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I don't see any kind of mathematical gymnastics that has landlords making more money on vacancies. Any tax they'd save would be a fraction what would otherwise
by ed25519FUUU 6y ago
I don't see any kind of mathematical gymnastics that has landlords making more money on vacancies.
Any tax they'd save would be a fraction what would otherwise be revenue. Besides, real-estate investors attempt to keep their costs (interest, depreciation, etc) all very close to their revenue, not the other way around. Less revenue is simply less of a chance to deduct expenses (not to mention less money for them).
The only way I think it makes sense is if they're sure they're going to be able to rent it for more if they hold out in a way that would make up for the short term loss.
- slindz 6y agoI recall a comment suggesting financing terms can be impacted once a drop in rental rate is realized. An apartment with an assumed rental value of $X can sit empty and still be assumed to pull $X. As soon as they start renting it out for $Y, the financials might have to be re-evaluated, which might prompt extra collateral from the borrower. I have no idea how reliable this comment may have been, but it's an idea...
- pc86 6y agoThis is what I had in mind but admittedly I'm not an accountant, lawyer, or landlord so I don't know for sure :)
- pengaru 6y agoA buddy of mine rents in a 90% vacant building he claims the owners haven't bothered putting tenants in at lowered rents because they're borrowing against the value established by the high rents. It's also a rent control scenario, which strongly disincentivizes ever lowering the rent.