[JumpCrisscross]

> Most RE investors lose money on vacancies (it's literally a line item in their expenses) and work hard not to have them

Plenty of landlords would rather a unit in a building go empty for longer than compromise on rent in a way that weakens their negotiating position with the other units. (Also, with lenders.)

The argument for taxing vacancies is city taxes are often set on the assumption of occupancy. A vacant unit doesn't contain a tax-paying worker. The vacancy tax adjusts for that.

> Remove tax benefits like bonus depreciation or accelerated depreciation

Agree.

[colechristensen]

>Also, the argument for taxing vacancies is city taxes are often set on the assumption of occupancy. A vacant unit doesn't contain a tax-paying worker. The vacancy tax adjusts for that.

Also important for commercial vacancies. The rent is too high, costs for commercial goods and services (and especially food and entertainment) is inflated by inflated rent so restaurants and consumer businesses can't stay open because they can't afford to pay the rent and lower prices to attract customers at the same time. And yet a huge proportion of the commercial space is just empty.

A vacancy tax makes up for that missing tax revenue from a running business and also just raises the quality of life for the people of your city by giving them opportunities for things to do and lowering the bar for entry into running a business.

[gs17]

>Plenty of landlords would rather a unit in a building go empty for a little longer than compromise on rent

Yep, I watched my last apartment (which I left partially because the rent went up to an unreasonable price) sit vacant for several months and laughed at how he could have made much more money if he compromised slightly on rent (which he seems to eventually given in to, so his greed only served to lose him money and not get the price he wanted).

[kstrauser]

Our previous landlord evicted us to "rent it to her sister". We saw it listed for rent at a higher price soon after, and then it sat empty for 4 years. That did my heart good.

[BeetleB]

> Plenty of landlords would rather a unit in a building go empty for longer than compromise on rent in a way that weakens their negotiating position with the other units. (Also, with lenders.)

In my experience: A tiny minority (for housing - not sure about commercial). This is one of those cases where selection bias applies. As most landlords really hate vacancies, the ones you do see are the tiny few that don't. And because they let them be vacant for months, it adds to the selection bias. They perhaps own most/all of the property, so the vacancy cost is miniscule (only property tax).

I do know the bulk of landlords are fussy about the type of consumer they get (e.g. decent credit rating, etc), and will allow for longer vacancies to get them - the rationale being that a bad occupant costs more than the vacancy charge - especially in tenant friendly states like California (extremely expensive to evict).

Keep in mind - the bulk of them don't own the properties outright - they are paying a loan. In a place like where I live, they may need to pay $2000/mo on a property that they rent out for $2300/mo. That $300/mo is a very slim-to-nonexistent profit margin once you account for costs. If it goes vacant for a month, they are losing over 6 months of net revenue. When you factor in the costs, it may well be closer than a year's worth of gain. The property doesn't appreciate much here, so they're not gaining in that fashion. Now when an eviction takes 4 months to execute, you can do the math on how they may prefer a 1 month vacancy to a bad tenant.

Really: Get rid of fixed interest mortgages and you'll discourage rent seeking behavior. Most are playing the long game: They'll accept a net loss of, say, $100-200/mo because they know their costs are (relatively) fixed, and in, say, 5 years the rents will have gone up enough to break even or yield a small profit. Keep it up for the next 30 years and they've made good money (and had a tenant pay for all the equity).

If you want to discourage rent seeking, discourage the main incentive: The cheap loan.

[JumpCrisscross]

> A tiny minority

Of landlords altogether, sure. Counting by unit in high-demand locations, unclear.

> property doesn't appreciate much here

You're describing a stable housing market. Those aren't where RealPage is accused of making mischief.