From: ahk@chinet.com   
      
   Stephen Sprunk  wrote:   
   >On 31-Mar-15 12:14, Adam H. Kerman wrote:   
   >>Stephen Sprunk  wrote:   
   >>>On 31-Mar-15 07:42, Adam H. Kerman wrote:   
      
   >>>>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?   
      
   >I assume that's because it upsets the supply/demand curve, but only in a   
   >minor way unless the tax rate is outrageous.  For the purposes of this   
   >discussion, the gap is not large enough to be relevant.   
      
   It's one of the first lessons learned in Economics 101.   
      
   >>>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.   
      
   >I addressed gentrification of entire neighborhoods in a prior post.   
   >Other than that case, it's not a relevant factor.  Slumlords aren't   
   >usually interested in gentrification; it's not their business model.   
      
   You're absolutely right; one always hopes they'll sell to someone   
   interested in improving the building.   
      
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