In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
People are aware of this, and purposely choose products that are 80% as good for 20% of the cost. Other people shop at Whole Foods and Apple. None of them is ripping you off. They all provide options that you knowingly and willfully choose over your other options.
> And if Target/Amazon/Dollar General weren’t around, there’s no reason they wouldn’t increase prices and pad their margins.
The comparison to landlords being that if one of them had a monopoly on local housing they could charge really high prices. But that seems pretty fantastical considering that a local housing monopoly hasn't happened basically anywhere and would presumably yield antitrust scrutiny besides.
> In a landlord situation, their cost of goods is so small that they can afford to sit on an empty apartment while prospective renters need to put a roof over their family or business.
The cost of goods is the cost to buy housing (and the opportunity cost of the interest you could have had on that money), plus that of maintaining the property. If that is so cheap then why is anybody renting?
I'm not a landlord, but I did consider getting into it once, and studied how the system works. And a number of my friends are landlords (including one who quit his job because the passive income is enough).
No - probably over 95% of landlords do no have a small cost. Almost everyone is paying a mortgage/loan on that property. The exceptions are old people whose house was paid off and they just want free money. Those people almost always charge low rent, BTW - they just want some extra cash. The standard tactic is to buy properties on a loan, and try to get $100-200/month profit per house/unit. So if the apartment costs $1500/month in rent, assume their monthly cost to the bank (principle + interest) is about $700-800. Then add in the insurance and real estate fees. The remaining money goes to long term costs (repairs, vacancy, etc). Then they keep about $100-200.
If the apartment sits empty, they're still on the hook for close to $1000/month in taxes, insurance and loan payments.
Over time, if the property appreciates significantly, the plan is to sell the property, and use the gain in appreciation to buy a larger apartment complex, where they are down to $100-200/month again, but because the place has, say, double the number of apartments, their overall gain is double. Lather, rinse, and repeat. They only stop once they are making enough to live on in the lifestyle they want - which could be anywhere from 30-60 units.
They are almost always in debt, and vacancies are almost always very expensive.
A lot of the anti-landlord comments are similar to anti-employer comments, where it's always a given that employers have large piles of money and they can afford X, whether X is higher wages, better equipment, etc. Once you step into the "other" role, you'll find your assumptions were wrong.
Of course, if the state/city needs to pass laws to help with housing, so be it. Let's not just blindly assume that most landlords can absorb it.
You have the choice of a hundred units. And its their responsibility to fight with each other to make you choose one of them. Thats what keeps them honest and gives you bargaining power.
If you switch TP vendors, that's not a big deal for either Walmart or you, so yes, prices are competitive. But if you switch housing, you are switching 100% of your housing, which will be ~30% of your total budget. I've had 13 landlords, and not one of them has had only one unit. And small-time landlords tend to have other work, so regardless, it's a much smaller deal to them to have a tenant move.
> It also completely ignores that fact that most landlords are small operations, and often the tenants are richer than their landlords.
I look forward to your citations on both points.
I'm sure the average landlord doesn't own more than, say, 10 units. But in major markets there are a small number of large rental companies, so I suspect the average unit is not owned by a small landlord.
I'm entirely skeptical about your claim that tenants are "often" richer than landlords, but would be happy to be corrected with data.
Landlords do dick around with prices on small business owners, and Walmart has the scale to not get dicked around with. This is just another thing that helps them to be exceptionally competitive in pricing their goods.
The GP was talking about real estate and it doesn't have much to do with how competitive socks and toilet paper are.
This is one of those theoretical arguments that sounds good but have no empirical foundation at all.
If it was true the gigantic Walmart could completely dick me around when buying socks and toilet paper. In reality prices are very competitive.
It also completely ignores that fact that most landlords are small operations, and often the tenants are richer than their landlords.