2016 Election

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#1,526
#1,526
Gramps said:
One doesn't realize the cost of being a landlord unless they have been one. I got out of the rental business several years ago. It is a headache I did not enjoy. I changed from rental homes to land. I like land.Cudo's to you for bring able to be a landlord.
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I am trying to quit. I am retired, and just listed the first piece of property to sell. I hope to rid myself of all of it in the next couple of years.

The commercial part isn't as bad, but I would like for it all to go away. I don't enjoy it in the least.
 
#1,529
#1,529
1972 Grad said:
I have a degree in Econ from U.T., but I pay the property tax on the rental property. Would the rent be lower if there was no property tax? Maybe, maybe not. It is supply and demand that sets the rental rate. You have X amount of property and X number of tenants.
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Yeah, and taxes shift the supply curve, remember?
 
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#1,536
#1,536
I'm hoping there is an election and martial law isn't declared, otherwise we're in trouble. Our military leaders need to step up against Obama and have him arrested. If the Iran agreement passes who knows. It's not good for America!
 
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#1,537
#1,537
1972 Grad said:
I have learned more in my 43 years running businesses, than I did in four years getting my Econ degree. Thanks for the refresher course.
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That's because you made it thru your econ degree without understanding tax incidence and price elasticity. This knowledge should be applied to your decision making. You can succeed without it, but you do better with it.
 
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#1,538
#1,538
n_huffhines said:
Yeah, and taxes shift the supply curve, remember?
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It has been many years since I had a course in Microeconomics, thus my memory may not be very good. However, as I recall, if the tax is on the buyer then, in theory, there is a shift in the Demand Curve. If the tax is on the supplier, then the Supply Curve shifts.

The question is thus: who pays the property tax, the landlord or the renter? I would say it is the renter; therefore, there is a shift in the Demand Curve.

This is a very simplistic answer as one needs to factor in price elasticity and substitution effects.

It is no wonder that Economics is referred to as the "Dismal Science".
 
#1,539
#1,539
Abe Hoffman said:
It has been many years since I had a course in Microeconomics, thus my memory may not be very good. However, as I recall, if the tax is on the buyer then, in theory, there is a shift in the Demand Curve. If the tax is on the supplier, then the Supply Curve shifts.

The question is thus: who pays the property tax, the landlord or the renter? I would say it is the renter; therefore, there is a shift in the Demand Curve.

This is a very simplistic answer as one needs to factor in price elasticity and substitution effects.

It is no wonder that Economics is referred to as the "Dismal Science".
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Happy Labor Day Abe
 
#1,540
#1,540
n_huffhines said:
That's because you made it thru your econ degree without understanding tax incidence and price elasticity. This knowledge should be applied to your decision making. You can succeed without it, but you do better with it.
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Right. If the property tax goes away tomorrow, do I necessarily have to lower the rent that I charge to keep my tenants?
 
#1,542
#1,542
Abe Hoffman said:
It has been many years since I had a course in Microeconomics, thus my memory may not be very good. However, as I recall, if the tax is on the buyer then, in theory, there is a shift in the Demand Curve. If the tax is on the supplier, then the Supply Curve shifts.

The question is thus: who pays the property tax, the landlord or the renter? I would say it is the renter; therefore, there is a shift in the Demand Curve.

This is a very simplistic answer as one needs to factor in price elasticity and substitution effects.

It is no wonder that Economics is referred to as the "Dismal Science".
Click to expand...

Supply curve is what shifts. The burden is determined by price elasticity. There are certainly instances where landlords pay all of the increase (in the short term) but the same goes for renters. Presumably they share the burden in most cases.

The idea that renters don't pay it at all is ludicrous.
 
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#1,544
#1,544
Btw, i'm giving 72 too much crap. this stuff is really hard to keep straight in your head. 1972 was a long time ago. I had to look up to make sure it was shift in supply curve. I knew one of the curves shifted, but had to doublecheck.
 
#1,545
#1,545
n_huffhines said:
Supply curve is what shifts. The burden is determined by price elasticity. There are certainly instances where landlords pay all of the increase (in the short term) but the same goes for renters. Presumably they share the burden in most cases.

The idea that renters don't pay it at all is ludicrous.
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I agree that taxes are part of the cost of having rental property. It is not strictly......the property tax goes up $500 a year, so I get to charge the tenant an additional $500 though. It may work that way in a textbook.
 
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#1,546
#1,546
n_huffhines said:
Supply curve is what shifts. The burden is determined by price elasticity. There are certainly instances where landlords pay all of the increase (in the short term) but the same goes for renters. Presumably they share the burden in most cases.

The idea that renters don't pay it at all is ludicrous.
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I agree with you that the costs of property taxes are transferred to the renter. Thus, it is the Demand Curve that shifts.
 
#1,547
#1,547
n_huffhines said:
You do whatever you want, but in the long run market prices will return to equilibrium.
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Here is what you are missing. Let's say I rent to a retail store (which I do...more than one). Let's say my property tax goes down $1200. Let's say I keep my rent the same, and pocket the $1200.

Let's say that another landlord will rent to my tenant for $1200 a year less because he can theoretically afford to. Will my tenant go to the expense to move, and take the chance that his business will suffer, since he has rented from me and been in the same good location for 11 years(which one tenant has), to save $100 a month?

My theory is that he won't. Maybe 20 years down the road, and that tenant is gone, it MAY make a difference, but hopefully, I still have a great location and building. This, I think, is where theory and reality aren't the same.
 
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#1,548
#1,548
1972 Grad said:
Here is what you are missing. Let's say I rent to a retail store (which I do...more than one). Let's say my property tax goes down $1200. Let's say I keep my rent the same, and pocket the $1200.

Let's say that another landlord will rent to my tenant for $1200 a year less because he can theoretically afford to. Will my tenant go to the expense to move, and take the chance that his business will suffer, since he has rented from me and been in the same good location for 11 years(which one tenant has), to save $100 a month?

My theory is that he won't. Maybe 20 years down the road, and that tenant is gone, it MAY make a difference, but hopefully, I still have a great location and building. This, I think, is where theory and reality aren't the same.
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Yeah, it all comes down to how elastic are your prices?
 
#1,549
#1,549
Abe Hoffman said:
I agree with you that the costs of property taxes are transferred to the renter. Thus, it is the Demand Curve that shifts.
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Maybe watch the youtube video i posted for a thorough explanation.

It's a supply side cost, which is why the supply curve shifts. Where the burden of the tax falls doesn't determine what shifts.
 
#1,550
#1,550
n_huffhines said:
Yeah, it all comes down to how elastic are your prices?
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Well, I lowered one tenant's rent 3 or 4 years ago over 20% because he was having trouble when the economy went south. I haven't tried to raise it back up, because I can afford not to, and he has been a good tenant for over 10 years. I try to live and let live. I lowered an apartment tenant by about 15% because her roommate moved out, and she was going to have to move.

My rents are very reasonable, and I fix any problems right away. I have very little turnover. I try to treat the tenants like I would want to be treated. I don't make much money on rental, but I don't have to.
 
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