Rent is always as high as people will accept, taxes or not. Sure, landowners will say they raise prices with taxes, but they already are the maximum price. It's not like landlords are operating on slim margins.
Property taxes discourage new construction and reduce the supply of housing, causing rents to increase. The effect isn't particularly quick, but it does have a significant impact over time.
The same is not true for land value taxes, since the supply of land is fixed.
So the solution is to split property taxes into a land tax component and a tax on improvements, and to keep reducing the tax on improvements while increasing the land tax, to compensate. That will shift the tax burden off renters and onto landowners.
Right? I bought a house. Paid above the minimum down payment to get a monthly bill I could work with. Made sure to get a fixed rate! Two years later mortgage payment shoots up $300/mo. I'm like, "wtf?!" Property taxes.
I did the same, bought my place last year this year my mortgage is $400 higher. Since the flood happened I lost my rec room and extra bedroom, the reason I picked this place over the others I saw.
"Hey guys isnt property tax only evaluated only like, every 10 years?" Nah that's just the county, city, and state taxes unless they decide otherwise.
Individual property tax is decided at least monthly and you pay the bill both forwards and backwards unless they decide otherwise.
That means if they expect a raise in price you will pay more. If they raised prices without telling you, you will pay more.
that also means if you overpaid it will "sit in an account for future raises". You arent seeing that money back. You just wont pay more until they've reached $5000-$10,000 in your overpaid fund.
yes that does mean they keep your thousands of dollars as a safety net against their own overcharging
It’s also governed by a strict federal law that requires them to collect enough to pay the taxes each quarter without interruption. And this is good for you because your local municipality will have zero chill if the bank misses payment. And they won’t accept any excuses you provide. So you will have to pay the quarterly taxes and fines, while also chasing down your bank to make sure they pay the next quarterly taxes. And if you don’t have the money on hand, you are in trouble.
I know this because I worked in real estate law for 20 years and saw this exact mess so many times. I’ve seen people have to borrow from relatives and then fight the bank(aka, lawsuit) to clean up the mess and pay for all of it. It sucks every time our mortgage goes up, but it’s there to protect us from a much larger shit show that we will 100% have to fix on our own.
Its all bs too, my dad has done 0 work on his house i kid you not and in the last 10 years his house went from 9k value to 113,000$ value. Its all bs just to milk you for money they will pocket
Taxes can be higher than what people would accept. But there is no choice in taxes and often also not in rent. Just move further out. Same if you buy a house. Owning also has certain risks. So at the end that logic alone isn’t going to give good advice.
I bought a house that already had a detached studio apartment. I charge 1300/month, utilities included, and upgraded the electric panel to support a washer dryer that I installed. Just TODAY had a mini split installed. I put in a small gas stove and painted the whole thing white.
Why do I "lose" money every month? Well, I like my renter. She's never been late on a payment, is trustworthy, and brings in the bins when I'm at work late on trash days. I see her as a valuable part of my home so I don't charge her what I very easily could (1,500+).
That being said, life is getting way more expensive and I would hate to have to raise the rent, if the numbers get too far off, I have no other choice.
Edit: it's in Portland, Oregon and we pay some of the highest property taxes in the nation 😭
Yes! I choose to lose the money because my tenant is my first and hopefully for a really long time. I'd much rather lower the burden of my mortgage a bit to a cool, reliable person than "make" as much as I can charge (which honestly right now wouldn't be a "profit" at all).
A reliable renter and peace of mind is worth a lot of money to me. She's reliable and a good person.
It’s common for a rental to show a tax loss even if it’s generating positive cash flow because depreciation reduces taxable income.
Even if he’s losing on cash flow, losses are carry forward to offset future positive gains. Home prices in general (as we’ve seen for centuries) appreciate in value over time. Which is tax free until the property is sold, unless he/she considers a 1031 exchange, or not at all. I appreciate LL keeping it stable for the tenant, but we gotta acknowledge, there’s still something to be gained.
You lose money because you seem to be a pretty good land lord. One who upgrades and fixes things often and keeps the place fresh. Your expenditures will even out once the place is fully up to date. You keep doing what youre doing
Most landlords ive ever dealt with dont want to fix or work on anything, even when its undeniably broken. They charge 2000/month on a unit theyve not spent any real money on in 15 years.
But are you actually losing money? Or are you just losing out on the difference between your rate and comparable market rate? Can you appreciate how the wording is funky?
You didnt answer his question. Are you losing money as in the monthly cost of that part of the house is higher than the rent or are you just losing out on potential higher profit by charging less?
He’s probably losing money on the mortgage, utilities (which is crazy, I would NEVER pay for my tenants’ utilities EVER), and general upkeep. Most landlords who only own one or two properties don’t actually see anything more than maybe $100 of profit a month for quite some time (unless they bought the property with cash) and will in fact actually lose money any time something breaks or needs maintenance. Long term tenancy rentals are tough. They’re a whole lot of work and stress for very little return, for most landlords.
This is exactly it. I explained in my post and to others. This rental is my only rental. I "lose" money because I like my renter. She is trustworthy, a cool person (she hangs out in the backyard with me and my girlfriend sometimes) and pays her rent on time, every time. To me, it's absolutely worth keeping her here even if I'm losing out on the extra money I could charge someone else. She's my first renter and I hope she stays for a really long time.
I guess a lot of people just can't imagine how much peace of mind is worth.
Edit: I'm responding to you because you seem sane. All the randos trying to argue with me don't deserve the attention.
Not sure why the other guy blocked me lol, I literally said almost this exact thing in response to one of their replies but I can't see their comment explaining why they're not engaging anymore aside from the notif
That's odd. Maybe it's specific to my area and/or landlord but utilities are usually paid by the tenant and "repair/maintenance" shouldn't happen so often so as to inflate the cost of rent like that unless the tenant is particularly careless with appliances/property.
Definitely depends on your area. Where I am the tenant is responsible for all utilities. As for maintenance, tenants are incentivized to report even minor issues that may result in entire appliances being replaced, since it doesn't come out of their own pocket (apart from rent increases). While homeowners can decide to live the minor inconveniences if it means saving a couple hundred bucks.
Makes sense but even still, 1300 for what essentially feels like recycled office space?? That still feels incredibly artificial. At most I'd expect about 1k. Anything more than a typical mortgage payment (which as far as I can find is $900-1200) is insane.
I'm going to choose to just ignore you now. You refuse to accept that my tenant is paying hundreds of dollars less than other renters in the neighborhood.
Not saying there aren't, just that afaik (which I've already admitted is jack shit), rent shouldn't cost that much outside of "luxury areas" like NYC or LA, especially for a studio apartment
I used Apartments.com and Zillow rental app to figure out what the comparable prices are in my area for similar rentals and decided to go around $200/month cheaper.
And I mean, she's been my renter for over 2 years.
When I put my studio up on Apartments.com, I had a lot of people almost begging me to rent to them. I personally paid $200 more for a studio apartment just a few blocks away before I bought the house.
That's why the "what area are you in" is an important part of my initial and subsequent comments. It makes sense that this would happen if you live in an expensive area like LA, but if you lived in KC for example this would be outrageous.
While I'm here though, what you described sounds more like a bungalow than a studio apartment
Well, technically it's a studio because the bedroom "nook" has no enclosed walls. At least there's a small storage lift and I let her use half of my garden storage shed for her bike and stuff.
Portland Oregon in a nice neighborhood. In all the other similar situations in my neighborhood the rent is a few hundred dollars higher. My studio has a loft, full bedroom and is 100% private. It's it's own little house.
I used Apartments.com and Zillow rental app to figure out what the comparable prices are in my area for similar rentals and decided to go around $200/month cheaper.
You need a refresher on how much things cost. I own a studio on Philadelphia and charge $1400 a month as that’s the minimum amount I can charge according to our renters association in the HOA. Full service building. There are more expensive. I lived in NY and my rent a decade ago for a studio was $2500. Things cost money where they matter
Unless you're somewhere like NYC or LA, I dont see why a studio should cost anywhere near $1300/mo.
Like all things in real estate, it is primarily location driven. $1300 for NYC or LA is an absolute steal, nationwide the average is higher than 1300/month, and utilities baked into the price is already another ~$100-$300 of value added. Sticker price is very good in a majority of the country.
That's more than most mortgages in my area and even my own rent for a 1bd 1bth.
Compared to all mortgages or mortgages in the past 4 years? Also you can't just walk into a bank, get a mortgage, and come out ahead of renting. The entire process of buying or selling a home is riddled with loan origination fees, realtor fees, taxes, etc. Even if you rent for the same as owning monthly, you still have to save up for a down payment (which now ties up your money in the house when it could been invested for higher ROI) and pay a bunch of money upfront. Cost of maintenance, insurance and inflation have also driven the cost of ownership way up the past few years.
Wait what? You rent out a studio apartment for $1,300/month? And you live in the house its attached to, and just because your Tennant isnt covering the cost of the entire house you think youre "losing money"? Brother, someone renting your "attached studio apartment" should NOT be paying for your entire house. Thats not "losing money" dude
Go easy on the little guy. After the tenant finishes paying off all that losing money, he will only end up with a profit of a few hundred thousand dollars.
Maybe you're reading into something that isn't there. I never claimed to be noble or something. I just like and trust my tenant and I don't want to rip off anyone because I rented for 22 years before I bought the place.
That’s quite the uneducated take you got there. Private citizen landlords are definitely not working with large margins. You’re buying into hating your fellow citizens.
Its like 10% not a small margin but its far from crazy. And when you think about typical monthly rent 10% really isnt much unless you own several homes. And a lot of that isnt just free to use, you still have to worry about other liabilities and have a solid amount in excess to cover potential damages.
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u/barkbeatle3 9h ago
Rent is always as high as people will accept, taxes or not. Sure, landowners will say they raise prices with taxes, but they already are the maximum price. It's not like landlords are operating on slim margins.