6 ms·

> But let's not forget - you're paying for everything your landlord is, plus profit. Always. Definitely not always. Loss is common in business. Doubly so here

> But let's not forget - you're paying for everything your landlord is, plus profit. Always. Definitely not always. Loss is common in business. Doubly so here when asset values are appreciating. If the landlord thinks they're making bank simply holding property, any rental income on top that helps minimize costs is just gravy. There isn't tremendous pressure for costs to be fully recouped. In reality, you're paying the least amount you can that still beats the alternatives. That doesn't guarantee profitability for the landlord. The landlord recognizing lack of profits and selling the property is an alternative, but may not even be a tenable one in some circumstances (e.g. a market downturn that leaves potential buyers weary) without taking even greater losses.

dnissley 4y ago
I have observed that many small landlords are speculating on a longer term payoff of the property greatly increasing in value, are not present but planning on moving back in at some point, or own outright and have out of date ideas about market rent. All of these lead to situations where they may take losses of varying sizes in the near to medium term. Combine one of these landlords with someone who is not planning on sticking around long term and you've got a match made in heaven.
judge2020 4y ago
> Doubly so here when asset values are appreciating. If the landlord thinks they're making bank simply holding property, any rental income on top that helps minimize costs is just gravy. There isn't tremendous pressure for costs to be fully recouped. Maybe with certain small owner groups, but I can guarantee you that any community with a dedicated management company (separate from the ownership group) has a goal of making profit on top of however much their property value is appreciating. Not every owner plans to sell the property within a few years of buying it. This applies to all of your apartment communities regardless of age (well, minus lease-ups in their first year). Also, most properties run on a bog-standard business checking account for their income and expenses; the owner isn't just dumping money in it every month to support operating losses because "the property is appreciating anyways!". If the manager and management group isn't making money to sustain operations, you'll have both an angry owner and angry corporate management that can't pay themselves for their management fees.
unshavedyak 4y ago
> Definitely not always. Loss is common in business. Maybe randomly here and there, but you will be homeless if your landlord continually loses money. I said it earlier in my comment, "on average". If your landlord on average is losing money, you will be homeless soon enough, or someone else will buy it and increase your rent or find a way to be more efficient than the previous landlord.
- randomdata 4y ago
  > but you will be homeless if your landlord continually loses money. Or you will find yourself continually cycling through landlords as each one eventually gives up and sells to the next sucker. Assuming the next sucker comes along. The landlord might be stuck with the property. Real estate has been an easy sell of late, but that hasn’t been true historically. > and increase your rent To which you can say, "no thanks". Sure, they can kick you out[1], but with no rental income their losses will be even higher. What landlord worried about profitability wants to reduce profitability even further? The landlord is beholden to what the renter is willing to pay. The renter couldn't care less about the expenses involved in running a rental property. That doesn't factor into how much they are willing to pay at all. [1] If your jurisdiction has liberal enough laws. Where I live it is essentially impossible to evict tenants. Even in egregious cases, like the tenant who stopped paying rent, there is currently a year+ backlog in the government signing off on the eviction.
  - unshavedyak 4y ago
    I dunno, these seem like exceptions that prove the rule to me. Seems a time consuming game to seek out landlords who are losing money so that i can save money in the long run. Especially if i don't want to live in a place that behaves like it is also losing money. Ie where repairs and basic needs aren't met because the landlord is upside down and is seeking to sell asap. Anything is possible, but it seems quite improbable to a, what appears to be, very profitable venture for many corporations. A probable explanation to so many potentially owned homes being offered as rentals, too. For the significant majority of tenants i cannot imagine they're "winning" over their landlord.

dnissley 4y ago

I have observed that many small landlords are speculating on a longer term payoff of the property greatly increasing in value, are not present but planning on moving back in at some point, or own outright and have out of date ideas about market rent. All of these lead to situations where they may take losses of varying sizes in the near to medium term. Combine one of these landlords with someone who is not planning on sticking around long term and you've got a match made in heaven.

judge2020 4y ago

> Doubly so here when asset values are appreciating. If the landlord thinks they're making bank simply holding property, any rental income on top that helps minimize costs is just gravy. There isn't tremendous pressure for costs to be fully recouped. Maybe with certain small owner groups, but I can guarantee you that any community with a dedicated management company (separate from the ownership group) has a goal of making profit on top of however much their property value is appreciating. Not every owner plans to sell the property within a few years of buying it. This applies to all of your apartment communities regardless of age (well, minus lease-ups in their first year). Also, most properties run on a bog-standard business checking account for their income and expenses; the owner isn't just dumping money in it every month to support operating losses because "the property is appreciating anyways!". If the manager and management group isn't making money to sustain operations, you'll have both an angry owner and angry corporate management that can't pay themselves for their management fees.

unshavedyak 4y ago

> Definitely not always. Loss is common in business. Maybe randomly here and there, but you will be homeless if your landlord continually loses money. I said it earlier in my comment, "on average". If your landlord on average is losing money, you will be homeless soon enough, or someone else will buy it and increase your rent or find a way to be more efficient than the previous landlord.

randomdata 4y ago
> but you will be homeless if your landlord continually loses money. Or you will find yourself continually cycling through landlords as each one eventually gives up and sells to the next sucker. Assuming the next sucker comes along. The landlord might be stuck with the property. Real estate has been an easy sell of late, but that hasn’t been true historically. > and increase your rent To which you can say, "no thanks". Sure, they can kick you out[1], but with no rental income their losses will be even higher. What landlord worried about profitability wants to reduce profitability even further? The landlord is beholden to what the renter is willing to pay. The renter couldn't care less about the expenses involved in running a rental property. That doesn't factor into how much they are willing to pay at all. [1] If your jurisdiction has liberal enough laws. Where I live it is essentially impossible to evict tenants. Even in egregious cases, like the tenant who stopped paying rent, there is currently a year+ backlog in the government signing off on the eviction.
- unshavedyak 4y ago
  I dunno, these seem like exceptions that prove the rule to me. Seems a time consuming game to seek out landlords who are losing money so that i can save money in the long run. Especially if i don't want to live in a place that behaves like it is also losing money. Ie where repairs and basic needs aren't met because the landlord is upside down and is seeking to sell asap. Anything is possible, but it seems quite improbable to a, what appears to be, very profitable venture for many corporations. A probable explanation to so many potentially owned homes being offered as rentals, too. For the significant majority of tenants i cannot imagine they're "winning" over their landlord.