don’t you just join a church?

    I am sorry, although I can somewhat understand your desire to do something nice for your community- this idea is full of holes.

    1. I do appreciate your skepticism towards my idea of trying to help the housing crisis in San Francisco. And I think this type of pessimism is partially why people are afraid to help and why things don’t really get done. It’s easier to just donate money to a cause and offload the responsibility. I get it. It is very hard to find the time to help other people directly.

      I think as a homeowner or as a renter, it’s nice to have friendly people in your neighborhood in general. It is idealist to think that we can have a heterogeneous population of kind people. But I guess I’m a dreamer. I always have been, because dreaming is free. And there is no harm to dreaming of an ideal scenario.

      As for giving them an opportunity to earn some side income, it’s totally up to them. I’m sharing some flexibility and some ideas. I know when I was in my 20s I was always looking for a side hustle ideas.

      “ The subsidized rental agreement could obviously be made on down low, but its unlikely to remain a secret for long once their co-workers find out and question how they are living in such a nice place. If the teachers are ultimately fired for accepting such an offer, what good will that do?”

      I have spoken directly to the head of school about this idea and she fully supports it and appreciates it. One of her difficulties is maintaining staff due to high cost of housing and other income opportunities they may have. I also asked During a potluck get together How the teachers felt about San Francisco housing. That is when one of the teachers said that another teacher was looking for a place to stay.

      So you see, there are some positives to this idea.

      1. Not to be cynical about the idea since its coming from such a great place, but if you were looking to put your kids into a selective private school, this sort of quid pro quo is how “smart” people get ahead. I say “smart” with quotations because it’s like paying zero taxes. Some people think that makes you “smart”, some people think that makes you a criminal tax evader.

        1. I don’t understand. Can you elaborate further?

          How does accepting less money to provide housing for teachers equate to criminal tax evader?

          Did you recently get audited?

          1. Sorry Sam, I think my comment was clumsy.

            I was attempting to say that one might also be able to view your housing idea as a way to benefit yourself should it give you entrance into a selective school. Clearly that is not your motivation. The type of cynical, self serving, person who might consider this a viable strategy may also be the type of person to view paying any tax as “dumb”. Poor attempt at absurdism, with a tinge of political humor.

            I pay my taxes, hope to never get audited. That makes me “smart”.

            1. Thanks for the clarification. It is interesting how you and Canadian Reader didn’t address any of the positives and focused on potential ulterior motives.

              I don’t think it’s bad in general to be a good citizen in your community. But I can see why other people might be angry for providing this service.

              My kid was already excepted to his preschool before coming up with this idea. I don’t need to offer any type of incentives for him to get in.

              It is because I got to meet these teachers and understand their specific difficulties of living in the city, that I came up with this potential way to help.

              For three months a year, I am a high school tennis teacher. So I’ve gotten to know a couple other teachers at the school as well. It’s not easy raising a family, saving for retirement, and things we might take for granted here at Financial Samurai.

              But this is the second time I have been criticized for trying to help teachers. The first time was when I sent out a tweet asking to profile teachers you are making do in an expensive city.

              I’ll have to dig deeper into the Y, and maybe write a follow-up post.

      2. Canadian Reader

        I get it, it creates a cushy environment for everyone. Except those kids with poorer parents who are subject to less qualified teachers and a more disruptive environment. This outcome is exactly why your altruistic motives are in question. Fair enough if you want to use your cash to advantage your children, but don’t pretend it’s all about community and charity and solving the housing crises.
        Since you and the head master have such a tight relationship, clearly focused on charitable results, why not commit fully and sell your old property below market value to the preschool and let the headmaster rent it as needed to retain exceptional employees?

        1. Would it be OK for you if I didn’t offer them any side hustle opportunity? I can politely decline if they offer childcare services to keep things separate. They told me they are actively doing childcare help for working parents at the moment.

          How much more do you think I should donate for me to be OK in your eyes and not be viewed by you that I’m pretending to help?

          Selling my property below market value to the school for the exclusive use of their teachers could be good. I have to get to know the owners of the school first though. Right now, I just know the head of the school and several of the teachers.

          What do you suggest is the best course of action? And have you done something like this before or some other method to provide subsidized housing? I’m always looking for guidance. Thanks

          1. Canadian Reader

            I think you should keep your finances separate from your kid’s preschool. My comments are harsh, but its this insidious drip of private funds influencing and lurking in schools that is creating so much disparity among children and eventually adults. Over time this holds back real potential growth for society.
            There are a million other way to donate your money- if you want to keep it in housing why not choose a lottery system of giving subsidized rent to teachers through their professional association.

            1. Our hope is that our son gets into a good public school in our neighborhood. It is a lottery system here in SF for social engineering purposes.

              I would think providing subsidized housing to public elementary school teachers would be beneficial. You can’t bribe your way to get into public school, at least not that I know of.

            2. Jeez talk about being a grumpy Gus. Did you experience hardship in your own school perhaps? I’m trying to understand why you’re so sensitive about Sam’s idea to help teachers and are over reacting this way.

        2. Your comment is the reason why I don’t bother to help people and just focus on my own thing.

          I’ve tried to help before but I’ve gotten burned so many times. The world has made everybody a skeptic and very very cynical.

          It’s like you’re a single old woman who was scorned or swindled and you’ve been bitter at others ever since.

          Did something Terrible happen to you?

  7. That is a very kind idea. I remember how difficult it was to have an infant and a toddler at the same time and how comforting the idea of having help nearby would be. I do not advise renting to 2 unrelated people in their 20s. Some of my least successful tenants have been roommates (and it sounds like yours too). That is a stage of great changes in a person’s life, especially if they do not have a spouse yet. When your kids reach K-12 age, you may want a tutor — someone who can help your child with homework or offer your child an educational prospective that you and your wife do not have. Clearly, you will be able to tutor your children about economics, money, writing, and I’m sure many other subjects. However, you may find it helpful for your children to have a tutor with a degree in the sciences or advanced mathematics. Maybe you can find a married couple who are both teachers, who have different specialities. Biology and art? Music and Physics? A couple who are both educators would be more harmonious to your property, would meet your goal of helping teachers, and could provide your children the gift of two other perspectives in their education. Who knows the right couple would likely be willing to help with some childcare while your children are very young, considering your generous subsidy. Also, before renting your place, please consider if you or your wife’s parents suffer some unexpected health emergency, it will give you great comfort to have the ability to have them in a home nearby.

    1. All great thoughts and suggestions. Our plan is to keep the downstairs empty for guests and potentially for parents who want to be close by to see their grandchildren grow up and who may need help.

  8. Try it out for a year and compare the joy it brought you for doing good vs the loss of revenue.

    On a somewhat separate note, I would like to read an article on your political perspective. In the current state of our nation, what parties do you see doing the most good for our civilization in the long term (economic, social issues, environmental, etc.)? Thanks Sam.

  9. It’s a great idea in my mind to rent to the underpaid teachers. You’re most passionate about this option anyway out of three presented. Writing an option for occasional childcare help in the rental contract could be a win too. Yes you’re forgoing some possible income, but I’d say gaining some peace of mind and renting to teachers whom are probably better tenants (since they’re responsible for teaching and caring for kids all day anyway).

    As a whole, I’d say the pros outweigh the cons.

  10. Great summary of how to fix things without waiting for politicians!!

    For me the lack of future control is concerning – they stop paying rent and you can’t kick them out for six months while they trash the building. Local/Regional governments can do crazy things that can be very problematic in this setup.

    Another big challenge would be you decide/need to sell and no one will pay well for it because they can’t kick out the tenants or charge market rents. The price then gets cut in half because of the low cap rate valuation as NOI is very low.

    We have been doing this for a family member once removed that has a kid with medical challenges for six years now. They $10k discount a year does not get appreciated at all compared to a $10k check. We also have no easy exit strategy if the current folks change situations like the kid growing up and moving out – (like the tech job change in your example). Plus in our case it seems to sometimes reduce the effort to make things better themselves and supports spending that isn’t impressive like a very nice phone compared to income.

    If I did it again I would do a annual cash grant that could be adjusted in value or given to someone else based on an annual application. :)

    1. Thanks for sharing. It does seem likely that there will be less of an appreciation on the $24K subsidy versus getting a $24K check.

      It’s similar to me finding it easier to provide $24K in subsidies versus writing a $24K check.

      We humans are destined to take everything for granted. So perhaps the key is to find someone who has had significant hardship… and who will therefore appreciate the subsidy, pay on time, and take care of the place.

      Everything is a leap of faith.

      Thanks for the reminder about this post:

  11. Sam,

    In today’s world you have to be extra careful of a lot of “False Allegations” of rape or sexual assault/harassment complaints as well! There are a lot of people out there both men and women always looking to easily get ahead. If you go forward with this always and I mean always have your wife or a witness with you. You are talking about reduced rent on a prime living situation. Especially in a very liberal state and city where you are. Good luck evicting or getting your property back in a timely manner, etc, etc.. I love where your heart is at, but when it comes to business it isn’t worth it, just be extremely careful. My realtor/property manager always has a witness with him when he goes to assess a situation at a house/apt. Just be careful. With everything going on in the world today it isn’t worth it!

  12. I think it is a nice idea on paper. I personally always have my rent 10% below market rate, and my houses are upgraded much nicer than the comps. This allows me to retain highly qualified tenants for much longer than the typical landlord.

    I would be worried about legal ramifications in commiefornia. What if you want to raise rents to market rate? Could you even do that with proper notice?

    1. Sam,

      I believe your heart is in the right place, but in today’s world it is a risk/headache I would not take. You must always asses worse case scenarios first, especially w/California and San Francisco being extremely liberal. In such an expensive prime real estate market as San Francisco you will open yourself up to false allegations of sexual assault/rape/harassment, be it male or female renters. Think about it, if the tenants don’t work out for whatever reason and you don’t renew the lease. If you are giving the rent at a huge discount in such an expensive cost of living area they may not want to leave that situation very fast. It may take awhile to get them out! If you do this though always, and I mean always have your wife with you when going to the residence. My property manager always has one of his employees with him when going to a rental. Sad to say but in today’s world you must protect yourself.

    2. In my experience tenants always look for additional “opportunities” once they occupy a place… move their brother in to sleep on the living room sofa to even further subsidize the rent, offer tutoring as a business in off-teaching hours, post their place on Air BNB when they take off for the summer on a “subsidized” holiday. There are many pitfalls in offering something for less than market value. Instead, I keep our rental units at the very top of their game in terms of aesthetics and services and always charge market rates. The best tenants are on their way to someplace better, so when they do give notice and move on (typically 18 months – 3 years down the road), I can re-rent to the next good person who is happy to pay new market rates for such a nice well-maintained, service-oriented product. Ie don’t say to myself “why fix the washing machine when they are paying such low rent to begin with! They can fix it themselves” (which they don’t, instead just stop paying rent). I would rather say “I’m going to provide the nicest place possible to this person because they are paying me top rent” it’s really win-win to keep everyone happy.

  13. Basically any subsidized housing is simply redistribution of income from those with more income to those with less income. In this case you would be redirecting $24,000 from you to the tenants – you forego a potential $24,000 of rental income if rented out at ‘market rate’ and the tenants get a benefit worth $24,000 pa. Unfortunately the tenants are unlikely to perceive the benefit as being worth $24,000 to them, but will instead consider the rent they pay ‘high enough’ and mentally discount the value they are receiving.

    The problem I see with this plan is that you would rent to a pre-school teacher, who would then expect to be able to rent indefinitely. What happens in two years time when your child has different teachers, and you are still providing a $24K pa subsidy to someone who used to be his teacher two years ago, and not to any of his current Yr 2 teachers? And how do you evict them if they are paying rent on time but decide to change jobs?

    Perhaps renting out at market rent and simply donating $24K pa to a charity that provides subsidized housing or rent assistance to many people would be more practical – you could vary the amount each year depending on your own circumstances (what if you really need some extra income one year?), and the benefit would be spread amongst many needful people, rather than just providing a bonanza to one lucky individual.

    1. It would be providing subsidized rent to two preschool teachers as they would be roommates in the two bedrooms.

      I’m OK with subsidizing their rent if they continue with their occupation. If they suddenly want to become techies making $250K each, we’ll need to have a discussion.

      The focus more is on helping preschool teachers as a whole or any teacher in the system. It’s just a bonus to immediately help my son‘s preschool teachers.

      But I hear what you’re saying.

      Donating money to causes is never as efficient as being able to help someone directly. That’s the thing that bums me out… inefficiency.

  14. I think it’s a great idea. I would go even further and create a company, which can have an app like AirBnB that lists properties with details for rent outs. Let others, like you, list their available portion of their property for rent with price, photo, video tour etc.

    You may ask why the Company is needed (since you can do with just an app/website)?
    Well, there are legal issues that may arise with such system. This company can charge minimal to the member owners a small feel to list the property (OR a % of their rental income), and proceedings can go towards creating legal agreements, attorney’s cost for their members incase if they need legal assistance and to create a sustainable system that provides piece of mind to member owners. Create a board, by-laws etc and now you extended an opportunity to others who also wants to take an active role in addressing the crisis.


  15. I make a good chunk of my money from renting out properties. In Washington, DC the HCVP program (vouchers) pays at or above market rate, and it is still very difficult for program participants to find apartments due to economic and class discrimination. So, I am participating in a nationwide program, that program, though, does not cover everyone (Not every poor or low-mid income person has a voucher). However, it is a way that I can help a low-income person have access to safe and quality housing when they otherwise are not finding it AND I receive market rate or better rents. I encourage other landlords who might be on this website to research the HCVP in your state/city and see how it is run.

  16. Long time reader Sam. Love the way you think and teach, and want to give back.

    Clearly this topic is in line with your life philosophy, which isn’t actually about money at all, its about maximizing happiness, and your desire to give that wisdom to more people.

    I’m curious, do you think this is the OPTIMAL way to meet that goal (maximize other people’s happiness)? Or is this a “shortest distance” solution? Seems to me that by mixing your desire to “do good” while retaining an asset strategy that reflects your long term view on coastal real estate in international city, that you may end up with sub-optimal outcomes. What would happen if your son was thrown out of the pre-school or some other terrible event? What if the teachers stopped paying you? What if you had to sell and you felt guilty about needing to make them leave? I don’t know, as I struggle with the same issues i am more inclined to think “well if I give up maximizing my profit now, i reduce my ability to make a bigger impact later”. It’s not selfish to think that way unless your goal is just to never give back. Of course, human nature is to want more and more and more and never give back. That’s how you end up with…..11,000 empty units. Hoarding housing capacity is a market inefficiency. You would never run a factory like that.

    SF housing policies are a whole different animal, but Vancouver CA has solved this problem with a 1% vacancy tax (1% of value per year!). At that rate you could subsidize something like 45k worth of housing for each homeless person per year in SF. Seems like there are practical options here

  17. If you rent out your home in San Francisco, probably you should not expect to return back. Renting out your home to a single person means they will more likely bring their boyfriend who will share thereat payment. If you have own several different properties than I guess than you have to rent them out to someone. Though the rent is controlled by rent control in San Francisco, you can still gain by taking annual depreciation from the property to offset the taxes on your wages.

  18. In San Francisco, if you rent any portion of your home to any tenant, including a teacher, means that you are hoping that they move out when you want them to. If they are getting a good deal, they more likely will stay twenty years or more. Their pay will go up but your rent control rent will not. You will pay present day prices for plumbers, carpenters, window repairs, etc to maintain the house while the tenant pay rent with a basis from twenty years earlier. The tenant will not want to share their increase pay with you. You may retire on social security while your tenant is still in the prime of their life. There is no shortage of low income housing in San Francisco. They are just occupied by high income earners who remain because they feel they have been made richer from years in your rent controlled unit.

    Also, it cost a fortune in lawyers fees and court cost to evict someone from your home. San Francisco may require that you pay their rent someplace else for several years.

    1. Good point on paying today’s prices, and market rate prices in the future versus being stuck in rent controlled prices. But at least rent control prices do you still go up by about 2% a year if you were to choose to raise the rent.

      I was thinking about providing a subsidized housing for teachers for 20+ years to do some thing about the situation and then if my kids decide they would want to move in, they have a right to move-in.

  19. Colleen Canning

    Go for it. Rent it at a reduced price to the Pre School Teachers. Nothing better than paying it forward when one is able. Plus, you’re still receiving Passive income.

    1. Subsidized housing is so important! I wonder if you looked at co-operative affordable housing models that would help you draw up application and tenant agreements that address unique goals and risks.

      I also agree with other comment that reduced rent can bring in more steady, conscientious renters and ultimately be a better long term financial choice.

  20. Wow that’s so generous that you’re considering doing that. I can see a lot of positives in that. San Francisco is definitely an expensive city to rent in on a teacher’s salary. And I would think that preschool teachers are probably good tenants because after being around wild toddlers all day they probably just want peace and quiet when they’re at home.

    I’ll be curious to see how things pan out. Thanks for sharing your thoughts!

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