Speaking of rent...

[peeonme]

Back in late October I had placed an offer on a house, the deal fell through as there was a cloud on the title. That home is now up for rent.... at $550. per above what my mortgage payment would have been. They want $1400. per month. This is for a 3 b.r. 1,000 sq. ft. home (with a 2 car garage).
Seems pretty high to me... what are your thoughts?

 

[LoveMyPeppermill]

Everything depends on your location. In most of metro NYC, that's dirt cheap for a house like that. The only way to tell would be to check some site like Zillow for going rates for similarly sized houses in your area.

In terms of the rent being higher than the mortgage payment would have been, remember that the landlord will be responsible for maintenance, property taxes, and possibly insurance that you'd be responsible for if you had bought the place.

 

[Rickrock]

It definitely depends on the location. Although I am not in the market that would have sounded high to me a few years ago, but maybe about right now, but I haven't been in the market and don't know. On the east or west coast that might not pay for a 1 bedroom apartment, but in the Midwest that might be okay.

 

[unloadonme]

I've no idea about the US housing market. Here in the UK, I'd expect the gross annual rent to be somewhere in the region of maybe 7 or 8% of the property's open market value.

 

[rareboy]

Depends on what is included in the rent. Obviously, in addition to the capital investment (mortgage), the owner has to pay taxes and may also cover all appliances and maintenance.

I figure after all the expenses on the house we rent out, we probably clear about 20% of the gross rent payments for our pains.

 

[peeonme]

The cost of rent in my area doesn't include utilities (for a house). Some landlords have a clause which makes it the renters responsibility for repairs under a certain amount.
What I look at is cost per sq. foot. If I buy a home, such as the one mentioned I am paying .85 cents per sq. ft. If I rent that home I am paying $1.40 per sq. ft.
I hear "advisors" tell people that "now" isn't the time to buy, wait until the so-called bubble bursts or until interest rates go back down.

Some don't buy because they think that they need a down payment of 20% or that their credit score isn't good enough. So sadly they rent paying far more than necessary. There are all kinds of programs that will help a person buy a home. A first, last and security (in my state) is 2.5 times the amount of monthly rent, in this case $3,500.... this amount may well be enough (when combined with FHA or other programs) to make a renter an owner.

I would point out as well that the $850. that I would have paid included taxes and insurance. The homes in my area are starter homes built in the early 1950's, why pay 1400 when you can pay 850?

 

[Kahaih]

Jobs don't anchor people anymore, and neither do houses.

A lot of healthcare/medical professionals offered short contracts, for example, don't want the headaches of buying and selling properties. Hospitals have huge turnovers.

A rental property, similar to car leases, can be very convenient, these days. And a lot of people are willing to pay a little extra for that convenience.

 

[rareboy]

The cost of rent in my area doesn't include utilities (for a house). Some landlords have a clause which makes it the renters responsibility for repairs under a certain amount.
What I look at is cost per sq. foot. If I buy a home, such as the one mentioned I am paying .85 cents per sq. ft. If I rent that home I am paying $1.40 per sq. ft.
I hear "advisors" tell people that "now" isn't the time to buy, wait until the so-called bubble bursts or until interest rates go back down.

Some don't buy because they think that they need a down payment of 20% or that their credit score isn't good enough. So sadly they rent paying far more than necessary. There are all kinds of programs that will help a person buy a home. A first, last and security (in my state) is 2.5 times the amount of monthly rent, in this case $3,500.... this amount may well be enough (when combined with FHA or other programs) to make a renter an owner.

I would point out as well that the $850. that I would have paid included taxes and insurance. The homes in my area are starter homes built in the early 1950's, why pay 1400 when you can pay 850?

I cannot agree more. My renters pay more than they possibly would if they just purchased.

We set our rent based on depreciation (instead of mortgage interest since it is paid for), plus taxes, plus $400+ per month for ongoing upgrades and maintenance. (the average per annum) plus maintenance on the water system, septic, furnace, etc. We include major appliances and always buy new for replacements. We include $200 per month for wear and tear in order to pay the costs of re-painting and refinishing flooring.

 

[rareboy]

"Rent today is so high that it's probably less expensive to purchase than it is to rent...What we're trying to do is, on the front end, assist them with getting into a new mortgage."

— Secretary of Housing and Urban Development, Marcia Fudge, on the White House's plan to save homebuyers and owners money

What the Feds will have to watch though, is that they don't help create the environment for another Freddie Mac and Fannie Mae sub-prime mortgage disaster.

The best way to help people afford a house? Make sure they are being paid a fair wage. Stop subsidizing Wall Street. Focus on Main Street.

 

[NotHardUp1]

The housing industry is shaped now to favor speculators. It has been for a few decades.

We, as a nation, encourage investors to speculate on housing and, we applaud profiteering at the expense of the working class and the poor.

This would be tolerable if society, through its laws and social institutions, ensured basic, safe, affordable housing was available to all who can afford to be living independently. But that is not a societal value now.

With that basic need not met in our culture, with a minimum wage that will not enable a working person to have decent individual housing, the "free market" then is an abusive, opportunistic game that results in speculators just clucking their tongues and tsk-tsking about the needy.

We will be judged, as a nation, and as a people, for how we have disregarded the working class. And it won't be a random karma that punishes us.

 

[Rickrock]

I just heard that there is a house for rent on my street. It is a 3 bedroom, 2 bath ranch with an attached 2 car garage and a basement. I believe it is probably about 1500 square feet. I have heard that the rent is $1700 a month.

 

[Dominus]

Renting is my business. At least in the indy area, I'm still having trouble keeping up with demands.

Yesterday a young couple moved out of a 1 bedroom apartment due to job change. Today someone else is moving in. When I listed this place, I increased the rent by 30% from last year. And I still had 20-some applications to look thru.

I am still puzzled about this whole situation. How come there's a housing shortage all of a sudden? Every time I list a place I get a bunch of applications within a day. The same apartment that was rented for $900 a year ago is now renting for $1200.

I've even gotten offers for more than the listing price. I know it is immoral to accept it so I haven't accepted it. And every time I talk to people about what they are finding, it's the same story. They can't find anything. Very few listing. Weird.

 

[rareboy]

This is the time to set a reasonable rent that covers your book costs and pays for your management time. Enjoy.

I have this thing where I don't increase the rent each year. As long as my tenants are stable and happy, they get the same rent for at least 5 years.

And I am happy to work out a bi-weekly payment if that is better for them as well. But I am not in it to make my living from this.

 

[LoveMyPeppermill]

I've even gotten offers for more than the listing price. I know it is immoral to accept it so I haven't accepted it. And every time I talk to people about what they are finding, it's the same story. They can't find anything. Very few listing. Weird.

One of the newsmagazine/websites here in NYC looked into the reason for the high prices and low inventory of rental apartments in Brooklyn right now, and he found that a number of landlords are deliberately holding apartments off the market in order to restrict supply and pump the price up. And he found that there is either a website or software that lets them collude to do that.

That's the sort of thing that makes people here favor a vacancy tax. (That and commercial landlords leaving storefronts vacant for years at a time rather than lowering the rental price to something a local business could afford.)

 

[Dominus]

One of the newsmagazine/websites here in NYC looked into the reason for the high prices and low inventory of rental apartments in Brooklyn right now, and he found that a number of landlords are deliberately holding apartments off the market in order to restrict supply and pump the price up. And he found that there is either a website or software that lets them collude to do that.

That's the sort of thing that makes people here favor a vacancy tax. (That and commercial landlords leaving storefronts vacant for years at a time rather than lowering the rental price to something a local business could afford.)

I'm not saying this isn't true. But it is hard for me to believe that such organization can be a thing.

I don't even care about the next landlord over. Let alone colluding with them to purposefully leave my units empty.

Also, in order for such collision to work, everybody has to not cheat. This is where tragedy of the commons come into play. In other words, all it takes is 1 guy to not go along and everybody else feels like why can't they rent out all their units as well?

Any link for me to read about this?

 

[LoveMyPeppermill]

I'm not saying this isn't true. But it is hard for me to believe that such organization can be a thing.

I don't even care about the next landlord over. Let alone colluding with them to purposefully leave my units empty.

Also, in order for such collision to work, everybody has to not cheat. This is where tragedy of the commons come into play. In other words, all it takes is 1 guy to not go along and everybody else feels like why can't they rent out all their units as well?

Any link for me to read about this?

You're in Indiana, though, not New York City. And we're talking about landlords on a larger scale than (I gather) you work on. Buildings with 30 or more units and apartment towers where landlords will keep an entire floor vacant for a couple of years. My (pretty good) landlords in my two-story, four-apartment house in Queens wouldn't do that, either.

I think it was in the New York magazine vertical Curbed, but I'm not entirely certain. I'll try to find it and will post it here when I do.

 

[LoveMyPeppermill]

Any link for me to read about this?

Here it is:

New Yorkers Never Came ‘Flooding Back.’ Why Did Rents Go Up So Much?

Getting to the bottom of a COVID-era real estate mystery.

www.curbed.com

 

[Dominus]

You're in Indiana, though, not New York City. And we're talking about landlords on a larger scale than (I gather) you work on. Buildings with 30 or more units and apartment towers where landlords will keep an entire floor vacant for a couple of years. My (pretty good) landlords in my two-story, four-apartment house in Queens wouldn't do that, either.

I think it was in the New York magazine vertical Curbed, but I'm not entirely certain. I'll try to find it and will post it here when I do.

Ya, I have no idea how mega landlords work. My primary goal is to keep my small-ass rental company at 100% effective occupancy rate, or as close to it as possible.

Currently, I have a 2 bedroom apartment off-market because I wanted to do some reno to it while nobody is there. The reno is almost finish. Probably will list it next week.

Regarding colluding with each other to create an artificial scarcity. Where does property rights end and collective good begin? Say company X owns 2000 units and purposefully keep 200 of their units empty in order to jack up the prices of the rest. In order to force them to not keep 200 of their units empty, society will have to violate their right to their properties. See what I'm saying? Say you own a house that has an extra bedroom. How would you like it if the government forces you to rent out that extra bedroom?

I'm just saying. It's dangerous to violate property rights in the name of societal good.

 

[LoveMyPeppermill]

Say company X owns 2000 units and purposefully keep 200 of their units empty in order to jack up the prices of the rest. In order to force them to not keep 200 of their units empty, society will have to violate their right to their properties. See what I'm saying? Say you own a house that has an extra bedroom. How would you like it if the government forces you to rent out that extra bedroom?

The difference being that the extra bedroom would be within my living quarters, and those 200 warehoused apartments are not within Company X's living quarters.

You're right that, as a general principle, violating property rights is dangerous., but situations vary. One's right to do whatever one wants on, or with, one's own property -- say, detonating powerful explosives -- has more limits in a place like New York City, where thousands of people can be affected by that whatever-one-wants, than in rural Alaska.

The argument here would be that the City of New York, a place where space is limited and valuable, gave permits to Company X to build 2,000 units in order to house the people that live in the city. If Company X then keeps 200 of those built units off the market in order to artificially restrict supply and drive rent up, then Company X is violating the understood terms of the permits the City issued to build those units on that limited and valuable space.

So one thing the City might do, in order to motivate Company X not to warehouse units and artificially restrict the supply of housing, is tax Company X for every unit that stays unrented beyond, say three or four months (or however long it would reasonably take to clean up and/or renovate an apartment between tenancies).

 

[peeonme]

One reason that rent has gone up is that there was a moratorium on evictions because of Covid. Many people did get unemployment plus additional money from the feds. and still quit paying rent while pissing the extra bucks away. The higher rent in many loses is a way to make up loses during this period. Add to this inflation and interest rates being raised and the extra cost is passed on.