Re:Inflation rises to 7% in December (led by energy)
by lumost on Wednesday January 12, 2022 @04:25PM
(#29912878)
It’s only better to have high occupancy when you care about cash flow. Low/negative cost of capital means you only care about theoretical cash flow for valuation purposes. Given the rate at which home prices have been increasing landlords will make more money from appreciation than from rent.
Re:Inflation rises to 7% in December (led by energy)
by sokoloff on Wednesday January 12, 2022 @04:20PM
(#29912827)
If they raised the rent successfully on 2/3rds of the units to just over 3/2’s of its old value, then it seems like they could afford to keep 1/3 of units vacant and available for new tenants who are willing to pay that higher rent. (They’re no worse off on a cashflow basis and they have vacant inventory that represents possible upside.)
Re:Inflation rises to 7% in December (led by energy)
by izend on Wednesday January 12, 2022 @05:14PM
(#29913472)
This strategy only works because vacancy rates are low and interest rates are low.
Re:Inflation rises to 7% in December (led by energy)
by sokoloff on Wednesday January 12, 2022 @05:24PM
(#29913579)
I don’t think the second condition is even needed. As long as you can raise the rent by over 50%, you can keep 1/3 of units vacant and be better off than last year; that’s probably only possibly if overall vacancies are low.
Re:Inflation rises to 7% in December (led by energy)
by mistrial9 on Wednesday January 12, 2022 @05:34PM
(#29913706)
companies that profit well in high inflation environments are studied in some business schools. Part of the equation you describe is the (assumed) constant demand, and the ability to adjust frequently compared to life of the asset.
What's worse is that the complex is full of unoccupied and newly vacated units. You can tell because the lights are kept on 24/7 and they installed new LED bulbs. This makes me wonder why they would treat current tenants so badly by raising rents so much when so many of those units that are being vacated remain empty?!? Surely it would be better to be less aggressive and have a higher occupancy, no?