San Francisco is one of the most famous cities in the United States. With its stunning architecture, vibrant nightlife, and proximity to Silicon Valley, it's a city that attracts all kinds of national and international residents. Owning a rental property in San Francisco can be lucrative if managed well, but be aware that this city has unique property management challenges.

There are unique challenges with managing rentals in San Francisco, the three main ones being high turnover rates, strict rental laws, and expensive repairs and maintenance.

We'll highlight what you should expect from each of these categories and ways you can proactively prepare for each if they arise.

San Francisco property management challenge #1: High tenant turnover rates

One of the biggest challenges San Francisco property managers face is high tenant turnover rates. San Francisco has many job opportunities, and people constantly move in and out for work, internships, or school. According to First Tuesday Journal, San Francisco's rental turnover rate has risen significantly in the past decade, with nearly 20% of San Francisco renter households moving in 2017. They predict turnover rates will likely be highest in 2022 and 2023, as first-time Generation Y homebuyers and retiring Baby Boomers will simultaneously hit the home-buying market.

Tenants often move within a few months of moving in to find more affordable or desirable housing to maximize their experience. This high turnover rate can be a challenge for San Francisco property managers, who must often deal with vacancy periods caused by seasonal fluctuations or circumstantial churn. San Francisco homeowners may need to re-rent their properties multiple times throughout the year. This process can eat into profits and require significant coordination time and resources.

Circumvent by investing in marketing and relationship building

Investing in tenant screening by conducting diligent credit checks and reference checks can help you select reliable and longer-term tenants. When experiencing periods of rental churn, homeowners can consider partnering with local realtors to find reliable tenants quickly. Local property management services like Doorstead can help place high-quality tenants in a time crunch.

It's best practice to proactively invest in marketing strategies that target San Francisco's diverse population of renters. Investing in marketing and social media before you actively need it is easier to build a community over time. If your tenant has vacated the home and you're looking to fill in a new tenant quickly, post-high-quality listing photos and descriptions with attractive lease terms as soon as possible. Highlight amenities such as on-site laundry or parking and attractive neighborhood features. Share the listing on popular listing sites, local Facebook groups, social media, and through word of mouth. Consider offering flexible timelines and rent discounts if the property remains vacant. Here's Doorstead's guide to dos and don'ts of San Francisco property management.

San Francisco property management challenge #2: Budgeting for expensive repairs and maintenance

High tenant turnover rates lead to more wear and tear on the property since shorter-term tenants are not as invested in the property they're renting as long-term nesters.

San Francisco is one of the most expensive rental markets in the nation, with an average rent of $3,397. With high rental rates, tenants expect comfortable and safe housing, which can require costly repairs and maintenance depending on your property's age and condition. Therefore, homes must remain up to market standards; attracting and keeping high-quality tenants will be challenging. In addition, homeowners must anticipate and budget for local repair and maintenance costs which are significantly costlier than other national markets.

Circumvent by: getting quotes and focusing on quality over cost-cutting

Mindful budgeting strategies include:

• Working with experienced local contractors.
• Being cognizant of the city's high cost of living and services when estimating repair and improvement costs.
• Setting aside money each month to account for unexpected repairs.

To budget accurately, San Francisco homeowners and property managers should work with knowledgeable contractors. Partner with a reliable local contractor or service provider who is familiar with San Francisco's unique housing market and conditions and gives upfront and transparent pricing. To avoid exorbitant repair costs, in the long run, homeowners should invest in regular maintenance checks and repairs, such as replacing HVAC units before they break down.

Proactively invest in preventative maintenance and repairs by regularly inspecting properties, nipping repair issues as they arise, and investing in energy-efficient upgrades. Work with vendors and contractors who present different options, give thoughtful recommendations, and don't take shortcuts.

San Francisco tenants are typically more environmentally-conscious than other markets and will appreciate thoughtful upgrades. San Francisco homeowners can also consider partnering with property management services with a network of vetted local vendors like Doorstead.

San Francisco property management challenge #3: Strict rental laws

The San Francisco Rent Stabilization and Arbitration Ordinance protect tenants from being displaced in a rental housing market that is becoming increasingly expensive. The San Francisco Rent Ordinance has two parts: rent control and eviction control. A landlord can only raise the rent a certain small percentage each year and can only evict a tenant for specific reasons.

These laws make it difficult for San Francisco property managers to raise rents, even if the cost of living in the city has increased. Tobener Ravenscroft has a helpful definitive guide to renters' rights in San Francisco, covering more rental regulations and policies.

San Francisco also has strict building codes that require all properties to meet a high standard of living conditions, including proper heating, ventilation, electricity, plumbing, and air quality. Homeowners can face heavy fines and penalties if these regulations are not adequately met or maintained.

Circumvent by learning about important legal policies:

San Francisco homeowners should be familiar with the city's rental laws and respond proactively to any changes. Working with property management services, vendors, and contractors with experience in the San Francisco market will help minimize any risk of non-compliance with city regulations or costly repairs. 

Working with tenant law expert services or tenant lawyers to discuss rental laws and best practices around contracts can help ensure you're covering your legal bases. In addition, individually staying up to date on San Francisco rental laws and regulations help homeowners succeed in this competitive but lucrative market. 

San Francisco property management is a unique challenge, but it can be fulfilling for those prepared to deal with the city's challenges. We addressed how to circumvent the common challenges presented by high turnover rates, budgeting in an expensive city, and navigating strict rental laws and policies in San Francisco. For further reading on successfully managing your rental home, check out Doorstead's complete guide to renting your home.