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this post was submitted on 24 Aug 2023
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Economics
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The thing is, there’s too much hassle and insecurity there for you. The income tax on empty properties would almost certainly change the equation, whether it incentivizes you to sell the building or rent it out, that helps tenants.
I wouldn't say that I was leaving money on the table. There's a difference between gross income and net income - my gross income would have increased if I rented my house out, but my costs would have increased as well. Once I accounted for the cost of my time, of the additional maintenance, and of the risk that I would get someone who refused to pay rent, trashed the place, and took a year to evict, I decided that the net income from renting would be negative.
I was just a guy with a house, not a professional landlord. I think a professional would have found a profitable way to rent out a house like mine (because it wasn't rent-controlled). But these vacant properties are already owned by professional landlords - I'm not sure who you think would find a way to make money off of renting them out if the professionals can't. And why would someone buy a property that doesn't make money?
(I suppose some people would buy them for a low price as a bet that the restrictive regulation will be repealed someday. Where I live, you can already get cheap rent-controlled property in very expensive parts of town with the hope that you might eventually be able to get the tenant out of there. But I don't see this as a viable large-scale solution.)
Either the properties are valuable as rental properties, they’re not especially suited for rental properties, or they’re not fit to live in. If they’re in the first category, great. If they’re in the second, forcing a landlord to sell instead of sitting on an empty property helps, in that it creates more supply of livable homes for people making the leap to homeownership (that’s the answer to who would buy a house that doesn’t make them money: people who want to live in it). If the property is unsafe/unlivable, it should be repaired in a timely manner or torn down.
I think rent-controlled properties tend to be apartment buildings rather than single-family homes. An apartment building can be converted into a co-op or condominium and I admit I don't know much about that process. I can see a lot of potential difficulties. Maybe there are solutions and I am just ignorant of them.
Presumably most of the tenants in the building can't afford to buy their apartment outright but just kicking them all out isn't allowed. If tenants do end up getting their apartments for less than market price, what's to stop them from immediately reselling them? And won't monthly costs for the tenants go up because the co-op/condo can't run at a loss?
It’s pretty common to have a building that’s partially inhabited by renters and partially by owners. It’s not super unusual to have a building owner sell only some units in a building.
It’s entirely possible to put a clause in the contracts associated with the sale that the new owner must give the old owner a share of any profits on a resale within five years.
If there’s a building with five rent controlled units, two of which are occupied, and the owner of the building sells off the other three, the two occupied units will continue to be rent controlled and belong to the landlord. If the landlord doesn’t want them and lowers the price by a bunch or makes a special offer to the tenants, people still don’t have to buy it. If people start to think being a landlord is risky and maybe not a great idea, good.