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Absolute nonsense. Why would a "speculator" refuse to rent out their property and make a profit out of it?

by lottin 2y ago

amunozo 2y ago
To be able to sell it in the future a higher price without worrying about people living there, or having to pay money to mantain a building that is not in condition to be rented.
- lottin 2y ago
  Right, because a run-down building sells for the same price as one in good shape.
  - orthecreedence 2y ago
    You're just making the bet that real estate value increases faster than the building deteriorates with minimal maintenance. That's often a really good bet.
    - lottin 2y ago
      I don't think that this is the bet. The bet is that the market will not discount the extra repair/maintenance costs that the buyer will have to incur, which is a ridiculous proposition. Speculators gain nothing from letting the property they own rot away.
em500 2y ago
Many countries especially in continental Europe have strong pro-tenant rights. Often the rent contract cannot be terminated by the landlord, only by the tenant, which can make it more profitable to leave property empty vs renting it out. (When a tenant-occupied property is sold, the new owner in some countries cannot terminate an existing rent contract, which makes the property less valuable on the market vs empty properties.)
- lottin 2y ago
  Yes, I understand that selling a rented property can be less profitable than selling a property without a rent contract. But holding on to a property that generates no income is even less profitable.
  - tomjakubowski 2y ago
    On an abandoned property, the land may appreciate faster than the improvements depreciate. As long as that pace exceeds the mortgage interest (if any) and property tax (ibid), it's profitable. There are other possible complications too which might swing it, like income tax deductions. Sometimes seemingly abandoned buildings are used for one-off occasions which generate income: downtown LA is full of "historic" buildings which the owners allow to dilapidate outside of a few areas they can rent out once or twice a year to a film crew. edit: another thing -- rich people procrastinate too, in fact many of them can afford to procrastinate on matters like this, and they may rather take a loss than confront the anxiety and work of selling or renting out the property
    - lottin 2y ago
      Sorry, but I fail to see how owning an abandoned building is MORE profitable than having people living there and collecting rent on it, even if that means that you have to spend part of that income on maintenance costs.
im_dario 2y ago
Real estate is baby boomers and older millennials (as they inherited from their parents) "cryptocurrency" (as speculative asset). They HODL it to manufacture scarcity. Just for reference, in a small city (40K people, 8 sq. km.) you can find 2K empty properties out of the market because it's more profitable to wait prices to raise.

Absolute nonsense. Why would a "speculator" refuse to rent out their property and make a profit out of it?

by lottin 2y ago

Absolute nonsense. Why would a "speculator" refuse to rent out their property and make a profit out of it?

To be able to sell it in the future a higher price without worrying about people living there, or having to pay money to mantain a building that is not in condition to be rented.

lottin 2y ago
Right, because a run-down building sells for the same price as one in good shape.
- orthecreedence 2y ago
  You're just making the bet that real estate value increases faster than the building deteriorates with minimal maintenance. That's often a really good bet.
  - lottin 2y ago
    I don't think that this is the bet. The bet is that the market will not discount the extra repair/maintenance costs that the buyer will have to incur, which is a ridiculous proposition. Speculators gain nothing from letting the property they own rot away.

em500 2y ago

Many countries especially in continental Europe have strong pro-tenant rights. Often the rent contract cannot be terminated by the landlord, only by the tenant, which can make it more profitable to leave property empty vs renting it out. (When a tenant-occupied property is sold, the new owner in some countries cannot terminate an existing rent contract, which makes the property less valuable on the market vs empty properties.)

lottin 2y ago
Yes, I understand that selling a rented property can be less profitable than selling a property without a rent contract. But holding on to a property that generates no income is even less profitable.
- tomjakubowski 2y ago
  On an abandoned property, the land may appreciate faster than the improvements depreciate. As long as that pace exceeds the mortgage interest (if any) and property tax (ibid), it's profitable. There are other possible complications too which might swing it, like income tax deductions. Sometimes seemingly abandoned buildings are used for one-off occasions which generate income: downtown LA is full of "historic" buildings which the owners allow to dilapidate outside of a few areas they can rent out once or twice a year to a film crew. edit: another thing -- rich people procrastinate too, in fact many of them can afford to procrastinate on matters like this, and they may rather take a loss than confront the anxiety and work of selling or renting out the property
  - lottin 2y ago
    Sorry, but I fail to see how owning an abandoned building is MORE profitable than having people living there and collecting rent on it, even if that means that you have to spend part of that income on maintenance costs.

im_dario 2y ago

Real estate is baby boomers and older millennials (as they inherited from their parents) "cryptocurrency" (as speculative asset). They HODL it to manufacture scarcity. Just for reference, in a small city (40K people, 8 sq. km.) you can find 2K empty properties out of the market because it's more profitable to wait prices to raise.