6 ms·

So are landlords making money hand-over-fist or what?

by pyrophane 3y ago

aorloff 3y ago
No, because costs are rising and vacancy is rising.
- MisterBastahrd 3y ago
  Rents are rising far faster than costs. Vacancies are rising because landlords gouge.
  - weard_beard 3y ago
    Maintenance, sewer, trash, mortgage and taxes have doubled or tripled. Get out with this nonsense.
    - monkpit 3y ago
      Mortgage rates do not go up for landlords on existing properties. Get out with this nonsense.
      - weard_beard 3y ago
        So one out of the five costs only applies to some properties? How does that make me wrong? You also failed to say, “nothing needs to be fixed at MY property! Why did my rent go up!?” Because it takes several years to save up to replace an HVAC system or a rotten deck or plumbing failure and I have to charge based on the projected cost.
        monkpit 3y ago
        Sewer, trash are negligible compared to the cost of rent. If they double you’re looking at rent going up by around 3% and that’s if the landlord isn’t making the renter pay those fees directly. Maintenance costs and taxes are the only ones that could be a factor out of your original 5 - your point is drowned out by the poor supporting facts. And taxes aren’t even going up, just the valuation of the properties - which drives higher rent anyways. And since you’re a landlord, you should have a maintenance plan that would reimburse you for things like HVAC.
        weard_beard 3y ago
        I will say that market rate has outpaced these costs. My wife and I ignore market rate and are always below, but we do adjust based on our actual costs. For a 3 bedroom in a Midwest metro area we had to raise rents based on our actual and projected costs by 300$/month last year. We are still below average rents in our area by 300-500$/month
        aorloff 3y ago
        I am not making a political argument about the economics here. At the end of an inflationary cycle (if we are at the end) the markets, including the housing market, have to find equilibrium. Costs and vacancy are rising for landlords. Suppose you are a homeowner. You definitely know then that utilities, insurance, possibly the mortgage, definitely maintenance costs have gone up. You pay those as your "rent" because you are the owner. So the rent went up, even though you are the landlord.
- monkpit 3y ago
  Costs of a fixed rate mortgage are rising… ok sure
  - ejb999 3y ago
    How about insurance, electricity, labor, property taxes and maintenance ... they are not going up in your area?
    - alistairSH 3y ago
      Electricity is usually paid by the tenant, no? Certainly, I've never rented a place where utilities were included. The rest are a small fraction of the total cost of ownership (vs financing the initial purchase). Rents appear to be going up faster than the total cost of ownership (the financing costs are fixed, or nearly so).
    - monkpit 3y ago
      No - taxes are going up only as a percentage of rising market apprisals of existing housing, which is covered by the renter paying market rates for rent. Electricity - not paid by landlord. Labor - not sure what you mean. Maintenance - fixed rates for home warranty for big things, minor costs for maintenance otherwise which are factored into rent monthly regardless of whether they are used. So that could account for single-digit percent rise in rates. Anything else?
      - aorloff 3y ago
        Taxes also go up because of new bond issues. Regularly
- phkahler 3y ago
  Costs are nothing compared to rent, so those vacant units are wasted income. They seem to be favoring higher rates over higher occupancy.
dmazzoni 3y ago
Sadly a lot of landlords have learned that they make a lot more money by doing exclusively short-term rentals on AirBnB. That reduces the supply of long-term rentals and drives prices up even higher.
- ejb999 3y ago
  Exactly - a apartment I know of had 7 units with long-term low to moderate income tenants - one by one each unit was evicted (or non renewed), a quick sprucing up and now 6 of the 7 are only available on AirBNB - and the landlord gets as much per week as he was getting per month before - the tenant in that 7th unit is getting pretty nervous that she is next.
- NoGravitas 3y ago
  Even for normal long-term rentals, some landlords own enough properties that it is more profitable to hold some of them off the market to raise prices than it is to rent them all out at lower prices. So it's also a product of the concentration of the housing rental market. I seem to recall seeing not too long ago a "market intelligence" product that basically allowed landlords to collude with each other to do this, except the collusion was through a service and algorithm that provided plausible deniability with regard to price fixing.

So are landlords making money hand-over-fist or what?

aorloff 3y ago

No, because costs are rising and vacancy is rising.

MisterBastahrd 3y ago
Rents are rising far faster than costs. Vacancies are rising because landlords gouge.
- weard_beard 3y ago
  Maintenance, sewer, trash, mortgage and taxes have doubled or tripled. Get out with this nonsense.
  - monkpit 3y ago
    Mortgage rates do not go up for landlords on existing properties. Get out with this nonsense.
    - weard_beard 3y ago
      So one out of the five costs only applies to some properties? How does that make me wrong? You also failed to say, “nothing needs to be fixed at MY property! Why did my rent go up!?” Because it takes several years to save up to replace an HVAC system or a rotten deck or plumbing failure and I have to charge based on the projected cost.
      - monkpit 3y ago
        Sewer, trash are negligible compared to the cost of rent. If they double you’re looking at rent going up by around 3% and that’s if the landlord isn’t making the renter pay those fees directly. Maintenance costs and taxes are the only ones that could be a factor out of your original 5 - your point is drowned out by the poor supporting facts. And taxes aren’t even going up, just the valuation of the properties - which drives higher rent anyways. And since you’re a landlord, you should have a maintenance plan that would reimburse you for things like HVAC.
        weard_beard 3y ago
        I will say that market rate has outpaced these costs. My wife and I ignore market rate and are always below, but we do adjust based on our actual costs. For a 3 bedroom in a Midwest metro area we had to raise rents based on our actual and projected costs by 300$/month last year. We are still below average rents in our area by 300-500$/month
        aorloff 3y ago
        I am not making a political argument about the economics here. At the end of an inflationary cycle (if we are at the end) the markets, including the housing market, have to find equilibrium. Costs and vacancy are rising for landlords. Suppose you are a homeowner. You definitely know then that utilities, insurance, possibly the mortgage, definitely maintenance costs have gone up. You pay those as your "rent" because you are the owner. So the rent went up, even though you are the landlord.
monkpit 3y ago
Costs of a fixed rate mortgage are rising… ok sure
- ejb999 3y ago
  How about insurance, electricity, labor, property taxes and maintenance ... they are not going up in your area?
  - alistairSH 3y ago
    Electricity is usually paid by the tenant, no? Certainly, I've never rented a place where utilities were included. The rest are a small fraction of the total cost of ownership (vs financing the initial purchase). Rents appear to be going up faster than the total cost of ownership (the financing costs are fixed, or nearly so).
  - monkpit 3y ago
    No - taxes are going up only as a percentage of rising market apprisals of existing housing, which is covered by the renter paying market rates for rent. Electricity - not paid by landlord. Labor - not sure what you mean. Maintenance - fixed rates for home warranty for big things, minor costs for maintenance otherwise which are factored into rent monthly regardless of whether they are used. So that could account for single-digit percent rise in rates. Anything else?
    - aorloff 3y ago
      Taxes also go up because of new bond issues. Regularly
phkahler 3y ago
Costs are nothing compared to rent, so those vacant units are wasted income. They seem to be favoring higher rates over higher occupancy.

dmazzoni 3y ago

Sadly a lot of landlords have learned that they make a lot more money by doing exclusively short-term rentals on AirBnB. That reduces the supply of long-term rentals and drives prices up even higher.

ejb999 3y ago
Exactly - a apartment I know of had 7 units with long-term low to moderate income tenants - one by one each unit was evicted (or non renewed), a quick sprucing up and now 6 of the 7 are only available on AirBNB - and the landlord gets as much per week as he was getting per month before - the tenant in that 7th unit is getting pretty nervous that she is next.
NoGravitas 3y ago
Even for normal long-term rentals, some landlords own enough properties that it is more profitable to hold some of them off the market to raise prices than it is to rent them all out at lower prices. So it's also a product of the concentration of the housing rental market. I seem to recall seeing not too long ago a "market intelligence" product that basically allowed landlords to collude with each other to do this, except the collusion was through a service and algorithm that provided plausible deniability with regard to price fixing.