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Question to landlords: does rent control hurt your bottom line? I understand the opportunity costs of rent control: if rents in your neighbourhood have gone up

by spoonie 10y ago

Question to landlords: does rent control hurt your bottom line? I understand the opportunity costs of rent control: if rents in your neighbourhood have gone up 50% this year you feel like a sucker if you can only raise them by 5%. Similarly you might put off minor renovations (that don't require the tenant moving out) because you won't necessarily be able to charge more to make up for the cost (apart from selling the property). But is it common to rent out a property below cost, assuming you can make it up later with rent increases? E.g. you just bought a property in Mountain View so your mortgage payments are high, plus the cost of all of the new appliances, and maybe it's an older house so labour and maintenance costs are higher than the $4k/mo you charge in rent.

ThrustVectoring 10y ago
Forget the cash flow of renting out a property for a second, and just consider selling it. If you have an apartment with a tenant paying below market rate, that property is worth less money to potential buyers because of the rent-controlled tenant they'd be stuck with. And buying or building real estate for speculative purposes is extraordinarily common.
- idlewords 10y ago
  No one has ever shed a tear for real-estate speculators.
  - tormeh 10y ago
    >real-estate speculators Also called "every house owner in the western world".
    - hrunt 10y ago
      I'm a home owner in the Western world and I don't consider myself a real estate speculator. I "bought" my house because I really, really liked it and wanted it to be my home for a very, very long time. Buying the house gives that a better chance of happening, as my payments will remain consistent and I get certain protections as a homeowner I wouldn't otherwise have. Whether I make money on it or not is immaterial to me as I don't plan to sell. While I'd like the value of the home to go down (taxes), it hasn't influenced my decision to stay in it -- so far. I think a lot of homeowners feel this way and aren't in way "speculators", but they're a non-vocal population. By the way, I put "bought" in quotes because it often seems like I'm renting it from the state.
      - shostack 10y ago
        Meanwhile most Americans first home purchase, if they can even afford one, is not their forever home. Due to all the handouts to banks through the mortgage industry that have in part caused house prices to go up like they have (ie. QE), many first time buyers have to leverage themselves to the hilt for their first underwhelming home in order to hopefully one day sell for enough to let them ladder up to a nice home. People would much rather own their forever home and not have to worry about selling at some point like you, but that just isn't the reality for most. So speculation is almost forced in the sense that if you want to own your forever home at some point, you have to play the leverage game.
  - stvswn 10y ago
    As a homeowner, I want speculators to drive up the prices in my neighborhood. I want them to snatch up and renovate the homes in disrepair and then rent them out at high prices to people richer than me. That would drive up my property value. There's no need to shed tears for anyone. I fail to see why moral high ground be ceded to either side, honestly. These aren't tenements in 19th century New York. Renters know the deal when they sign leases.
sokoloff 10y ago
> Question to landlords: does rent control hurt your bottom line? If it didn't, rent control would be wholly unnecessary.
jbuzbee 10y ago
"Question to landlords: does rent control hurt your bottom line?" Of course. If rent remains constant and every year the cost of other factors such as insurance, upkeep, salaries of employees, etc. go up, eventually, the bottom line will be negative.
- spoonie 10y ago
  Which rent control laws say that rent has to be frozen? I thought they allow for increases, usually inflation-matched. If costs rise faster than inflation I can see how rent control hurts, but then it seems to me that there are other problems.

by spoonie 10y ago

ThrustVectoring 10y ago

Forget the cash flow of renting out a property for a second, and just consider selling it. If you have an apartment with a tenant paying below market rate, that property is worth less money to potential buyers because of the rent-controlled tenant they'd be stuck with. And buying or building real estate for speculative purposes is extraordinarily common.

idlewords 10y ago
No one has ever shed a tear for real-estate speculators.
- tormeh 10y ago
  >real-estate speculators Also called "every house owner in the western world".
  - hrunt 10y ago
    I'm a home owner in the Western world and I don't consider myself a real estate speculator. I "bought" my house because I really, really liked it and wanted it to be my home for a very, very long time. Buying the house gives that a better chance of happening, as my payments will remain consistent and I get certain protections as a homeowner I wouldn't otherwise have. Whether I make money on it or not is immaterial to me as I don't plan to sell. While I'd like the value of the home to go down (taxes), it hasn't influenced my decision to stay in it -- so far. I think a lot of homeowners feel this way and aren't in way "speculators", but they're a non-vocal population. By the way, I put "bought" in quotes because it often seems like I'm renting it from the state.
    - shostack 10y ago
      Meanwhile most Americans first home purchase, if they can even afford one, is not their forever home. Due to all the handouts to banks through the mortgage industry that have in part caused house prices to go up like they have (ie. QE), many first time buyers have to leverage themselves to the hilt for their first underwhelming home in order to hopefully one day sell for enough to let them ladder up to a nice home. People would much rather own their forever home and not have to worry about selling at some point like you, but that just isn't the reality for most. So speculation is almost forced in the sense that if you want to own your forever home at some point, you have to play the leverage game.
- stvswn 10y ago
  As a homeowner, I want speculators to drive up the prices in my neighborhood. I want them to snatch up and renovate the homes in disrepair and then rent them out at high prices to people richer than me. That would drive up my property value. There's no need to shed tears for anyone. I fail to see why moral high ground be ceded to either side, honestly. These aren't tenements in 19th century New York. Renters know the deal when they sign leases.

sokoloff 10y ago

> Question to landlords: does rent control hurt your bottom line? If it didn't, rent control would be wholly unnecessary.

jbuzbee 10y ago

"Question to landlords: does rent control hurt your bottom line?" Of course. If rent remains constant and every year the cost of other factors such as insurance, upkeep, salaries of employees, etc. go up, eventually, the bottom line will be negative.

spoonie 10y ago
Which rent control laws say that rent has to be frozen? I thought they allow for increases, usually inflation-matched. If costs rise faster than inflation I can see how rent control hurts, but then it seems to me that there are other problems.