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Economics of Rental Properties

Summary?

Introduction

Scope and structure

Costs

Structure of costs

Operating

What operating costs look like

Mortgage

Mortage structure

Variable Rate

Variable rate issues

Federal Loan

Specific proposal

Replacement Reserves

Description and issues

Pricing

Different pricing models

Not For Profit

Prices set at costs

For Profit

Several different models.

Desirable Locations

Location, location, location also applies to rentals.

Profit Maximization

May involve flipping properties.

Relaxed Profit

Some (typically smaller) landlords will reduce stress by not maximizing profits.

Undesirable Locations

Prices set close to costs. Costs squeezed.

Conclusions

Private landlords are a bad idea.

Not for profits have issues with replacement reserves.