“For Gustavo Gonzalez, being a landlord runs in the family.
His Mexican-immigrant parents own rental units in the Bay Area, and four of his five siblings are landlords too. It was Gonzalez’s parents who encouraged him to buy his first apartment building about 20 years ago, when he was just 29. Now he owns or co-owns four multi-unit buildings in San Jose —all of which are under rent control —in addition to running a real estate business.
“None of us live high and mighty,” Gonzalez said of his family. “We’re just hard workers and we roll up our sleeves and do what we have to.”
Gonzalez sat down with this news organization to talk about Prop. 10, his best and worst tenant relationships, and the misconceptions he feels some renters and tenants-rights advocates have about landlords. This interview has been edited lightly for length and clarity.
Q: What is the most challenging part of being a landlord?
A: Truthfully, the most challenging part is not being able to afford to do everything you want to your apartments so they look amazing. You’re limited by cash flow. And these buildings are older, so they need a lot of work, so you have to prioritize and do the best that you can.
Q: What do you enjoy most about the role?
A: I enjoy seeing my tenants grow old. Nobody moves. My tenants have been there forever and they’re like family. In the first building, there’s probably four that haven’t moved since I bought it —so 20 years.
Q: What the most common misconception renters and tenant advocates have about landlords?
A: Oh, that we’re greedy and we’re just after the mighty dollar. And the truth is, we’re not. We’re people. We’re families. We have our own families. And we just want the best for our tenants, just like anybody else. We do have those few that are outliers that we have to make the best of.
So it’s unfortunate that they feel that way, but I think if they sat down and spoke to us, they would get a different perspective.
Q: Rent control is one of those issues that often drives a wedge between landlords and tenants. What are your thoughts on it?
A: If you look at many of the cities that are under rent control —San Francisco and others —they’re the most expensive cities to live in. So based upon that, it seems like it’s really not working very well.
It also makes it more and more challenging for us to manage our older buildings. We want what’s best for our tenants, and that’s a great, safe, happy living environment, and so that requires investment into the building.
Q: How much are you able to raise the rent on your units?
A: Under rent control it’s 5 percent a year. And that’s tough when you have an older building because the city is adding more and more fees, they’re requiring us to do more and more things. We have to take care of the trees that are on the sidewalks, which we didn’t have to do before. We have to take care of the sidewalks themselves. And trees create roots, and those roots bring up the sidewalks, and every seven or eight years we’re having to replace the sidewalks. And the cost is tremendous. That’s just one example out of many. But plumbers, electricians, everybody else, their fees have to go up to live in this area. So everything goes up and up and up —your trash bill, your PG&E bill.
Q: If you evict a tenant, you can bring that unit back up to market rate. Tell me about the trade-off between having a tenant leave and being able to raise the rent, vs. having a long-term tenant.
A: Well I’ve already come to the realization that I’ll probably never get to market rents, and I’m OK with that. I think my average rents are $1,300 for a one-bedroom. Our tenants can’t afford much more than that anyways. We have a great relationship with our tenants —I’m not there to kick them out or make it real difficult for them. I’m there to make sure I can provide a good living environment for them and be able to sustain the building. And so when a tenant leaves, we really don’t jack it up to market. We’ll maybe raise it $100 or $200.
Q: Let’s talk about Prop. 10. Voters in November will decide whether to repeal California’s Costa Hawkins law, which would allow cities the freedom to greatly expand rent control. Where do you stand on that measure?
A: Our biggest issue in the state of California, our biggest issue here in the Bay Area, is housing. The reason why our median price is $1.357 million —which is absolutely ridiculously high —is because we have a lack of supply. So what we really need is more housing. And we need to build for the future, not for yesterday. If you look at a lot of our developments along high-transit corridors, they’re five stories, or four stories. That’s building for yesterday. We need to build 30, 50, 60 story buildings, cities within cities.
Prop. 10 doesn’t do anything to help us do that. As a matter of fact, developers most likely won’t build because it won’t pencil out for them if they know they’re going to be under rent control. So what’s going to happen is everything is going to cost more, and that’s the last thing we need.
Q: How has the Bay Area’s affordable housing crisis impacted your life?
A: I have three kids and I’d love for them to live close by if they chose to. Eventually I hope to have grandkids. I’d like them to live in the Bay Area. So the impact to me is —will I have to move to be closer to my kids? Or can I figure out how to keep them here somehow?
Q: When was the last time you evicted someone? What led to that outcome, and what was the experience like for you?
A: Oh boy…evictions —they’re bad and they’re very uncomfortable and they’re very costly.
I think the last eviction was a tenant who wasn’t paying their rent and they were hanging around individuals who weren’t very nice —to the point where they stabbed one of my other tenants. That was probably seven years ago.
Q: How much does it cost you to evict someone?
A: I think it was $1,300 for the attorney fees. And then it was like three months of nonpayment. And then we had to basically redo that whole apartment, which I think cost us about $5,000.
Q: Tell me about the worst tenant you ever had.
A: We had a tenant once that wasn’t paying, and knew the system, and they were really malicious. They threw cement down our pipes, and so we had to replace all the pipes. And they did things to the unit that I don’t even want to discuss. It was just bad. That was about nine years ago.”