From: ahk@chinet.com   
      
   Stephen Sprunk  wrote:   
   >On 31-Mar-15 07:42, Adam H. Kerman wrote:   
   >>Stephen Sprunk  wrote:   
   >>>On 30-Mar-15 21:20, hancock4@bbs.cpcn.com wrote:   
      
   >>>>But property taxes can, and do, go up faster than rents, and the   
   >>>>landlords do end up losing money.  In the short term, they still   
   >>>>have a mortgage to pay, so they'll have to eat the loss in the   
   >>>>hope rents will eventually catch up.  In the long term, the   
   >>>>property will be abandoned if rents don't catch up.  (Other urban   
   >>>>conditions play a part, too).   
      
   >>>Absent rent controls, rents _will_ go up to keep pace with taxes;   
   >>>the tenants have no choice since _every_ landlord will be raising   
   >>>rents.   
      
   >>This I don't agree with. Yes, there are individual cases of tenants   
   >>overpaying. Generally, they won't do that.   
      
   >>A tenant simply doesn't care about the landlord's operating   
   >>expenses. He won't pay more than the place is worth to him. Two   
   >>buildings of approximately the same quality (ignoring location value)   
   >>should be rented for similar amounts.   
      
   >It's not a matter of tenants caring.  If every landlord's land values   
   >(and thus taxes) go up 3%/yr due to general inflation, then they will   
   >all increase their rents at least 3%/yr so they don't lose money.  The   
   >tenants either pay the higher rents or become homeless.   
      
   There's no such thing as a pass-through expense that's 100% paid by   
   the tenant. You understand why sales and excise taxes aren't paid 100% by   
   consumers, right?   
      
   >>>Aside from slumlords, who operate on a very different financial   
   >>>model, landlords _don't_ lose money or abandon properties.   
   >>>Slumlords' profits come from not reserving money for normal   
   >>>maintenance--and when the bill comes due, abandoning the property   
   >>>is cheaper than fixing it.  It's not as good a long-term return as   
   >>>letting good tenants pay your mortgage off, but it works well   
   >>>enough in the short term, particularly when you _want_ the building   
   >>>to be condemned--or when you need a front to launder money from   
   >>>another shady business. . . .   
      
   >>Shift taxes from the improvements to land, then slumlords pay   
   >>relatively high taxes on land that has a building with significant   
   >>deferred maintenance, since the negative incentive for having a poor   
   >>quality building goes away.   
      
   >Slumlords don't fail to maintain their properties due to taxes on   
   >improvements; _the tenants_ provide the disincentive.  Why spend $10k   
   >remodeling a house in the slum when the tenant will just cause $10k in   
   >damages when you evict them the next month?   
      
   One can't be the only one fixing up one's property; the first to do something   
   is taking a huge chance that none of his neighboring land owners won't   
   be encouraged to do the same thing.   
      
   If the place is no longer a slum, the landlord has the opportunity not to   
   look for slum tenants.   
      
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