- Joined
- Feb 5, 2020
- Messages
- 101
Rep Bank
$730
$730
User Power: 123%
As my wife and I age, we are looking for places to put capital that will produce somewhat passive income. We are most familiar with real estate, however I have an awful and worrisome itch of a concern. I worry that something like the following could happen, and I wonder how one might protect against it?
We buy a condo in Anytown for $400k cash, and hope for a 5% annual ROI. Let's imagine we are renting the unit for $2k/mo. Let's also imagine that our living expenses are $2k/mo. All is well.
Then, local government goons decide to implement Rent Control. We are "allowed" to continue our lease at $2k/mo until the end of the lease term, however the awesome tenants and we agree that with inflation and the increased $100/mo HOA fee, that we need to raise rent to $2,150/mo. Oops, it dawns on us that we are not allowed to raise rent by $150/mo, and that instead government bureaucrats have crunched numbers and that an increase of only $27.48 is "fair" and "equitable." Oh well, my wife and I can eat cheaper food and get rid of our gym memberships.
Next year, free market rent should be $2,500/mo, and our personal expenses are now $2,600/mo. Damn it!
Ok, ok, I know the above "100% of eggs in one risky basket" is silly, but it is just an example to illustrate a concern. Some ways that I have contemplated a landlord might protect themselves against the tyranny of Rent Control include:
Have any of you experienced rent control suddenly coming to your area? Was there any way for landlords to be grandfathered into being exempt? How?
What else should I be asking that I am not?
(The image is of the view from the deck of a rental condo we have in Fountain Hills, AZ, if any of y'all are headed out to stalk MJ, hit us up...lol)
We buy a condo in Anytown for $400k cash, and hope for a 5% annual ROI. Let's imagine we are renting the unit for $2k/mo. Let's also imagine that our living expenses are $2k/mo. All is well.
Then, local government goons decide to implement Rent Control. We are "allowed" to continue our lease at $2k/mo until the end of the lease term, however the awesome tenants and we agree that with inflation and the increased $100/mo HOA fee, that we need to raise rent to $2,150/mo. Oops, it dawns on us that we are not allowed to raise rent by $150/mo, and that instead government bureaucrats have crunched numbers and that an increase of only $27.48 is "fair" and "equitable." Oh well, my wife and I can eat cheaper food and get rid of our gym memberships.
Next year, free market rent should be $2,500/mo, and our personal expenses are now $2,600/mo. Damn it!
Ok, ok, I know the above "100% of eggs in one risky basket" is silly, but it is just an example to illustrate a concern. Some ways that I have contemplated a landlord might protect themselves against the tyranny of Rent Control include:
- Select a place where the political bias is more free-market, like small-town Idaho versus The Bay area.
- Base rent on something other than the USD, like some sort of index or precious metal or similar. (Rent is 1.2 otz AU/Mo.)
- Set rent ridiculously high, like $10k/mo in my example, and offer discounts via wink wink (discount this year is $8k /mo, next year $7,850/mo discount etc...
- Don't even do residential real estate, and instead do a REIT, storage units etc...
- ?
- ?
Have any of you experienced rent control suddenly coming to your area? Was there any way for landlords to be grandfathered into being exempt? How?
What else should I be asking that I am not?
(The image is of the view from the deck of a rental condo we have in Fountain Hills, AZ, if any of y'all are headed out to stalk MJ, hit us up...lol)
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Attachments
Access Restricted: Unlock 1,000,000+ Posts
Stop Peeking Through the Keyhole.
Open the Door.
You hit a wall because the best advice isn't free—it's earned. Since 2007, MJ DeMarco has been active here daily (99.9% active rate), building a war room for entrepreneurs who refuse to settle for mediocrity.
- Active Daily: Life-changing content posted dozens of times every day. No dead threads.
- MJ's Inner Circle: Direct access to the author of The Millionaire Fastlane.
- Vetted Network: Connect with founders scaling to 7 and 8 figures.
- Proven Roadmaps: Strategy over motivation. Execution over "hustle porn."
"SCALED TO 6-FIGURE MONTHS"
"Tips and advice here saved me from huge mistakes, others allowed me to scale my business to 6-figure months."— User MitchC
"INSANE QUALITY OF PEOPLE"
"The number of high quality people I've met from this forum has been insane. All of it predicated on building real value."— User Richard Peck
"You are the average of the five people you surround yourself with."
Are you surrounding yourself with success?
