You also have a bull agenda. I am here to fuck it up.
Here's a funny thing Moops: I always consider that, for a market to be healthy, there has to be a healhy bear population. As soon as there are no bears to be found, you know the market is in bubble territory and it is time to sell sell sell.
So when you turn bullish, we'll know it is time to get the hell out and you'll get your 40% crash, but you'll already have bought.
Being a bear: It's a shitty job, but someone has to do it.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
If a 10% property tax was brought in I'd immediately hit my tenants up for rental increases. It probably wouldn't cover the whole amount, but I'd push as hard as I could for as long as I could until it did.
As always in economics, a rise in supplier prices--here (hypothetically) driven by a tax increase, will lead to a corresponding reduction in demand.
And so, on average, - some of your tenants would pay - some of your tenants would see out their lease and then move, e.g to a smaller place at the same rent as before - some of your tenants would turn deadbeat, and kick off an extended / expensive process to get rid of them (by coincidence, I had a mate at work tell me this morning of his trouble clearing out a tenant so his IP could be sold: the saga has gone on 9 months and is still unresolved).
You've already conceded you wouldn't recover the full amount of the tax increase. You also wouldn't recover the one-off costs from tenants in the second or third category.
Average rents wouldn't rise by nearly the amount of the tax hike. Your margins as a landlord would slip, and many tenants' rent/m2 would rise. And there would be considerable adjustment costs all around.
As always in economics, a rise in supplier prices--here (hypothetically) driven by a tax increase, will lead to a corresponding reduction in demand.
And so, on average, - some of your tenants would pay - some of your tenants would see out their lease and then move, e.g to a smaller place at the same rent as before - some of your tenants would turn deadbeat, and kick off an extended / expensive process to get rid of them (by coincidence, I had a mate at work tell me this morning of his trouble clearing out a tenant so his IP could be sold: the saga has gone on 9 months and is still unresolved).
You've already conceded you wouldn't recover the full amount of the tax increase. You also wouldn't recover the one-off costs from tenants in the second or third category.
Average rents wouldn't rise by nearly the amount of the tax hike. Your margins as a landlord would slip, and many tenants' rent/m2 would rise. And there would be considerable adjustment costs all around.
You always run the risk your tenants will turn deadbeat. Even when you are not trying to raise the rent. A good property manager will help here, since they have an informal network that ensures that tenants who go deadbeat once will have huge problems ever renting through a property manager in the network again.
You do make a good point: The adjustment to big changes is never instantaneous. There are immediate effects which are usually painful for all concerned and a long-term equilibrium. The long-term equilibrium for increased land taxes is negative for whoever lives in a property that is taxed and whoever held that property at the time the tax was introduced.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
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