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> ... risk is higher. They need to match the market's risk adjusted returns, so they need a higher return to balance out the higher risk. Risk of what? The gr
by everybodyknows 8y ago
> ... risk is higher. They need to match the market's risk adjusted returns, so they need a higher return to balance out the higher risk.
Risk of what? The greater fall in property values in the 2008 crash proved higher capital risk, and low-income tenants may be more likely to damage the building -- but the two kinds of risk lie on opposite ends of the scales of time and space.
> ... the higher the value of your rental, the more taxes you will pay.
Not so for most in California, where Prop. 13 limits property tax increases to 2%/year.
- mruts 8y agoRisk means a higher standard deviation of returns, also known as volatility. But you’re right to bring up the exposure landlords have to the real estate market. It’s unclear to me whether low valued properties or high values ones have more beta to the market. If I had to guess, I would venture that lower valued properties are actually less correlated with the market.