Sigh, If you read his post, he takes what the market gives...thats all. Nothing about greed....its supply and demand and what the market will bear (Did I spell bare right? I'm a trader ok?). This is a very serious accusation that you accuse OldTrader of Kicking....how can you take your example and pass it on to OldTrader like that? Sorry to stick my nose in this, but really this is depressing when a trader calls another trader such a terrible thing. Michael B. P.S. There may be some folks that drive down a street with a row of nice well kept houses and then there is a real eye-sore and they say gee..I wish someone would fix that up...
Kicking: The way capitalism works is that the owner of a property is FREE to raise rent to any level they choose. The tenant is FREE to rent any place he chooses. Typically tenants look around at various possible rentals so that they may find the cheapest possible place to rent that still satisfies their needs. Landlords typically compare their rents to other comparable properties so that when they try to rent it, the tenant thinks it is as reasonable as all the other comparable possibilities. This is called capitalism kicking. It's the system that the USA was founded on and became the economic powerhouse of the world with. No one has the power to FORCE the other to do anything. The landlord cannot FORCE the tenant to rent his property. He can simply offer it at a price that makes it attractive to the tenant. And the tenant cannot FORCE the landlord to lower his rent. But he can simply choose a different property. Unfortunately, there are always a certain number of folks who believe they know better than the market, and that therefore they "should" have the right to FORCE someone else to do price their product in accordance with what THEY believe it "should" be, rather than what the market will bear. The method that is used in relationship to property is called "rent control"....a form of price control used to "distort" the marketplace. There is a long history of price control that one can read about to see how it works. The bottomline is that under price controls the "product" become scarce. Think not? Go back to our grand experiment with price controls here in the USA under Richard Nixon. He instituted wage and price controls. Take beef for example. Beef couldn't be sold for more than a certain amount that the government deemed as "fair". Sound familiar kicking? The next thing you know, there was no beef in the store. And this was true about many, many products. Eventually the wage and price controls had to be suspended, and when they were, prices skyrocketed to an equilibrium point that created an incentive for producers to produce the product. We finally had beef in the store. Get your history book out, or your economics text kicking, and read about it. I find it amusing that here on a traders site, one would have such a lack of knowledge regarding what is really basic economics 101. But here's the bottomline kicking....if the landlord is asking for too high rent in your estimation, just don't rent it. Go rent someplace else. The only time you will ever have a problem is when there is a difference between what YOU in your opinion have deemed is "fair", and what is available in the marketplace to rent. What this will tell you is that there is something wrong with your premise as to what is "fair". The market does a pretty good job of sorting these things out. Or again, if you don't like the rent the landlord charges, go buy a house. Hell, if the rent is so high, rent the house out and make a profit. Just don't try to force folks to do what YOU think is "fair". OldTrader
The Midwest. I'd prefer to keep the specific location confidential, but you can find similar houses all through the Midwest. Remember, market value was $110K, but the house had some problems. OldTrader
Thanks for the defense Michael. But I wouldn't worry about it too much. What kicking thinks is "greedy" is simply a landlord trying to maximize his profit. In a free society this a normal and healthy action. Just as it is normal and healthy for a tenant to try to find the cheapest acceptable place possible to rent. These countervailing incentives leads to a "fair" price that kicking evidently believes only he or the government can set. OldTrader
Hi oldtrader... Curious...Where you live.... ? I have dabbled a little in real estate here in NY myself. I'm more into building new homes on re zoned lots these days . I got a little bogged down with my last project because I had a partner basically screw me by deciding he wanted to keep the homes and simply give me back my investment with no profit for me....lol... We settled out of court and he was supposed to buy me out a few months ago with some profit for my troubles ... He's trying to refi now with washington mutual...hope he gets it or it's back to court we go since he is now in default of the settlement agreement.... The basic premise is find a subdividable lot where you could bring down the old home and build a bigger home or two homes on the lot. A 60 x 100 lot in a properly zoned area... R4 etc... is going for about 850,000. You can build 2 two families for about 300 each and sell each for an easy 900 K netting you around 300 K. For once in my life I got real lucky and had the home I own get rezoned to an R5 from R4....this allows a 1.35 FAR and 3 floors. Having plans drawn up for 2 semi detached three family homes to be built in early spring of next year if we can get all the tenants out in time. It will cost a little more because code calls for block and brick on 3 families but they are also worth more as well. Like you, trading is my real love but you can really make alot of money in this hot market by forcing price appreciation. I find in NY it's hard to make money with a simple renovation because transaction costs can really add up. To simply buy a home you've got closing costs of over 4 % of the total loan and when you sell you got 4 % commission plus holding costs while you renovate and sell. It's hard to find houses cheap enough to overcome your expenses.... redeveloping the land can solve these problems. Your taking a old single or two family and build 2 new two or three family homes. But I must say it still isn't easy. Your competing with builders who can get the job done quicker and cheaper then you. They can bid higher then you and close much faster if they are buying cash. Heck you can lose the deal even if your paying more sometimes if they throw the owner money under the table and save him $ on his tax bill...anything to get the lot... they just bring up the cost of building it and pay less cap gains to make up for the cash given.... Like you said, people need to stop thinking of investing in real estate as buying and holding for 20 years. People have to open their minds up the different scenarios and opportunities. And if you don't know much about construction ( Like Me) you can learn from books...and I don't mean carlten sheets books either.... but books about the process of constructing a home... I didn't know who cam first the framer or the roofer...lol... Books can teach you to be a GC.. who goes first, insurance you need etc..... Your architect will help you along the way but so will the subcontractors.. Some more then others but you will get the job done. They ask you a million questions...Where do you want the power to come in... how do you want to vent the boilers...direct vent etc....so many decisions it got a little overwhelming. They would ask me a question and I would reply ...well, what would you recommend...lol ...But I must say.. once the first one is done the rest get easier. Oh, and your prices get better since the subs realize you will be calling them again and your not a onetime deal... I love the market but I'm starting to really like realestate...lol Nick
I'll be in favor of rent control when they also give us bill control...oh and tax control and heating gas control and nat gas control... Till then...free rental market I say ...
Greed...?....Its business...these landlords invested there hard earned money to make a return. their not you "mommy and daddy".... The have expenses that go up every year...their taxes keep going up....heating oil and nat Gas keep going up....sewer/water bills....insurance...maintenance, vacancies, advertising, legal and professional fess ect... The list is endless and the expenses keep going up. This winter one of my homes nat gas bill went to 1000 bucks for the month....it only has 3 apartments in it and only 2 are on this meter..... Why shouldn't I pass the cost on to them....con ed, my utility sure passed on to me.... Why shouldn;t the tenant pay for keeping the heat at 85...i keep mine at 70... Maybe he should lower hs thermostat and put on a sweater ... My taxes went up 20 % last year..... My insurance went up as well.... What you think these increases landlords are asking for are pure profit... They simply try to keep the boat afloat....thats all... If the going rate for a three bedroom apartment is 1800 bucks why should I offer it for 1300 hundred while my expenses go up year after year...... Doesn't make sense.... If you owned property you expect me to believe you would under price your rentals in the face of ever increasing expenses...? I don't think so... Let me ask you this.... do you underpriced your stocks when you sell them....I'll assume that You don't....you sell them at market value don't you.....does that make you greedy ? I know you think trading stocks never hurt anyone... but not raising my rents to keep up with my expenses will surly hurt someone....ME Nick