Matt Desmond author of EVICTED often claims “the rent eats first.”
However, the truth is municipal governments are first at the table for that rent check, with their ever-increasing property taxes, sewer and water bills, those extras that are attached to the water bills as well as all the special assessments added to the tax bills.
Municipal governments also are the ones who will be paid even if you don’t and even ahead of the mortgage holder.
If rents increased year over year the same 9-286% as the city taxes, there would be rioting in the streets. There are a lot of news articles where there has been outrage at modest rent increases because that is not what one expects in an economic downturn.
However, owners will have to raise rents substantially to cover these tax increases. Add to that the reduction in rent collected many owners are experiencing this year and 8-20% rent increases will be required just to maintain the financial position of last year.
When costs exceeds the property’s income, the property will eventually fail. If this happens on a widespread basis, all tenants will be harmed and face much higher rents in the future.