| > The same apartments are getting 10 year tax abatements, because they are "good for business" aka trickle-down. This promotes new construction. Not as well as zoning reform, but it does. Which lowers the rent (or at least makes it go up less fast). > And landlords are usually smaller, but again, they're another reason why housing is stupid priced: it's common to see a rental of a home priced at mortgage+30% . Well of course they are. The landlord is taking on the maintenance of the property, insurance, the risk of a housing crash (look at housing prices FFS), the risk of a vacancy or destructive or non-paying tenant, legal expenses associated with operating a business etc. And on top of that, they have to pay the mortgage. They do turn a profit, because of course they do, why else would they do it? And with that they slowly buy the property from the bank, at which point the interest on the value of the property goes to the landlord instead of the bank, the same as it would if they sold the property and invested the money in something else. The problem with landlords is not that they turn a profit -- they always will or they'd sell the property instead. It's that they lobby for zoning restrictions that limit the housing supply to increase rents. But homeowners do the same thing, to the detriment of both renters and prospective homeowners. |
Let's say rent is mortgage + 30%. If we assume all the risks and costs (maintenance, insurance, etc) are eating up all of that 30%, they still make a whopping 200%+ profit in the long run.
In a fair business relation with 20-30% profit, the landlord would actually loose cash each month until the mortgage is over, with the expectation to realize profit when the property is sold. This rarely happens.