Well at the moment most landlords I have spoken to (the ones with loans) are losing more money by renting out the property than they ever have before. You only leave money on the table if house prices increase, and despite what you see in the media, many house prices have not risen that much. My own have only recently returned to what they were worth back in 2008 before the GFC, but in that time I have spent many thousands on interest payments to the bank so if I sell today I won't break even and will make an overall loss, as compared to leaving the money in a normal bank account the whole time. I am hoping that by next year when the leases expire the house prices will have gone up enough that I can at least break even and recover the extra money I paid to the bank. So I'm not sure what you mean by all the money left on the table, unless I am missing something?
The property sale is unlikely to be going to another investor given current market conditions, so it will be removed from the rental pool. Yes you're right that it will go to another person, but this is likely to be someone moving out from their parents' home, or someone coming in from interstate. It's unlikely to be a renter purchasing the home because if a renter was going to buy a home they would have done so already, or they're still saving for a deposit and the price increases have set them back so they have to keep saving for longer now.
It's odd to say that landlords aren't providing housing, when a new investor in the market will provide an additional rental that was not available before. Yes it might be an existing house instead of building a new one, but we're talking about rentals not about buying. When we need more rentals available it doesn't matter whether they are existing houses or new ones. We only need new houses when we're talking about lowering the price of buying a house.
The fact is that landlords aren't increasing rents faster than interest rates, it's misleading the way it's calculated. The interest rates have been increasing every month or two for a while now, but due to most leases being a fixed length, the rent can't be changed. So of course once the lease gets renewed there is a correction and six months or even a year of interest rate increases suddenly get included in a single new lease, and so of course that looks like the rent is being increased at a much higher rate because of the sudden jump. But if you look at it percentage wise over the whole time period, you'll find that the majority of rents (at least outside major cities) are increasing at or under the interest rate. In my own case I have increased my rents way under the interest rate which is why I'm now stuck for the next six months having to dig into my savings to make my loan repayments. But hey at least my tenants are keeping VERY quiet about maintenance issues as I think they realise they're getting a pretty good deal, so at least they are helping me save some money there.
At any rate, time will tell which one of us is right. I am sure rents are going to continue to rise as the number of landlords decreases, but if that does not happen I am more than willing to admit I was wrong. We'll see!
Well at the moment most landlords I have spoken to (the ones with loans) are losing more money by renting out the property than they ever have before. You only leave money on the table if house prices increase, and despite what you see in the media, many house prices have not risen that much. My own have only recently returned to what they were worth back in 2008 before the GFC, but in that time I have spent many thousands on interest payments to the bank so if I sell today I won't break even and will make an overall loss, as compared to leaving the money in a normal bank account the whole time. I am hoping that by next year when the leases expire the house prices will have gone up enough that I can at least break even and recover the extra money I paid to the bank. So I'm not sure what you mean by all the money left on the table, unless I am missing something?
The property sale is unlikely to be going to another investor given current market conditions, so it will be removed from the rental pool. Yes you're right that it will go to another person, but this is likely to be someone moving out from their parents' home, or someone coming in from interstate. It's unlikely to be a renter purchasing the home because if a renter was going to buy a home they would have done so already, or they're still saving for a deposit and the price increases have set them back so they have to keep saving for longer now.
It's odd to say that landlords aren't providing housing, when a new investor in the market will provide an additional rental that was not available before. Yes it might be an existing house instead of building a new one, but we're talking about rentals not about buying. When we need more rentals available it doesn't matter whether they are existing houses or new ones. We only need new houses when we're talking about lowering the price of buying a house.
The fact is that landlords aren't increasing rents faster than interest rates, it's misleading the way it's calculated. The interest rates have been increasing every month or two for a while now, but due to most leases being a fixed length, the rent can't be changed. So of course once the lease gets renewed there is a correction and six months or even a year of interest rate increases suddenly get included in a single new lease, and so of course that looks like the rent is being increased at a much higher rate because of the sudden jump. But if you look at it percentage wise over the whole time period, you'll find that the majority of rents (at least outside major cities) are increasing at or under the interest rate. In my own case I have increased my rents way under the interest rate which is why I'm now stuck for the next six months having to dig into my savings to make my loan repayments. But hey at least my tenants are keeping VERY quiet about maintenance issues as I think they realise they're getting a pretty good deal, so at least they are helping me save some money there.
At any rate, time will tell which one of us is right. I am sure rents are going to continue to rise as the number of landlords decreases, but if that does not happen I am more than willing to admit I was wrong. We'll see!