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> And why can't they lower their prices? Because if you bought an over-inflated peak-market house you're stuck with that mortgage rate. There's people paying

by Alupis 3y ago

> And why can't they lower their prices? Because if you bought an over-inflated peak-market house you're stuck with that mortgage rate. There's people paying $1,500 - $2,000 monthly on mortgages for average homes. To rent it out, it's not sufficient (for a variety of reasons) to simply collect the mortgage payment, meaning you have to charge even more to stay afloat. If the market cools, and people no longer are willing to pay $2,5000 a month in rent on average homes, then the home owner is in a pickle... try to re-fi, if possible, offload the home, or ride the storm out (if financially feasible).

jandrewrogers 3y ago
The vast, vast majority of rental properties have a much lower cost basis than if you were to buy it yourself today. Many landlords could rent it for much less than your mortgage payment on the same property and still turn a profit.
- Alupis 3y ago
  > The vast, vast majority of rental properties have a much lower cost basis than if you were to buy it yourself today Anything to quote here for this? I'm inclined to believe you are probably right, but an awful lot of real estate has changed hands in the past 5ish years... all of which is hugely inflated above actual property values in a normal market. Lots of people with FOMO bought into houses way above their weight, and thought the rental market was a "game" anyone can play.
smeej 3y ago
"Hold it empty" is not a better way to "ride the storm out" than to rent it at lower cost. The solution to losing money isn't losing even more money even faster.
- ProfessorLayton 3y ago
  This is absolutely dependent on the market. It makes sense to hold an empty property in cities that make it incredibly hard to remove tenants without cause.
whimsicalism 3y ago
I mean, it's the choice between paying your full mortgage and partially defraying it. I am not sure what changes economically once you are net negative with the mortgage - it still makes marginal sense to rent it out
- Alupis 3y ago
  I suspect two things: 1) Actively looking for that right renter willing to pay a premium for a particular property/part of town. 2) There's probably tax benefits to the lost income and mortgage expenses while looking for a renter.

by Alupis 3y ago

jandrewrogers 3y ago

The vast, vast majority of rental properties have a much lower cost basis than if you were to buy it yourself today. Many landlords could rent it for much less than your mortgage payment on the same property and still turn a profit.

Alupis 3y ago
> The vast, vast majority of rental properties have a much lower cost basis than if you were to buy it yourself today Anything to quote here for this? I'm inclined to believe you are probably right, but an awful lot of real estate has changed hands in the past 5ish years... all of which is hugely inflated above actual property values in a normal market. Lots of people with FOMO bought into houses way above their weight, and thought the rental market was a "game" anyone can play.

smeej 3y ago

"Hold it empty" is not a better way to "ride the storm out" than to rent it at lower cost. The solution to losing money isn't losing even more money even faster.

ProfessorLayton 3y ago
This is absolutely dependent on the market. It makes sense to hold an empty property in cities that make it incredibly hard to remove tenants without cause.

whimsicalism 3y ago

I mean, it's the choice between paying your full mortgage and partially defraying it. I am not sure what changes economically once you are net negative with the mortgage - it still makes marginal sense to rent it out

Alupis 3y ago
I suspect two things: 1) Actively looking for that right renter willing to pay a premium for a particular property/part of town. 2) There's probably tax benefits to the lost income and mortgage expenses while looking for a renter.