5 ms·

> There was no room for negotiation or to even take a day to think it over, if you walked away from it, there were 2 people right behind you to take it. Naive

> There was no room for negotiation or to even take a day to think it over, if you walked away from it, there were 2 people right behind you to take it. Naive question maybe, but if demand is that high, why don't prices rise even higher to balance it out a bit? Presumably most landlords would prefer another hundred or two a month at the cost of a few extra days on the market?

SllX 6y ago
They do. At some point the landlord makes the decision that this is good enough and accepts an offer using whatever factors are in play, maybe some personal circumstances like needing the money sooner rather than later or just liking one of the applicants more, but the next landlord is now informed by what his neighbors charged a month or two ago for a similar space and uses that as the floor for what they should ask for. On and on it goes and suddenly prices trend up and a space that went for $X two years ago now goes for $X+$500 today, or as we see in the original article, $X-$1K versus a year ago.
daniellarusso 6y ago
Time is money. Why hold out and continuously interview potential tenants, when multiple people are literally asking you to take their money? Cash today is better than cash in a few days.
- chillacy 6y ago
  Yes this: in real estate investing this is called the vacancy rate and it eats into profits, sometimes significantly. Too much vacancy and you can’t cover the mortgage.
  - kosievdmerwe 6y ago
    Divide a month's rent into 12 and you see it's a 100-200 dollars, which highlights how much you'd have to raise rent for a month's vacancy.
    - daniellarusso 6y ago
      ...and that is if you are only dealing with a single vacant property.
  - kevin_thibedeau 6y ago
    Unless the property is used for money laundering and it's fine to let it sit vacant for years.
fennecfoxen 6y ago
> Naive question maybe, but if demand is that high, why don't prices rise even higher to balance it out a bit? It's not always legal to charge more in San Francisco.
- standardUser 6y ago
  Rent control does not apply to vacant units in SF.
- jefftk 6y ago
  What are you referring to? (SF rent control does not apply when you're bringing in a new tenant)
jedberg 6y ago
It is better to rent to an interested party today than wait a month for someone who might pay $200 more per month. When the rent is $3500 a month, it will take 1.5 years to make up that difference.

SllX 6y ago

They do. At some point the landlord makes the decision that this is good enough and accepts an offer using whatever factors are in play, maybe some personal circumstances like needing the money sooner rather than later or just liking one of the applicants more, but the next landlord is now informed by what his neighbors charged a month or two ago for a similar space and uses that as the floor for what they should ask for. On and on it goes and suddenly prices trend up and a space that went for $X two years ago now goes for $X+$500 today, or as we see in the original article, $X-$1K versus a year ago.

daniellarusso 6y ago

Time is money. Why hold out and continuously interview potential tenants, when multiple people are literally asking you to take their money? Cash today is better than cash in a few days.

chillacy 6y ago
Yes this: in real estate investing this is called the vacancy rate and it eats into profits, sometimes significantly. Too much vacancy and you can’t cover the mortgage.
- kosievdmerwe 6y ago
  Divide a month's rent into 12 and you see it's a 100-200 dollars, which highlights how much you'd have to raise rent for a month's vacancy.
  - daniellarusso 6y ago
    ...and that is if you are only dealing with a single vacant property.
- kevin_thibedeau 6y ago
  Unless the property is used for money laundering and it's fine to let it sit vacant for years.

fennecfoxen 6y ago

> Naive question maybe, but if demand is that high, why don't prices rise even higher to balance it out a bit? It's not always legal to charge more in San Francisco.

standardUser 6y ago
Rent control does not apply to vacant units in SF.
jefftk 6y ago
What are you referring to? (SF rent control does not apply when you're bringing in a new tenant)

jedberg 6y ago

It is better to rent to an interested party today than wait a month for someone who might pay $200 more per month. When the rent is $3500 a month, it will take 1.5 years to make up that difference.