Comment by WalterBright
Comment by WalterBright 4 days ago
[flagged]
Comment by WalterBright 4 days ago
[flagged]
Not true.
Do a google search for "rent-fixing algorithms".
If you own enough homes in a rental market, you can determine the market rate. An empty house has value simply by depleting local housing stock, since it is giving you greater leverage to drive market rate up.
Of course its less value than actually having it rented, but its still value. Tax code will also allow for softening the loss.
> If you own enough homes in a rental market, you can determine the market rate.
Only if the government has managed to prevent new construction.
Consider this: You aim to buy all 100 units, and then you can charge whatever rent you like, right? What happens is sellers discover you are doing this, and then raise their asking prices through the roof. The result is it costs you so much to get that monopoly that you cannot hope to be able to rent at a profit. Especially if it is possible to create new units for the purpose of selling at a high price to you. And it is possible, unless the government prevents new construction.
You cannot attain a monopoly unless there are major barriers to entry. In this case, it is government zoning that prevents new construction. In California, anyone can sue to block any new housing construction, bringing the construction market to a standstill and hence the highest home prices in the nation.
Depends on your definition of value. There are many investments structured in a way that mere ownership, as long as comps go up in the local market, will cause increases in value.
Don’t look down.
It’s also why the current admin seems really intent on bullying Powell into decreasing the fed rate - Trump and many of his friends are very exposed to real estate.
Of course it does. Many houses remain empty because PE firms buy them and hold out for rents locals cannot afford.
Rent control plays a role in that.
If rents are not allowed to rise, the landlord risks locking in a low rent for the indeterminate future. It's a better play to leave it vacant until the rents rise.
Rent control is simply a disaster.
Strangely, there's a ton of vacant commercial real estate in my neighborhood that the corporate landlords don't seem to be in any rush to rent out.