4 ms·

A landlord charges what the market will bear, and a unit sitting empty for a month is expensive, so sometimes they'll charge slightly less. If that doesn't quit

A landlord charges what the market will bear, and a unit sitting empty for a month is expensive, so sometimes they'll charge slightly less. If that doesn't quite cover their own costs, well, they're in this for the long haul, usually, and they'll make it up eventually. Landlords often don't rent out houses immediately after buying them. They must first either invest in repairs and upgrades to justify a higher rental price, or wait until the housing market itself justifies a higher rental price. For most landlords I've known, their first rental unit involved renting out their own paid-off or almost-paid-off house, and living in a new one they bought. Listing a new unit sometimes means being underwater for the first year or two, but they tell themselves that they're building equity and eventually rents will rise to more than cover their costs--which is eventually true.

dahfizz 4y ago
> A landlord charges what the market will bear Yes, but people wouldn't choose to be landlords if "what the market will bear" wasn't profitable. If renting didn't cover the landlord's costs (on average, over time), then nobody would be a landlord. > but they tell themselves that they're building equity and eventually rents will rise to more than cover their costs--which is eventually true. This is also true for you if you buy a house. Renters have their rent go up every year. Owners are always ahead after 30+ years.
- pwinnski 4y ago
  Is your argument that landlords are by and large rational actors? Yes, I will concede that landlords are by and large rational actors, although I'm not sure that means as much as you seem to think it does. A landlord is investing, and usually willing to consider returns over a long term. Landlords I have known are not profitable every year, and almost never from day one on any given property. I have known one landlord--and heard of others--who have seen multiple years of profit on a property get wiped out by a single bad tenant. But that's okay! Most landlords (not the big corporate landlords for which the economics are very different) console themselves in unprofitable times with the knowledge that at least they have the underlying asset, and it should increase in value over time. > Renters have their rent go up every year. Owners are always ahead after 30+ years. Look, if the only thing you care about is $X out every month, then sure, fine. Buy a house, don't look back, and whatever you do, don't every tote up every penny you've spent on everything related to your house and chart it against S&P Index returns over the same period of time if you'd rented a smaller apartment instead.

dahfizz 4y ago

> A landlord charges what the market will bear Yes, but people wouldn't choose to be landlords if "what the market will bear" wasn't profitable. If renting didn't cover the landlord's costs (on average, over time), then nobody would be a landlord. > but they tell themselves that they're building equity and eventually rents will rise to more than cover their costs--which is eventually true. This is also true for you if you buy a house. Renters have their rent go up every year. Owners are always ahead after 30+ years.

pwinnski 4y ago
Is your argument that landlords are by and large rational actors? Yes, I will concede that landlords are by and large rational actors, although I'm not sure that means as much as you seem to think it does. A landlord is investing, and usually willing to consider returns over a long term. Landlords I have known are not profitable every year, and almost never from day one on any given property. I have known one landlord--and heard of others--who have seen multiple years of profit on a property get wiped out by a single bad tenant. But that's okay! Most landlords (not the big corporate landlords for which the economics are very different) console themselves in unprofitable times with the knowledge that at least they have the underlying asset, and it should increase in value over time. > Renters have their rent go up every year. Owners are always ahead after 30+ years. Look, if the only thing you care about is $X out every month, then sure, fine. Buy a house, don't look back, and whatever you do, don't every tote up every penny you've spent on everything related to your house and chart it against S&P Index returns over the same period of time if you'd rented a smaller apartment instead.