Mom-and-pop landlords getting squeezed in Sonoma County with cascading regulation

They are left questioning whether owning rental investment properties is still viable for them — especially since the county Board of Supervisors are considering further action next month to add to tenant eviction safeguards.|

When Gov. Gavin Newsom on Friday signed legislation to extend a statewide moratorium on tenant evictions until June 30 because of the pandemic-induced economic upheaval, he emphasized the sweetener included for landlords in the law.

Newsom was referring to the pool of $2.6 billion for landlords to cover a portion of tenants’ unpaid rent between April 1, 2020 and March 31, 2021.

“We are trying to help small landlords as well here at the same time we are helping tenants,” the governor said.

Even with the olive branch from the state, smaller landlords in Sonoma County are unhappy, calling this another regulation that will squeeze them. They are left questioning whether owning rental investment properties is still viable for them — especially since the county Board of Supervisors are considering further action next month to add to tenant protections.

With the strengthening protections for residential tenants, some of the spotlight has shifted to the “mom-and-pop” landlords who typically own a few rental homes in the county. Monthly rents provide them with extra income until they eventually cash out and sell their properties.

About 60% of the 80,000 rental units in the county are owned by this type of property investor, said Ross Liscum, a Santa Rosa real estate broker affiliated with Century 21 NorthBay Alliance.

Jennifer Coleman is one of them. For almost 30 years, she has been a landlord renting two duplexes and two townhomes. They are in a partnership that she has with another investor, a rental portfolio rebuilt since the Great Recession in 2008. She owns one townhome rental on her own and has sold three single-family units from tightening regulations..

She cited the list of expenses for each property: taxes, insurance, maintenance and more. She and her investor partner rely on cash flow from monthly rents to be sustainable.

“We took what little money we had left (after the last recession) and with sweat equity put it into an investment property. So these are my semi-retirement earnings,” said Coleman, who is also a renter. “I can't afford to subsidize people.”

Besides the statewide eviction moratorium, since last January landlords have been operating under another law that capped annual rent increases at 5%, plus the rate of inflation for much of the state’s multifamily housing stock. And landlords are required to show “just cause” to evict tenants who have been living in a property for 12 months or more.

Sonoma County is under even greater rental protections, after last month Newsom extended through Dec. 31, 2021 a price-gouging order originally enacted after the 2017 North Bay wildfires. It prohibits rental increases of no more than 10% from the time when the measure first went into effect in fall of 2017.

Now, the county supervisors, led by newcomer Chris Coursey, may tighten eviction restrictions even more with a new ordinance under consideration to block evictions when property owners seek to sell or move into their own properties.

“This is about a pandemic,” said Coursey, who tangled with the local apartment management lobby before when he served on Santa Rosa City Council. That battle ended up being an unsuccessful effort to implement rent control.

“We don't need people being kicked out of their homes, having to either be out on the street or doubled up with a friend or family in overcrowded conditions,” he said.

Talk of such tighter rules for landlords are having an effect on the rental market, Liscum said. He had five clients who sold their rental properties in 2020 and they were bought by owner-occupied buyers. His research concluded 46 single-family homes in Santa Rosa and another 138 condominiums that had been rented were sold last year.

That’s 184 rental properties that are out of the market, he said.

“If there's a need to help tenants who for whatever reason are unable to make their payments, there should also be a need for government to help those folks that are providing the housing opportunities to be made whole ... and not just discounting it because they're rich people and all this other stuff that gets thrown around,” Liscum said.

For example, the real estate broker cited Bob Miller, who has owned three rental properties in Sonoma County for almost 20 years. One of his tenants in a southeast Santa Rosa unit has not paid rent since April. After repeated requests to learn more about the situation, the tenant told Miller there’s financial hardship.

Miller finally hired an attorney who reached an agreement last year with the tenant. The tenant was supposed to pay $100 weekly. But Miller never heard back from the tenant. In September, the tenant started paying 25% of the monthly rent — the minimum amount required under the state eviction law extended last week to avoid being removed from a rental home.

By December, Miller’s tenant was behind $17,000 in rent and that put him in a financial bind. He said he’s frustrated because he understands the tenant has suffered no loss of income and have provided no proof of that. The renter apparently is using the pandemic as an excuse not to pay $2,300 monthly rent on his Santa Rosa home, Miller said.

His attorney served a 60-day notice to the tenant to vacate by Feb. 1 because Miller intends to sell the home. Even that action is unresolved since the tenant has refused to leave. Miller said he can’t even a do a check on the property because the tenant told him a family member has the coronavirus.

“I just see it tightening, tightening, tightening,” Miller said of local and state rental protections that landlords now face.

Miller is not the only landlord rethinking whether to continue renting homes given that many tenants have an artificially low rent because of the price gouging order enacted more than three years ago, said Keith Becker, president of DeDe's Rentals & Property Management in Santa Rosa, which manages 500 rental properties in the area.

Rents in Santa Rosa dropped 2% annually from January 2017 through December 2020, said Rob Warnock, a research associate at Apartment List, an online marketplace for apartment listings. The median monthly rent in Santa Rosa is now $1,860, down from $1,900 at the start of the pandemic in March.

“If you are asking my opinion, I suspect that we are at risk of reaching a tipping point,” Miller said, noting the financial predicament for landlords who can longer shoulder property expenses when tenants don’t pay rent obligations.

Tenants’ advocates paint a different portrait and say landlord abuses are still evident. They claim an estimated 11,400 tenant households remain at risk of eviction in Sonoma County, signaling that protections should be strengthened.

“We've had a tripling of volume in terms of the number of people who have come to us with housing-related questions since COVID,” said Ronit Rubinoff, executive director of Legal Aid of Sonoma County.

There have been 117 residential eviction cases filed in the county from Sept. 2 through Dec. 3, according to Legal Aid data.

In one case, Rubinoff said her team helped stave off an eviction on Christmas Eve. The judge threw out the case since the landlord gave the notice to the tenant in English even though he knew the rental family only spoke Spanish.

“Here's a landlord who's trying whatever means possible to move people on right during the middle of the pandemic,” Rubinoff said.

Coursey said the county will have $14.7 million that can be used to pay local landlords for tenants’ back rent, money coming from the latest federal pandemic aid package.

“A check in the mail always reduces anxiety,” said the supervisor, who’s also former Santa Rosa mayor and in an earlier career was a Press Democrat columnist. “It’s not a simple process, but we are going to get there.”

However, Liscum, the real estate broker, said he thinks many area landlords won’t be able to qualify for that government help because their tenants have to earn less than 80% of the median income in the county.

“To me, that money is going to go to the low-income investor properties,” Liscum said. “The market-rate (rental) people are going to basically be locked out of any opportunity to get any type of (rent) reimbursements.”

Editor’ Note: The story has been updated to correct the number of ownership on Coleman’s rental properties.

You can reach Staff Writer Bill Swindell at 707-521-5223 or On Twitter @BillSwindell.

Bill Swindell

Business, Beer and Wine, The Press Democrat  

In the North Coast, we are surrounded by hundreds of wineries along with some of the best breweries, cidermakers and distillers. These industries produce an abundance of drinks as well as good stories – and those are what I’m interested in writing. I also keep my eye on our growing cannabis industry and other agricultural crops, which have provided the backbone for our food-and-wine culture for generations.

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