- This topic has 50 replies, 10 voices, and was last updated 1 week ago by .
-
Posts
-
We need to stop overcharging for everything. Being kind to one another also involves transactional living. Instead of thinking just about self when it comes to money think also how those prices will affect someone else. You can tell me from today till tommarow it’s the “market” this how much I can charge. But we are communal people and our need to support one another comes because we are actually incapable of doing “everything” alone. If lowering your price will bring ease to another person’s life. Take that leap of faith and watch how G-d blesses you. The opposite is true too. Watch the internal strife you suffer because the price did not take into account the party involved
Rental houses are largely a function of supply and demand. New York City keeps the supply low (through rent control of various flavors), which keeps the price high. However policies that encourage people and businesses to move elsewhere will reduce demand, which will lower prices. A private landlord has little control – if he sets the price tooo high he won’t find tenants, if he sets it too low he will have more people wanting to rent than he can deal with, plus he may have too little revenue to stay in business. The frum community could migrate to cities which encourage construction and maintenance of apartments, though that may not be an option for someone whose parnassah comes from working for the goyim’s well-paying corporations.
I have been a landlord for many decades. When my expenses (taxes, maintenance, insurance) rise then rent has to increase at renewal time. I keep my net constant, but why should you expect me to subsidize my tenants?
I do not look at what the current rentals in my local markets are to set rents. They are set based on expenses and a reasonable Return on Investment.
In years when taxes and insurance does not go up, I renew at current rental amounts.This may be one reason that most of my tenants have been in place more than 10 years.
Indeed, one of the talmidei chachamim in Bavel was in business of retail wine sales. He would buy a barrel, say for $100 and then sell 10 bottles for $10 each. Gemora asks – this does not make sense as there is no profit. Answer: he also had sediment left that he will sell to other businesses for small profit. The lesson is – ehrliche business is about having some profit – not too much but also so that the business can exist.
akuperma > if he sets it too low he will have more people wanting to rent than he can deal with, plus he may have too little revenue to stay in business
Furthermore, often if you price too low, you may get questionable renters who may stop paying or who will try to push for other payouts, such as costs of repairing things they break. If you charge more, you’ll get people who either/or earn more and are not able/interested in fighting for every penny.
ehrliche business is about having some profit – not too much but also so that the business can exist.
I’ll try to remember that principle when negotiating the purchase of a $500 Calabrian esrog or $50/lb box of hand-made shmurah matzoh.
>>>I’ll try to remember that principle when negotiating the purchase of a $500 Calabrian esrog or $50/lb box of hand-made shmurah matzoh.
No comparison to rental prices. If you can’t afford it you can easily do without a $500 esrog (or not buy an esrog altogether and just borrow one) or $50/lb box of hand-made shmurah matzoh (or ask for Kimcha D’Pischa. The Gemara says that Arba Kosos etc. in an exception to the rule of
עֲשֵׂה שַׁבַּתְּךָ חוֹל וְאַל
תִּצְטָרֵךְ לַבְּרִיּוֹת)
. When someone is living in an apartment with raising rents they do not always have the easy option to just movegadol > I’ll try to remember that principle when negotiating the purchase of a $500 Calabrian esrog or $50/lb box of hand-made shmurah matzoh.
Absolutely. Buying this would be lifnei ever. They would not be selling them if you are not
I used to buy from a couple of the talmidei chochomim like in the gemora whose prices were 30,40,50… The older one is already niftar, and the younger one went to another town to be a rov.
I took kids to the store to teach them some advanced math: record all prices: 30,40,45, 50, 70, 100, 150 compute median 50, add 20% for hidur mitzva, buy $60 esrog.
relevant Gemoras
Bava Metzia 40b – Rav Yehuda was selling oil and sediment, not wine.Bava Basra 90-91 Shmuel (R Yehuda’s teacher) one can not profit more than 1/6th
plus payment for labor and selling expensesRambam: this limit is set by Beis Din and is for essentials only (oil, wine, flour).
Shulchan Aruch (CM 231:20)overall discussion is that 1/6th is enforced only under some circumstances – having a beis din regulating prices and essentials
and when all grocers do not keep to the limit, one does not have to.:SMA (38 and Prishah 26 DH d’Chi): When there is no Beis Din and everyone else transgresses Chachamim’s words not to profit more than a sixth, one who fears Hash-m need not be careful about this. If not, when he finished selling cheaply, all others will sell for a high price!
AAQ – I am not sure SMA works in current markets: Walmart shows you the power of low profits: one who sells cheaper can order more merchandize and become as rich as Waltons.
none2> If you find the perfect tenant and he can’t afford 50 dollers one month would it kill you to wave that
Of course. But a lot of laws make it difficult to give discounts to good tenants – you might get accused of various discriminations. I believe Trump’s father was accused of something similar: when he had apartments for rent (maybe subsidized ones?), he quickly advertised them in russian-language newspapers, so that recently arrived russian jews would come before less desirable renters.
there are a couple of articles in WSJ looking at recent experience in Austin TX where even progressives went for relaxing rules and encouraging building more instead of rent control – and successfully lowered housing prices in the last several years. TX-wide rule forbidding rent control was helpful here to nudge them in the right direction
One lesson from NY and other such places – if problems remain unresolved, then there will be someone offering a socialist solution. Places where it is easy to build do not elect communists to establish rent control. Historically, this is why USA had very weak socialist movements 100+ years ago comparing to most of Europe – as many problems were resolved otherwise.
Ex-CTLawyer: Just trying to understand your pricing model. You say you keep your net the same, how do you handle pricing downturns (which do inevitably happen over the decades)?
no ones making you buy a 500$ esrog and i know of a prominent posek who sells his chabura matzah for 40 a pound, i dont know why it costs so much but i can guarantee hes not cheating anyone
@fakenews
B”H my properties are not financed, so I am not subject to fluctuations in interest rates.In 2007/8 when the markets imploded, real estate values dropped. Many with mortgages found themselves underwater and lost their properties.
AND: my real estate taxes dropped for a year when my town made the next year’s budget. I passed the savings along to my tenants by lowering their rents proportionally for my tax savings for the renewal one year leases.When taxes and insurance and maintenance are stable I do not increase rents at renewal time. This year real estate and fire taxes are increasing 2.5% based on the grand list of Oct 1, 2025 (payment due in January 2026-we pay taxes in arrears in CT). Tenants will get a proportional increase when lease renews. Example 2 family house with $600 tax increase, each tenant will get a $25 increase for the coming lease year. I don’t increase their $2500 month rent by 2.5% which would be $62.50 unjustly enriching myself.
I set a 10% net ROI for myself (7% which I could get in a stock dividend<which I do regularly for clients and self for 40 years >, and 3% for my efforts/labor time in managing the properties, doing bookkeeping and taxes, etc.)If I had to pay a mortgage those 3Br 2 bath central A/C modern apartments would have to bring in $3800 mo rent, which is comparable in the area.
I’d rather have long term stable families as tenants who can afford the rent on dad’s income while mom can raise the children and watch over the property.Not unusual for me to get a text from a tenant stating that the kitchen faucet broke and the bought a mid price replacement from Home Depot for $40 and they asked their son in law to install it so as not bother me to get a plumber. I immediately Zelle them the cost of the faucet and express my thanks.
Long term good tenants are the key to financial sucess as a landlord, turnover is a killer.
Today is the last Friday of the month bc and many of my tenants have already paid rent for July. I have not had to bring an eviction action in about 20 years and I”H will never have to do so againExCTL > Long term good tenants are the key to financial sucess as a landlord, turnover is a killer.
Your system looks pretty good and ehrliche. I presume your rentals are in CT residential area. Many people have a little different situation when renting out in metropolitan areas where most renters are moving in/out every year. I am not complaining – as this takes more effort but also pays better. It becomes harder to be nice to renters – as they move out anyway 🙂 I guess it increases a sechar for being nice. So, you got to go a fine line. We usually pay for the first case new tenants do something stupid, just pointing them to the lease item they violated. Some interpret this as weakness and repeat the same thing next week. We then tell them what the repairs they need to do and, as a favor to them, we can recommend a cheaper repairman. This usually works. This is a business extension of great Jewish poet Henrich Heine musing in his dairies – “it is impossible to live if you don’t trust anyone. but if you trust everyone all the time, you’ll be taken advantage of. You can live reasonably if you simply do not let the same person cheat you second time”. I don’t think Heine thought of broken fixtures, but it seems to work.
none2 doesnt hold of halacha (see wheres hashem thread) some i wouldnt be too keen to accept mussar from her
@AAQ
We have a mixed portfolio:
Suburban one and two family homes
Urban 3 family homes
Urban apartment buildings geared to seniors
Commercial properties
All above in CTSingle family blue collar tenant homes (NY)
Retirement apartments (FL)Many of our CT properties are near universities but we do not rent to students. Too destructive and transient.
I bought my first rental property when I was 25 and the system has worked well (B”H) for almost 50 years.
none2.0 while it seems like AAQ and EX CTLawyer can afford to charge lower rents, others have mortgages and are trying to make ends meet. Others are thinking about the future. If someone scrimps and saves for years so that they could invest in real estate, doesn’t it make sense that they would want to make as much profit as possible? They are being responsible and trying to save for the future.
ExCT > but we do not rent to students. Too destructive and transient.
Right, but you lower your profit. Where we are, mortgages are high – mostly because houses are expensive to buy, so I don’t think we would make any profit (even taking into account appreciation) without going for highest paying renters. What I am saying is that there does not have to be a contradiction between trying to get higher profit and being decent. I see it even more in my main business – I charge high but after that I focus on what I can do for the customer. I saw and worked with businessmen who try to squeeze as much as they can from every transaction and they are not successful in a long term.
Once, I was insistently invited for an extra lunch by visiting group after we seemingly finished all business about potential partnership. After some time, I realized that the group needed us so that they can bill this lunch internally as a business expense. I lost some time on this, but timely escaped a dreadful partnter.amom, right – you should be allowed to make your profit as long as you are decent towards the others. For example, years ago I knew a generally decent Rabbi with a large family and a visible in the community but presumably low-paying position. I then found out that they were routinely hiring recently arrived to the county old Russian ladies as babysitters – for an obscenely low rate – like 2-3 times below minimal wage (which was pretty low in the state). I had to wonder whether anyone from that community was touched by the divrei Torah from the rav …
It is not about making as much profit as possible, but a fair return on your money.
If I had mortgages (and did in the past) I still used a 10% Return on Investment as a fair profit. 7% return on the money (as I can easily get in securities and 3% for my time and effort (management).
If I paid professional managers, those costs would be figured in the expenses before setting rents to give a fair profit.
There is an old axiom in investing: bears make money, bulls make money, pigs get slaughtered. Don’t be greedy! Make the rents too high and tenants can’t pay, or double up causing excess wear and tear. Real Estate is not a get rich quick scheme. It is hard work over the long term.
none,
Since you’re lecturing others, please disclose how much you donate annually to assist the less fortunate with food, clothing and shelter.
@AAQ
You write about the need to have the highest paying renters in my response to not renting to students; a group I label as destructive and transient,
So, if I can rent a 3br to six students for $4800 month plus utilities or a couple with 3 children for $4100 per month. I’ll take the family. The wear and tear from 6 students far exceeds the family. They tend to move friends in without permission. They tend to leave after the academic year and the unit needs painting every time. They have no pride in the place.
The family wants to live in nice surroundings and does not generally trash the place. Typically only have to paint after 4 years if they renew leases. They want stability, don’t trash the grounds, etc.Yes property is expensive, but I look at the rental market and aim for 85%of market rate on a new purchase that is financed. If it can’t carry at a 10% return, not worth buying,
Typically, landlord loses a month’s income every time there is a change of tenant. Lease expires 11:59:59 pm and can’t expect to have it ready for move in at midnight.
Outside of NYC, landlord pays real estate agent, typically one month’s gross rent on a year’s lease.
I don’t use agents, we own an in house Real Estate Agency. Mostly get my tenants by referral from happy existing tenants whose friends and families are anxious to live in my properties.BTW you talked about appreciation in deterring your profit. You neglect to mention depreciation, that wonderful accounting system that throws off tax saving snd profit. After 29 years (used to be 15) and depreciation to zero one doesn’t sell and have a huge taxable capital gain from reduced cost basis. Instead one doesn’t a like kind property swap, avoids the tax and gets to start depreciation again. I’m
ExCTL, in our case difference between transients and family is ~ $1000/month – after taking into account annual agent fee. For $12K year, it is possible to fix a couple of things and paint (which is not required every year). Not enough families with 3+ children in this area .. and the ones that do – I think kids are more destructive to property than young adults.
I agree on only purchasing property below market rate.
Good idea on own RE agency, I’ll think about it!
Thanks for the warning on depreciation, I have some years before I worry about that.@AAQ
The late Mrs CTL and her mother A”H were RE Brokers for more than 40 years. The CTL firm handled all closings flowing through the office. Several of my children and grandchildren are licensed and keep the agency alive.In CT, RE agents do not get any income on a residential renewal; so most agents can’t be bothered with rentals
none,
You are lecturing others on how to do business and the one with a stuck up attitude. You’re also a hypocrite and don’t practice what you preach.
none,
Once again, since you’re lecturing others, why are you so afraid to disclose how much you donate annually to assist the less fortunate with food, clothing and shelter? Is it because you don’t donate a penny, which would make you a hypocrite?
none,
Where do you come off writing that I “can’t handle being held accountable for something your doing that’s perhaps wrong”? I don’t own a business or any rental properties.
You however are a hypocritical blowhard who enjoys lecturing others but is too afraid to disclose how much you donate annually to assist the less fortunate. Typical rude, liberal loudmouth.
- You must be logged in to reply to this topic.