A question, about real estate

[Afro]

Why is it that a landlord would rather have a house stay vacant for half a year bringing losses, than lower the rent a bit, to what some old Tennant's pay and have it occupied and bringing in money??

 

[Ole Waru]

From one case which i was privy to i came to discover that the landlord had borrowed money from the bank and in such a situation some repayment math is calculated based on a fixed rent and occupation rate, anyway it seemed logical for the property to remain unoccupied as he wouldn't need to pay anything than him reducing the rent, it seems obvious but financial agreements can get complex.

 

[shocks]

From one case which i was privy to i came to discover that the landlord had borrowed money from the bank and in such a situation some repayment math is calculated based on a fixed rent and occupation rate, anyway it seemed logical for the property to remain unoccupied as he wouldn't need to pay anything than him reducing the rent, it seems obvious but financial agreements can get complex.

Definitely not a bank loan, maybe some other debt instrument

 

[Aviator]

Why is it that a landlord would rather have a house stay vacant for half a year bringing losses, than lower the rent a bit, to what some old Tennant's pay and have it occupied and bringing in money??

Let's do some maths together.
Suppose you plan to charge 30k. Over an year, you get 360k.
If you have a tenant willing to pay 25k, that's 300k per year. You lose 60k.
Now extrapolate to 10 years. Or 10 houses.

 

[QuadroK4000]

Definitely not a bank loan, maybe some other debt instrument

Engineer ile Volkswagen ya Red, huko Baba dogo bado iko kwa yard?

 

[Mr Black]

The quality of tenants matters, a landlord may be willing to take a loss in the short term but not at the risk of having tenants who would either be unable or unwilling to pay up, or they are going to be a nuisance which can be costly,

 

[Aviator]

The quality of tenants matters, a landlord may be willing to take a loss in the short term but not at the risk of having tenants who would either be unable or unwilling to pay up, or they are going to be a nuisance which can be costly,

You've just nailed it
They want a certain class of people.

 

[Liberty]

nuisance

Noisy; tenants, loud electronic noise, the worst tenants

 

[Afro]

Noisy; tenants, loud electronic noise, the worst tenants

usually peasants, so you filter them out by holding on to your current price. now i get it

 

[The.Black.Templar]

You've just nailed it
They want a certain class of people.

tenants separated by 5-10k are the same class of tenants

 

[Aviator]

tenants separated by 5-10k are the same class of tenants

Not in the same neighborhood.
Think of an average mtaa in Kanairo where a 2br is 25k. Then someone puts up one for 30-35k. He will attract the cream of the mtaa.

 

[The.Black.Templar]

Not in the same neighborhood.
Think of an average mtaa in Kanairo where a 2br is 25k. Then someone puts up one for 30-35k. He will attract the cream of the mtaa.

they will mostly be outsiders.....sometimes those outsiders may not be many and the place remains vacant for a good number of months. I doubt if alot of people would move to a more expensive apartment in the same mtaa unless they are moving from a two bedroom to a three bedroom

 

[Aviator]

they will mostly be outsiders.....sometimes those outsiders may not be many and the place remains vacant for a good number of months. I doubt if alot of people would move to a more expensive apartment in the same mtaa unless they are moving from a two bedroom to a three bedroom

For you to charge more than the rest in the same neighborhood, you must offer something extra. Be it security, water, parking, etc. People are always willing to pay for this extra
So yes, it's possible to move to a more expensive house within the same mtaa

 

[Denis Young]

Let's do some maths together.
Suppose you plan to charge 30k. Over an year, you get 360k.
If you have a tenant willing to pay 25k, that's 300k per year. You lose 60k.
Now extrapolate to 10 years. Or 10 houses.

How is it a loss? With the right tenant, depreciation of a unit is generally low. Water and electricity is a cost born by the tenant. So why wouldn't a landlord prefer to be bringing in 300k a year rather than nothing assuming normal loan repayment terms?

 

[Aviator]

How is it a loss? With the right tenant, depreciation of a unit is generally low. Water and electricity is a cost born by the tenant. So why wouldn't a landlord prefer to be bringing in 300k a year rather than nothing assuming normal loan repayment terms?

The starting point is very important.
Suppose rent goes up by 10% annually.
Someone who starts with 20k will be at 32k in 5 years. Compare with someone who started at 25 and is at 40k in the same timeframe.
So, starting low screws you up until the tenant moves out.