Posted by Max on June 18, 1997 at 00:38:46:
In Reply to: Re: Rent Control has some significant inequities posted by Sir Loving on June 17, 1997 at 19:59:37:
You say your son is smart. I certainly hope he is smarter than you, because you obviously don't know the first thing about living in the real (unregulated) world.
Your argument that the only thing that matters is what the original down payment is just plain ignorance. I'll give you an example based on today's dollars. Perhaps it will open your eyes.
Let's say someone buys an apartment that costs $300,000 and puts 5% (15,000) down. Now based on your logic, let's say that someone rents the apartment for the next fifty years. Now let's assume that person pays for the entire cost of the building ten times over over the next fifty years. According to you, that would be $15,000 * 10, or $150,000. Now that turns out to a monthly rent of $250/month ($150,000/600 months). Now you probably think that is too much because the landlord got a return of 10 times his investment.
But he didn't!
A $285,000 mortgage over 30 years at an 8 percent interest rate comes to $2091 a month. Let's assume $4000 a year in taxes and $1200 in Homeowner's Insurance (these will surely go up, but I'll pretend they don't), and the total monthly payment is now up to $2683 a month.
I'll also assume the maintenance is zero (it's probably $400 a month minimum in an apartment of that value).
Now the landlord is paying $2683 a month in mortgage and taxes and insurance and getting $250 in rent from you, meaning he's losing $2433 a month for the first thirty years of the mortgage. By the time 30 years have passed, he is now down $875,880.
Geez, this landlord doesn't sound rich to me. Now granted, he doesn't have to pay a mortgage after that, but he still has to pay taxes and insurance, which come to $433 a month. So he's still losing money after that. After 50 years the landlord is $979,000 in debt.
If he had instead invested his original $15,000 investment and put it in the stock market and gotten a ten percent annual return, that investment would be worth $1,760,862 after 50 years.
So in your example, you consider the landlord greedy and corrupt for charging $250 a month, even though that puts him $1,000,000 in debt. If the landlord had never invested, he'd be worth $1,760,000.
No wonder nobody's building housing in New York anymore (except for luxury housing which is decontrolled. Everybody knows that new middle-class housing will just be recontrolled, it's just a question of when). They can't get a positive return on their money.
: Not all buildings have mortgages that are paid.
: When we talk about buildings built before 1947, for which mortgages have not been paid the question becomes what has the owner done with 50 years of rent money? Gone to the Bahamas?
: When someone buys a building or an apartment, they buy it with all current leases intact. Yes, they should take everything into account before making such an important decision and not expect to bribe senators to change the laws in order to evict people that have chosen to make NY their life long home.
: You may ask what expenses would there be if the person in residence is not receiving any maintenance inside their apt? First their are the obvious expenses.
: Maintanance and utilization of common areas, 0.00
: electricity in the halls $10.00 per month
: elevators - none
: super once a week throws out the recycle trash $5.00
: roof repairs $800,00
: asbestos removal - none
: new boilers - free if you switch to gas heat.
: her apt. on the open market would rent between $1,000 and $1,200 a month. - pure profit for the landlord.
: RC tenants pay $106 per month more than what it's worth.
: it is very difficult to sell enough units to give the building 50% control.
: I don't want to buy at today's crazy prices.
: Without that control, the banks will not lend money for repairs.
: Home Equity loans are tax deductible.
: Landlords do not bother to repair R/C apartments till the tenant moves or dies.
: No one wants to through out an old person. Yeah right, all landlords care about is their big bottom line.
: What gets me with the current rent laws is this: When that guy dies, his son, who is young and perfectly able bodies will inherit the lease? Since when should you inherit a lease of something that you don't own. It is understandble with a spouse or significant other, but an abled bodied off-spring. That is totally ridiculous.
: The landlord made a deal with the family. Are you saying that parents in rent control apartments shouldn't have unprotected sex? That the childen who were in the apartment taking care of their parents should be thrown out on the street. Some of these kids were there before their landlord. Don't you think they deserve to live in thier homes without having to pay through the nose?
: : Regarding the idea that someone who has lived somewhere could have bought the building 10 times over..... If you want to turn back the clock and change the law, then lets do it fairly and offer the building to the existing tenant at the price it was worth 50 years ago when the tenant's family first moved in.
: A person purchasing a building only risks his original 5% down payment, For a 10 unit $25,000 building built in 1947 that comes to about $1,250.
: 50 Year old tenants paying $200 monthly rents have contributed over $250,000 when you consider the annuity.
: If something were to happen to this property, an earthquake a fire, the renters need to find a new place to live and buy new furniture. The owner has lost many thousands of dollars. Landlords are not worried, that's what homeowner's insurance is for.
: : Regarding RC/RD causing landlords to raise their rents astronomically. Some will try, History has shown us that others will hoard vacant units just to drive prices up.
: One of my children has been accepted to a Specialized High School, he is a very intelligent boy. His subjects will include Architecture and Engineering. I hope he will eventually attend N Y University and take subjects like City Planning. If we get our opportunity to remain in NY, there will be an answer for everyone in 8 years.
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