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If renting doesn’t make sense economically, how is it profitable for the landlord? Because it’s almost always profitable for the landlord.
by kennywinker 1y ago
If renting doesn’t make sense economically, how is it profitable for the landlord? Because it’s almost always profitable for the landlord.
- Simulacra 1y agoBecause of the price, and the market willing to pay that price. If nobody was willing to pay $2500 for an apartment, nobody would rent it, and the landlord wouldn't have any money. For one person that can't afford a place, there are 10 who can. So landlords quite naturally match the market demand.
- kennywinker 1y agoIn theory rental prices are just the market price. In reality there is a very high pressure on the price to be above whatever the landlord’s mortgage is. I understand why, but i’d still rather pay my mortgage than my landlord’s.
- Panzer04 1y agoLandlords who rent at their cost and not the market price won't rent. I don't see how your statement follows at all. I'm sure landlords would prefer rents to be higher than their mortgage but that will be determined by supply and demand, not their desires. The housing market is huge, with lots of alternatives and competition, so you can't exactly price fix it either.
- kennywinker 1y agoYou can choose to not see it, and I can struggle to explain it, but i dare you to find a landlord in a city larger than 100k who is renting at a loss. I suspect it’s some kind of uncoordinated price fixing. E.g. 1. landlord buys property, optimistically sets rent at $mortgage+30% even tho that’s above the market rate 2. Everything cheaper is rented, or highly sought after, so renters are forced to take the higher rent. 3. Other landlords see places renting for higher than their current rent, and raise prices accordingly. But i’m no economist. I’ve just never seen a landlord take a loss except as a result of special circumstances. Economic crashes, fire, etc.
- apwell23 1y agothey bought it ( or refied it) at lower interest rates. It currently only profitable only of ppl who got super lucky during covid .
- _chris_ 1y agoLonger time horizon -- mortage inflates away. In the short-term, only need to beat the property tax bill, especially if the interest rate is <3% and the property is increasing in value faster than that.
- milesbarr 1y agoReal estate can make sense as an investment but most people aren't in a position to treat their primary residence like one.
- archagon 1y agoI’m pretty sure my landlord’s family trust owns our 100 year old home outright. At this point, any rent is “free” for them, modulo repair and maintenance costs.