4 ms·

You don't need 10k landlords, you need property management firms which all happen to use the same software which effectively creates a cartel even though it is

You don't need 10k landlords, you need property management firms which all happen to use the same software which effectively creates a cartel even though it is not a coordinated one [1]. [1] https://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...

simmerup 3y ago
Didn’t a similar thing happen with car prices on auto trader?
refurb 3y ago
Software doesn't mean that landlord's are still at the whim of market forces. If rent goes down but the software says to charge more, then the unit stays empty.
- PartiallyTyped 3y ago
  As you can read in other comments in this thread; that is preferable as there is higher potential even though said gains may never be realised.
  - refurb 3y ago
    Meh.. while corporate landlord's may be more willing to leave a place empty, it doesn't take long for that to be a losing proposition. With the exception of a few US cities with rent control so strict you practically can't increase rent by more than a very small amount (San Francisco), most cities, even those with rent control allow for single digit percentage increases that can allow you to adjust rent over a relatively short period. If you refuse to drop rent by 5%, all it takes is 1 month of an empty unit to exceed the loss from taking a 5% lower rent for one and a half years. Add on top that nobody can predict the future including when rents will go back up, leaving units empty is a terrible financial decision. That said, it places with ridiculous rent control where evicting a tenant is almost impossible except the most extreme circumstances, I could see where it makes more sense, especially if a landlord is looking to sell as empty units are worth a substantial amount more than occupied units.
busterarm 3y ago
They don't even need this software, they just need their mortgages underwritten by the same small handful of banks. The banks aren't willing to put the write downs on their balance sheets. They can lose money for years due to vacancy but those losses only matter when everyone realizes the rating on that bundle of mortgages isn't AAA. Lowering the rent would force them to reprice the asset right now.

simmerup 3y ago

Didn’t a similar thing happen with car prices on auto trader?

refurb 3y ago

Software doesn't mean that landlord's are still at the whim of market forces. If rent goes down but the software says to charge more, then the unit stays empty.

PartiallyTyped 3y ago
As you can read in other comments in this thread; that is preferable as there is higher potential even though said gains may never be realised.
- refurb 3y ago
  Meh.. while corporate landlord's may be more willing to leave a place empty, it doesn't take long for that to be a losing proposition. With the exception of a few US cities with rent control so strict you practically can't increase rent by more than a very small amount (San Francisco), most cities, even those with rent control allow for single digit percentage increases that can allow you to adjust rent over a relatively short period. If you refuse to drop rent by 5%, all it takes is 1 month of an empty unit to exceed the loss from taking a 5% lower rent for one and a half years. Add on top that nobody can predict the future including when rents will go back up, leaving units empty is a terrible financial decision. That said, it places with ridiculous rent control where evicting a tenant is almost impossible except the most extreme circumstances, I could see where it makes more sense, especially if a landlord is looking to sell as empty units are worth a substantial amount more than occupied units.

busterarm 3y ago

They don't even need this software, they just need their mortgages underwritten by the same small handful of banks. The banks aren't willing to put the write downs on their balance sheets. They can lose money for years due to vacancy but those losses only matter when everyone realizes the rating on that bundle of mortgages isn't AAA. Lowering the rent would force them to reprice the asset right now.