
How Much Should a Landlord Pay a Tenant to Move Out of an Apartment? - DanBlake
http://priceonomics.com/how-much-should-a-landlord-pay-a-tenant-to-move/?
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keltex
I think the problem with this analysis is the assumption that rental units and
owner occupied units are identical to one another.

In most places, rental units have more basic fixtures an amenities and tend
not to be upgraded. It can easily cost of $100K to upgrade a kitchen or
bathroom with high quality cabinetry and appliances. And this happens all the
time with $1M+ units.

I have a house for sale in Mexico and I'm intentionally not renting it out.
Why? Because renter occupied units are perceived by buyers as having more wear
and tear and low-end than a place that's owner occupied.

~~~
knieveltech
I am totally fascinated by the concept of a $100k kitchen renovation. What
does that even look like? Where I live you can build a small house for $100k.

~~~
patio11
It's basically a $100k diamond ring, except with more granite countertops.

The stock kitchen for a middle-class house in suburban USA and a kitchen with
$100k of work done to it are functionally identical for 98% of people who buy
them, but the one with $100k spent on it looks like $100k was spent on it (if
you're in the know).

Less sardonically: "professional-grade" appliances, granite countertops,
redone cabinets which were custom-built by artisans out of exotic-but-
sustainable wood as opposed to something which came out of a factory in China,
etc, will all let you spend arbitrary amounts of money in a kitchen.

~~~
_delirium
$100k is going way overboard, but I do think a nice kitchen with nice
materials makes a significant difference in usability and comfort (a nice
kitchen can be had for in the $10-20k range). I've lived in all three of: 1)
an all-linoleum cheap suburban house; 2) a nice apartment where the kitchen
had tile/stone surfaces; and 3) a recent prefab-via-IKEA wooden-countertop
kitchen ensemble. Of those, #2 really was the nicest to use, followed by #3
and #1. Lineoleum and wood are just much less practical countertop materials
than any kind of stone. They're fragile and mark easily, so you have to be
really careful with knives and hot items. Of the two, linoleum is worse on
heat-sensitivity, while wood is worse on picking up stains. Granite has the
advantage of being hard to stain or mar, so even though I don't like the look
of those black-granite countertops, they _are_ nice to use and maintain.
Marble can be cheaper in many places (esp. Europe) and imo actually looks
nicer, but is more porous so has to be frequently resealed to avoid stains.

If a kitchen is cheap enough, granted, it could be a reasonable strategy to
just treat it as disposable and replace the surfaces every few years, if you
don't mind it always looking beat-up. I grew up in a home with all linoleum
and we did exactly that right before we sold it: put in all-new countertop and
floor when we were about to sell and then avoided using it to avoid marring
it, so it'd look quite misleadingly nice for the realtor showings. But it
wouldn't be my first choice in surface, if I had any spare cash.

~~~
mechanical_fish
I call upon the over-the-top stylings of professionally trained chef Alton
Brown:

[http://youtu.be/iKkf9YYwmGQ](http://youtu.be/iKkf9YYwmGQ)

... to explain, kinda painfully, that you can't use a sharp knife on a stone
counter or you'll dull the knife. You need a cutting board. Or a wood
countertop.

I understand the concern about heat but I've cooked with linoleum counters for
my entire life, mostly as a baker, and I don't remember damaging one. It's
just a question of not getting into the habit of setting hot objects on
arbitrary surfaces. I and every cook in my family has a nice little collection
of trivets, which cost a few dollars each and often come with college logos or
bad jokes on them. Of course, this probably makes us look lower-class. See
above under "status symbol".

We also have the confidence that, should we make a mistake, we can always buy
a second or even a third linoleum countertop and still be saving money over
granite or engineered stone.

That said, there's a good chance I'll end up owning a stone counter someday
anyway just because, in the Massachusetts market, status symbols matter, and
signals of recent renovations matter even more. We have a lot of lead paint,
buried asbestos, hidden knob-and-tube wiring, and sixty-year-old hack-job
plumbing around here, and anything you can do to suggest that your kitchen's
walls have recently been opened and pronounced up-to-code is worth doing.

~~~
_delirium
Sure you can get by with many things, and I mostly have. But if I had some
money, I'd buy something more durable. Admittedly, I might not actually buy
granite: tile countertops are cheaper, and have many of the advantages I'm
looking for.

I don't cut _on_ countertops, and agree that's bad for knives (I use cutting
boards, as is traditional even in countries like Italy and Greece where stone
countertops are the norm). But I do often have sharp things in the kitchen.
The last time I dinged a counter it wasn't even due to a knife, but because I
accidentally dropped a corkscrew. Would've been no problem with stone or tile,
but since I don't have those, it caused a permanent mark where the tip hit!
With wood countertops I've found myself paranoid about even setting a coffee
cup or wine glass down without a coaster, lest it leave stains that are hard
to remove. And with linoleum I'm always paranoid that even a bowl taken from
reheating in the microwave will leave a ring-shaped heat-mark.

In addition to tile as a stone alternative, I _am_ somewhat curious about the
newer generation of synthetic countertops. I have heard that modern Corian
countertops (or generic brands making Corian®-style countertops) are quite
durable, and somewhere in price between linoleum and stone.

------
afafsd
As a landlord (in a different city where things are sensible and I can raise
my rent or evict my tenant any time I darn well like because it's my fricking
property) this kind of thing makes me really angry.

~~~
k-mcgrady
>> "I can raise my rent or evict my tenant any time I darn well like because
it's my fricking property"

Of course you're going to think that - it's in your best interest. But it's
not fair to a tenant. Without regulations on evicting people asshole landlords
could make families homeless for no reason. I don't think you should have to
pay to evict someone but if you rent your property out there should be
regulations in place to protect the tenant. If there weren't I think you find
the market for rental properties start to diminish. People who could afford to
buy (and that's true of a lot of renters) would to avoid the risk of their
lives being turned upside down overnight.

~~~
jcrites
How is it unfair to tenants? Tenants sign a lease for a period of time with a
fixed price. The lease's fixed price protects both parties. When that lease is
up, the landlord and tenant should be free to negotiate a new price.

If tenants want stable prices over a longer period of time, then they should
negotiate a multi-year contract with the landlord. All of the protections
you're discussing are already built into the concept of a lease.

If either the tenant or landlord is not willing to agree to a longer contract,
then that should be their right. (Why should anyone be forced to lock in the
rental price of their property for years, even while the circumstances of the
city are changing -- e.g., receiving investment or decaying; people moving
into the area or out of it.) If one party wants a longer contract and the
other does not, then the party who desires the longer contract should offer
something in exchange for lowering the other party's flexibility. It all plays
into the price of the contract.

I personally prefer to rent month-to-month because I value my ability to pick
up and leave any time more than I worry about the uncertainty of being
randomly evicted. Someone who wants a five year lease should negotiate
differently and get a different price than I do (whether higher or lower
depends on the circumstances).

~~~
bitJericho
Every lease I've ever seen is on a take it or leave it basis.

~~~
jcrites
Plenty of properties will advertise "no pets", but you can negotiate with the
landlord about that. For example, you might offer an additional deposit
against pet damage, or offer to pay a cleaning fee when you leave. I have pets
and I have always been able to talk landlords out of their "no pets" policy.

If you offered the landlord double the lease price in exchange for a 2 year
contract, will they take it? Almost certainly. Few contracts of that type are
truly take it or leave it. My point is not that 2x would be fair, just that
you have the ability to negotiate, which means the question of whether you can
get a contract with the terms you want depends on your ability to negotiate a
price for those terms.

Many landlords value stability and will be happy with a longer term lease at
the same price, or even a lower price. And that's where the negotiation comes
in. If the landlord believes prices in the area will rise steadily, then he
may or may not want to offer a fixed price over a 3 year lease. Perhaps he
will offer a longer lease, but with a stipulation of 3% price increase per
year. You don't believe prices will rise that much, so you counter with 1%
YoY. It's like buying a housing future. You're locking in the price of housing
now as insurance against it changing in the future. That should properly have
a different price than a lease with no such provision.

If a person believed in rent control, why not go further? Fix the price of
property itself so that it may not rise more than 1% per year. If you buy a
house from someone, the sale price may not be greater than the last sale price
increased by 1% YoY. Would this be desirable? A law like this will have all
sorts of negative consequences on the economy. For example, imagine a house
owner who no longer wishes to live in the city. If prices were allowed to
rise, then he's incentivized to sell his house, cash out on the increased
price, and move somewhere else, enabling a person who wants to live in the
city can do so. But if prices are not allowed to rise, then he's stuck selling
is house for the same price he bought it; he has no incentive to move. Someone
is willing to pay him much more for that house, but they can't. This is what
it means for resources to be allocated efficiently, and it depends on the
ability of prices to change over time.

Fixing prices also affects investment. For example, if I believed that prices
were likely to rise in some area, then I'm incentivized to buy property there,
build housing or fix it up, and sell or rent it to capitalize on that price
increase. The rising prices bring investment: I might build an apartment
building to take advantage of rising rents. By comparison, if I know that my
property will be rent controlled, then that limits my financial upside from
investment, and removes my incentive to invest, which is also bad for the
economy if it would otherwise happen naturally.

------
justincormack
The US likes to think of itself as a deregulated, capitalist country, but
still has a large amount of regulation (largely state not federal it seems).
In the UK rent control was abolished by Thatcher in 1980, and while there is
occasional talk of reintroducing some controls the basic premise seems
unlikely to change.

~~~
frandroid
Surely there are some cities where there is rent-control in the UK? It's only
SF that has this, not "the US".

~~~
justincormack
No, it was abolished for the whole country, cities have no ability to impose
it (in fact they have very little power to do stuff).

(doesn't New York still have rent control?)

~~~
tedunangst
NYC has not just rent control, but rent fixed apartments. Which leads to a
rentocracy where people inherit 1500/mo leases for 10000/mo apartments and all
manner of tricks and lies to make it happen. And then building owners install
electronic locks to record visits and prove residents are only living part
time in their apartment.

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johnrob
Oops - taxes were forgotten! They can differ wildly due to income level and
legal loopholes, but it's pretty safe to assume an additional 130k in sales
doesn't all go into the seller's pocket.

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anigbrowl
It would be more accurate to say 'can add over $100k to sale price.' In the
case of legitimate owner move-in evictions, for example, compensation to the
tenant is capped by a statutory formula. It's been a few years since I looked
at it but I think it was in the region of $15k for the most complicated
situation. There are additional constraints, like if a child is in elementary
school you can't move in until the end of term due to the difficulty for
parents of switching schools.

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DanBlake
Reiterating my comment on the blog here:

Major issue with the article:

Condos do not have rent control- They are treated as single family homes- The
new owner can simply raise the rent to market pricing at the end of the lease
cycle. There are some rare outliers that can bypass this (such as if a tenant
was present in the apartment when it originally converted to be a condo) but
you should find that the vast majority of condos do not have this situation.

A much better analysis would have been on the sale of 2-4 unit buildings.

------
ipince
_The amount a landlord should be willing to pay will be higher than this
amount if your rent is substantially below the market rate, and lower if it’s
only a little below the market rate._

...Why? I don't see how that conclusion follows from the data. The data only
compared occupied vs unoccupied rent-controlled home sale prices. Nothing took
into account how under-market said rents were. Unless I missed something...

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tunesmith
This isn't exactly my wheelhouse, but doesn't that completely gloss over stuff
like time-value of money, and the fact that it's converting illiquid to
liquid? Not sure why a landlord would go through the aggravation and
uncertainty of buying out the tenant and then selling if it was only break-
even.

~~~
tedunangst
As noted, the correct methodology would be discounted cash flows. Instead
they're assuming the market has already done that analysis and that they can
measure the result indirectly through sale prices. If option A sells for X and
option B sells for X + Y, you should be willing to pay up to Y to take option
B.

The market may not have done the cash flow valuation correctly, but the owner
is selling in that market, not the ideal market, so it doesn't matter. The
market prices also account for the "hassle factor" so it may even be more
accurate than a spreadsheet calculation.

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1945
You own it, you can do whatever you want on the property (within reason..). If
you want to evict a tenant, that's your right and the state/city/federal
government should not have a place in intervening.

