3 ms·
Not a major deal, but the $1 in $8 calculation is a bit off, since it doesn't take inflation into account. The math still holds for the most part. Adjusting fo
by Apes 7y ago
Not a major deal, but the $1 in $8 calculation is a bit off, since it doesn't take inflation into account. The math still holds for the most part.
Adjusting for inflation and rerunning the same calculations:
* $2,600 -> $2,902.47 -> 2011 median rent adjust to 2018 dollars
* $3650 - $2900 = $750 / month increase in rent.
* $750 / .69 = $1086 / month increase (pretax)
* $52000 -> Increased yearly burn for a 4 man startup.
* $208000 -> 4 year pre-tax burn
* $208000 * .69 = $143520 -> 4 year amount to land owners
* $500,000 -> $558,166.51 -> Average seed round in 2011 adjusted to 2018 dollars
* $2.1M - $558K = $1.5M -> Increase in venture funding
So $143K / $1500K goes to Landowners, which is $1 in $11, not $1 in $8, or 30% less than originally calculated.
- buss 7y agoAh, shoot. I knew I forgot something.
- jurassic 7y agoFew landlords are paying full marginal income tax on their rental income because of the numerous tax advantages of property ownership (mortgage interest, depreciation, etc) that reduce their tax liability. Variation in the tax situation of different landlords makes it a pretty misleading thing to include in the analysis. Besides, how the landlord and the government divvy up the rent money doesn't make any difference to the startup that needs to pony up $208,000 more dollars. Whether rental income is taxed at 0% or 100%, the cost to renters and startups is a large and growing problem.