11-14-2021, 12:31 AM
While it is commonly thought that landlords price their rent based on covering their costs, you can’t just charge above market rate.
If it’s priced above the market equilibrium price, nobody will rent that unit. What we are seeing is there is such a lack of supply that units are being rented out for very high prices because that equilibrium price has been pushed by increased demand. An investor will also not have their unit sit empty… I’ve seen this said many times but this really makes no sense. No property owner is just going to willingly take $0 rental income rather than something slightly less than which covers their carrying cost.
And like Tom said, cash flow positive units are very rare in this market.
If it’s priced above the market equilibrium price, nobody will rent that unit. What we are seeing is there is such a lack of supply that units are being rented out for very high prices because that equilibrium price has been pushed by increased demand. An investor will also not have their unit sit empty… I’ve seen this said many times but this really makes no sense. No property owner is just going to willingly take $0 rental income rather than something slightly less than which covers their carrying cost.
And like Tom said, cash flow positive units are very rare in this market.