L.A. County wants to cap rent hikes at 3%. Landlords say that would push them to sell
L.A. County wants to cap rent hikes at 3%. Landlords say that would push them to sell
A proposal to cap rent increases at 3% for many landlords in unincorporated L.A. County is meant to keep housing affordable for at-risk tenants.
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Why would that push them to sell?
Edit: so the interest rates have risen several percent along with the cost or labor and materials eating into the profits of serial buyers who leverage loans to buy more on previously purchased properties. If they don’t jack up the rent, they can’t manage the debt.
That said, fuck those guys, hope they go bankrupt. This isn’t someone who has an extra property they invested in years ago, these are the clowns buying everything up and squeezing the market.
Because they're over leveraged. They've purchased assets when rates were low and now that rates have gone up they haven't factored this into their profit margins and would either go under or not make enough.
It's disgusting. If you have enough money to play the game you should have enough money to live with the consequences and a tenant isn't your get out of jail free card for your shitty planning.
Ok. So they’re playing the old game of leveraging assets (properties) to buy more and painting themselves in a corner because of rates. Well, fuck these serial buyers squeezing the market. Hope they do get forced to sell.
What is this? Making risky business decisions and getting both private profit and taking private risk? Get out of here you damn socialist! America is when the profits are privatized and the losses are socialised!
Because they're over leveraged. They've purchased assets when rates were low and now that rates have gone up they haven't factored this into their profit margins
Nobody forced them to make risky business decisions.
This is the consequences of their actions and shouldn't be anyone else's problem.
Nobody forced them to make risky business decisions.
Exactly... you want to make a nearly risk free investment? Try a long term bank deposit or invest in government bonds.
I agree 100%
I don't understand. If they get a fixed rate at the time of purchase what difference does it make that rates have gone up?
Very often these aren't traditional fixed-rate mortgages. That's what they probably have on their "primary" home, but when you're buying homes with the explicit purpose of using them as income generators, the landscape of available loans changes.
Thank you for a very well explained response. Also in countries like Canada mortgage terms are redone every 5 years on average making us much more susceptible to rate changes than in America.
That’s pretty disgusting. Would do nothing but make you move every five years, and banks are going to screw you over every five years.
Costs rising more than 3% a year. Since it's California I'd imagine the insurance is going up much faster than 3% of total ownership costs. If small landlords cannot stay in the black because they can't afford the insurance with capped rent increases they will sell to the entities that can afford to self-insure. Corporations like BlackRock
After reading a comment by another poster I don’t think these are “small” landlords, at least not mega-corporate buyers, but the kind that serial buy properties leveraging the assets to buy more. So not someone that bought an investment or two but someone buying as many as they can get away with. Maybe the bigger fish are doing it too… but anyway, they don’t have the profit margin on the rates they took the loans that are now rising. They probably didn’t do fixed rates, as you wouldn’t as a non-homeowner. So rates went from 3% to what…8%? Margin is eaten up along with inflation, labor costs, materials, etc.
Screw ‘em. They just want to make the renter eat it so they can profit, I have zero sympathy and I hope they go bankrupt.
Blackrock and other REIT's should be abolished. Using single family homes as an investment vehicle is what got us into this, we need to regulate the bad actors out of the marketplace.
everything is an investment if you're stupid enough or the supply is pathetic enough.
The running costs are not only insurance costs. The insurance "crisis" e.g. entirely predictable results of climate change affects everyone and why would the tenants have to foot the increased risk of damage to their landlords property?
Finally i doubt that it will just be swept up by actors like Blackrock. If the profit is limited due to the law, then the value of the property will reduce until equilibrium at which point each solvent market actor has equal opportunities. Because of the 10 Million property values now at 6 Million, the insurance rate will react accordingly.
Because they're whiny little babies