> If a landlord can charge 1200 instead of 1000 why wouldn’t they? They’ll charge the maximum they can get away with, costs are irrelevant
This is rarely true. Only universally true for large corporate landlords where there is an entire corporate structure maximizing every dollar due to personal incentives put in place by executives/ownership.
Small landlords (yes, even those with 6 buildings) are almost never min/maxing rent like this. They are optimizing for other things like time investment and hassle factor. And even doing the right thing.
I've both rented and landlorded. In neither side of those transactions over decades was I either paying maximal rent or charging it. When property taxes went up as a renter, my small time landlord would show me the tax bill and I'd pay exactly the increase. Same went for when I had tenants.
I'd go as far as to say the majority of mom and pop landlords are not looking to charge maximum rent. They only start doing so when they have a problematic tenant they are trying to "manage out" of the unit.
>Small landlords (yes, even those with 6 buildings) are almost never min/maxing rent like this. They are optimizing for other things like time investment and hassle factor. And even doing the right thing.
Yup. Have a single residential in a otherwise commercial building in NYC. They pay ~50% market for a spacious 3 BR for a number of reasons; mainly because we have known them for a long time and they struggle with health issues so we never really raised them. Charging them market would put them on the street. They can afford the 50%, live nicely, and the commercial tenants pay market which pays for the building with a little leftover. If they ever move we will certainly charge more but I see no reason to gouge like others.
This is right. Increased costs are either passed on to tenants or decrease the landlord’s cash flow. Those are the only two options. I don’t have any data on which occurs more frequently. But what is true is an increase in expenses means less debt service is available so purchase prices come down.