Jan 24

ht: Joe Murray

Most recent rent control measures use the day of the introduction of the bill as the baseline rent. Owners would be wise to review their rents now. If you are being generous to that good renter who has been with you a decade and pays far less than market rent, not only will you be stuck at low rent even after they move, but your building will be worth less when you decide to sell as the new buyer will also be held to the same cap.

The compounding effect.

“There is no force in the universe more powerful than compound interest,”

attributed to Albert Einstien

If you’re renting a unit for $900 and the neighboring house is at $1,000 today, you have a $100 difference. But that difference grows. Let’s say the government is generous and allows 4% per year increases. After ten years, the $900 rent becomes $1,332, while the $1000 rent is $1,480, a difference of $148, perhaps long after the renter you were being generous to has moved. Your property would also be devalued compared to that adjoing property due to the lower allowable rent.

If the inflation rate continues at 6.5% and the government allows that generous 4% rent increase, your $1000 rent in ten years is $776.33 in today’s dollars. The $900 is worth 698.70 in today’s dollars. I’m certain many properties would fail or fall into serious disrepair well before they hit the $200-a-unit-a-month haircut.

Nationwide Rent Control? – WSJ

The Editorial Board Jan. 22, 2023 5:55 pm ET
Ideas that start on the progressive fringes have a way of becoming government policy these days, as President Biden’s $400 billion student loan cancellation shows. Lo, Democrats in Congress are now pressing the President to impose rent control nationwide.

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