https://news.ycombinator.com/item?id=33224502 - discussing how Yieldstar, a consultancy, advises some landlords/property managers to hold or accept a higher vacancy rate while raising rents to increase overall profit.
For one thing, rent-stabilization may mean that if a landlord lowers the rent to fill a vacancy, he will not be able to raise the rate again. This creates a very powerful incentive to not lower the rates. Another pernicious effect of government price controls.
It’s not an “opinion” the law is bad. It is a well understood part of capitalism.
I lived in an NYC rent stabilized apartment for a number of years, and my rent was always articulated as legal rent is X, offered rent is Y.
It’s interesting how rent controls work perfectly but property tax controls (prop 13) is widely known to be the cause of all ills.
The landlord can decide to change the rent to anything up to the legal rent, but cannot go over.
There’s no mystery here, everyone knows the score, it’s just that landlords try to take advantage.
A certain amount of empty property should be expected - they do require renovation and repair.
In commercial real-estate, I believe 10% is considered healthy for offices.
It looks like 3% is considered healthy for apartments?
[1] Residential vacancy rate source for "healthy" - https://www.suburbsfinder.com.au/resources/vacancy-rate-expl...
[2] Commercial vacancy rates: https://www.statista.com/statistics/194054/us-office-vacancy...
You don't have a real market unless there is a bit of slack.
You'd expect a lot more empty property than just what currently needs maintenance. If you have no empty and rentable properties, then when someone comes to you wanting to rent an apartment, you can't rent them one. That's a big problem for you.
This is the same reason you don't expect a secretary's day to be filled with work. You need idle capacity so that when something comes up, you can handle it.
What do you mean, rents may only go up? That's not how it works anywhere. It's only true over specific time periods.
Edit ignore this I misread the comment
But rental changes are literally neighborhood-specific. COVID had some neighborhoods in NYC flat, others rising, others falling.
In any case, rents fall. That's the point. It's normal.
Rents are subject to supply and demand just like everything else.
One popular way to “flip” an apartment building of 100 units or so is buy one that is 100% rented and slowly raise rents until it is 80-90% rented and then sell it n
Then it does.
This sounds more like profit optimization. Maybe it is true that it is acceptable to have x% vacancy if it means that your overall occupied rental price remains higher.
An analogy here would be if you're running a hot dog stand, you start selling hot dogs for $10 instead of $5, and have greater unsold hot dogs but higher overall profit.