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It doesn't make sense to me why they'd WANT to leave them empty?? If I were a landlord, I'd be doing my best to keep the rentals occupied as much as possible.

by akulbe 8y ago

wwweston 8y ago
You know how some people say that if you're going for investors for your start up, it's better to sell them on user engagement & growth rather than revenue, because revenue brackets what you're potentially worth? I bet it's something like that. If you rent at a certain price, that brackets the property (and depending on the lease, maybe even locks it in).
arebop 8y ago
According to the article, is mostly speculators betting that the property values will rise faster than the market consensus (these speculators don't want to be locked into leases that will soon undervalue the property). Also, it is arbitrageurs who think they can profit by repurposing the units (e.g., hotel/airbnb conversion).
ripa 8y ago
If the value rises considerably in a few years for you to make a decent profit, then its mostly a headache (and operating costs, wear and tear etc) to have tenants .
baroffoos 8y ago
Because renting doesn't make you that much money and you have to work for it. Just leaving it sitting there and selling it later is no effort profit
- conanbatt 8y ago
  But its the exact opposite. Rental is generally profitable. You can bet on land while also renting and making extra money. You can't argue that they are greedy for buying land but not greedy enough to squeeze more money out of it. The answer is somewhere else.
  - refurb 8y ago
    In places with rent control, having a tenant reduces the value of the home. Sometime substantially if their rent is locked at a low rate. It’s not unusual to buy tenants out in SF before putting the home on the market. Spend $50k to get them to leave and the value of the home goes up $200k. If you know you’re going to sell in a few years, basically the value of the rent (adjusting for buyout) is way less than the incremental profit from selling an empty building.
    - conanbatt 8y ago
      Then the problem is rent control, and the solution is not to tax empty homes.
      - ramshorns 8y ago
        Rent control is the solution to a different problem. Without it, landlords have the power to make people homeless.
        conanbatt 8y ago
        Didn't know rent-control people harbored the homeless.
      - em500 8y ago
        It can also happen without rent control but due to other pro-tenant laws. For instance, in some countries landlords cannot terminate the rental contract unless the tenant is in serious arrears. This depresses the market value of a rented house, as the buyer can't live in in his newly purchased house if it's already rented out.
  - baroffoos 8y ago
    Because renting it is extra work and extra risk. You have to deal with finding someone to rent it to and then you have to keep inspecting the house to make sure they haven't wrecked it and then you have to fix any issues they report. Where as buying and selling later is very low maintenance.
GuB-42 8y ago
My guess is that these are unsanitary, and renovation is too expensive. So they let the building sit there until they find a buyer, speculating for an increase in value. Possibly a buyer who intends to demolish the building in order to build something else.
roel_v 8y ago
When laws are very tenant-friendly (impossible to evict, caps on deposits etc), having tenants becomes a liability, which depresses the value of the building, especially if you only want to hold on to it for a few years.
isoskeles 8y ago
"You gotta spend money to make money." I write that in a somewhat tongue-in-cheek way usually, but getting and caring for a tenant could, in some cases, be more expensive than leaving the space vacant. If you own the property outright, it's a measure of the cost of extra wear-and-tear, property tax, any other fees and fines, and maintenance (like this new one) against the rent you collect. It's not always the case that the rent is going to be a bigger number than tax, fines/fees, and extra wear-and-tear, especially if you own the property outright. If you add in rent control and a rising trend in rental prices, some landlords would rather leave the space vacant for a while to wait out the market for higher prices. You could easily lose money if you don't recognize and account for all of the costs.
acomjean 8y ago
I suspect some of it is tax liability. (I am not an accountant) but I think you can deduct the “loss” of rental income you didn’t get against other properties you may own. If the ammount of the loss is “rent you could have gotten but didn’t” instead of “market rate”, you’ll just keep the rent high. I’m in Cambridge MA and the Harvard square movie theater sits empty 5+ years and i can’t think why excepting financial shenanigans. (Though apparently there is finally a plan to redo the building)
Neil44 8y ago
The value of the property is based on its rentable value so if the landlord drops the rent to get a tenant in they immediately take a big loss on the value.

It doesn't make sense to me why they'd WANT to leave them empty?? If I were a landlord, I'd be doing my best to keep the rentals occupied as much as possible.

by akulbe 8y ago

It doesn't make sense to me why they'd WANT to leave them empty?? If I were a landlord, I'd be doing my best to keep the rentals occupied as much as possible.

wwweston 8y ago

You know how some people say that if you're going for investors for your start up, it's better to sell them on user engagement & growth rather than revenue, because revenue brackets what you're potentially worth? I bet it's something like that. If you rent at a certain price, that brackets the property (and depending on the lease, maybe even locks it in).

arebop 8y ago

According to the article, is mostly speculators betting that the property values will rise faster than the market consensus (these speculators don't want to be locked into leases that will soon undervalue the property). Also, it is arbitrageurs who think they can profit by repurposing the units (e.g., hotel/airbnb conversion).

ripa 8y ago

If the value rises considerably in a few years for you to make a decent profit, then its mostly a headache (and operating costs, wear and tear etc) to have tenants .

baroffoos 8y ago

Because renting doesn't make you that much money and you have to work for it. Just leaving it sitting there and selling it later is no effort profit

conanbatt 8y ago
But its the exact opposite. Rental is generally profitable. You can bet on land while also renting and making extra money. You can't argue that they are greedy for buying land but not greedy enough to squeeze more money out of it. The answer is somewhere else.
- refurb 8y ago
  In places with rent control, having a tenant reduces the value of the home. Sometime substantially if their rent is locked at a low rate. It’s not unusual to buy tenants out in SF before putting the home on the market. Spend $50k to get them to leave and the value of the home goes up $200k. If you know you’re going to sell in a few years, basically the value of the rent (adjusting for buyout) is way less than the incremental profit from selling an empty building.
  - conanbatt 8y ago
    Then the problem is rent control, and the solution is not to tax empty homes.
    - ramshorns 8y ago
      Rent control is the solution to a different problem. Without it, landlords have the power to make people homeless.
      - conanbatt 8y ago
        Didn't know rent-control people harbored the homeless.
    - em500 8y ago
      It can also happen without rent control but due to other pro-tenant laws. For instance, in some countries landlords cannot terminate the rental contract unless the tenant is in serious arrears. This depresses the market value of a rented house, as the buyer can't live in in his newly purchased house if it's already rented out.
- baroffoos 8y ago
  Because renting it is extra work and extra risk. You have to deal with finding someone to rent it to and then you have to keep inspecting the house to make sure they haven't wrecked it and then you have to fix any issues they report. Where as buying and selling later is very low maintenance.

GuB-42 8y ago

My guess is that these are unsanitary, and renovation is too expensive. So they let the building sit there until they find a buyer, speculating for an increase in value. Possibly a buyer who intends to demolish the building in order to build something else.

roel_v 8y ago

When laws are very tenant-friendly (impossible to evict, caps on deposits etc), having tenants becomes a liability, which depresses the value of the building, especially if you only want to hold on to it for a few years.

isoskeles 8y ago

"You gotta spend money to make money." I write that in a somewhat tongue-in-cheek way usually, but getting and caring for a tenant could, in some cases, be more expensive than leaving the space vacant. If you own the property outright, it's a measure of the cost of extra wear-and-tear, property tax, any other fees and fines, and maintenance (like this new one) against the rent you collect. It's not always the case that the rent is going to be a bigger number than tax, fines/fees, and extra wear-and-tear, especially if you own the property outright. If you add in rent control and a rising trend in rental prices, some landlords would rather leave the space vacant for a while to wait out the market for higher prices. You could easily lose money if you don't recognize and account for all of the costs.

acomjean 8y ago

I suspect some of it is tax liability. (I am not an accountant) but I think you can deduct the “loss” of rental income you didn’t get against other properties you may own. If the ammount of the loss is “rent you could have gotten but didn’t” instead of “market rate”, you’ll just keep the rent high. I’m in Cambridge MA and the Harvard square movie theater sits empty 5+ years and i can’t think why excepting financial shenanigans. (Though apparently there is finally a plan to redo the building)

Neil44 8y ago

The value of the property is based on its rentable value so if the landlord drops the rent to get a tenant in they immediately take a big loss on the value.