Quote:
Originally Posted by TboneS54
That's not how it works. You don't figure out your rents from your expenses. You do that research and analysis (ROI) before you buy a property. Rents are based on market. You want as much $ as possible, no matter what your expenses are. Then you want to back it down a hair so you're not at the absolute top of the market so as to attract and retain quality tenants.
Of course the market will reflect a rent price that will cover a well bought investment, that's natural. If you make a bad investment, you can't just raise the rent to cover your expenses. Your ceiling is the market rate.
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Of course a poor investment loses money, but no one intentionally makes investments to lose money. I agree rents are driven by market, but investors do not buy properties if they don’t think market rents will cover their carrying costs. If market rents are too low, they need to adjust the purchase price of the property. So if you rent you are paying every cost incurred by the landlord plus a return even if you don’t see or pay those costs directly, unless you happen to rent from a landlord who is losing money because they misjudged market rents or carrying costs, or there has been a downturn in rents, which is common. Again, if lessors could not consistently make money on renting property there would be no property to rent.