I live in Chicago. I know how much my upstairs and downstairs neighbors pay, and how much my roomies and I pay. We live in an up-and-coming neighborhood and my landlord, who I previously thought to be a misplaced farmer from the lesser-known parts of eastern europe, showed up yesterday driving a Lexus SUV and wearing leather pants.
Where/how can I find out how much he paid for the building I live in? Is this information a matter of public record somewhere?
Why does this matter to you? WHat makes you believe he has no other source of income to provide for his standard of living?
If you think you’re paying too much in rent, just check with real estate agents in the area and you’ll quickly find out the market price.
Where I live you can go down to the courthouse and find out the “assessed value” of the property, what it last sold for, and what the property taxes are for it.
But why don’t you just start by estimating what the rent of the building is. Even if your landlord is getting – say – $5K a month for a four-family unit, it’s not exactly financing a life of luxury.
Keep in mind that there are other expenses involved in being a landlord as well. In addition to mortgage payments you have taxes, insurance, utilities, maintenance, management (if it’s a larger building). Plus there’s loss of income when a unit is between tenants.
If this is a small building and it’s the only one he owns, he’s not making a lot of money. If it’s a large building or he owns more than one, either he’s doing a lot of work or paying a lot of money to people to manage and maintain them. Yes, long-term, real estate is a good investment. But it takes a lot of work and money to get started, so don’t begrudge him his luxuries.
I think that the standard is to charge 1/6 of the value of the property per year. Even if interest on the landlord’s loan causes him to own the property for twice its value after 20 years, he earned that money in 12 and gets 40% of the value of the property as profit over that time (I’m ignoring inflation and other minor details for convenience). Your landlord would earn 2% of the property’s value as profit each year.
Check your local bank’s property loan rates and mortgage rates, and the value of the property. Pittsburgh just put all property’s value and tax rate online. It was interesting to see that my rent was raised even though the property was devalued (even with inflation, I should be paying less than last year).
Not all landlords behave like the other name of the card game.
InstantCrisis
I vaguely remember being told that 20 years and 2x value are normal for paying off home loans. Someone can correct me if I’m off.
You can look up the purchase price of homes in many states at this site.
Zev Steinhardt
In my city in California, the local bldg dept has a folder on each property open for public viewing.
IAAL
here’s another thing to consider, this has a lot to do with a landlord’s profit on a building - how long ago did he buy the property?
profit is income minus expenses, of course. Income(rent) only goes up over time. Some expenses increase, too, such as taxes & any utilities he covers. But a landlords biggest expense is often his mortgage, which generally stays the same, or can go down if he refinances. Hence, properties held by a landlord tend to become more profitable over time. Tip - if you’re looking for cheap rent, don’t rent from someone who just bought their property - they’re probly too maxed out to cut you a deal. Also, some landlords spend money on improving a place when they first buy it, further hurting their cashflow early in the ownership cycle.
if i buy a rental property today, I’m looking to maybe break even on it for a few years, but further down the line, I hope it to return a yearly profit.
and as far as your landlord’s car & pants - a lot of people hold real estate as a sideline & have other business ventures or regular jobs. So he may get his money from somewhere besides landlording.
i second the suggestion to find out what the property cost & when it was purchased.
I have to say I am confounded by the OP. Why would you care about any of those things?
Speaking as a former landlord (I had a two-unit lot that I rented to two families), I should point out that he might actually be taking a loss on the property.
I did that for a few years; the rent I charged was just enough to cover the mortgage payments, some of the property tax, and the average for utilities. If utility usage went up for a month, or there was maintenance to be done, I took a hit.
Why’d I do that? Because I could then claim the losses and depreciation on my income taxes and get a refund. It wasn’t a big deal, but it helped. Also, the tenants were low-income families, and keeping the rent down $100/month often made a big difference to them. Meanwhile, I sat around and waited for the neighborhood to go up in value (which never happened 
). Good thing I had a regular full-time job, or I’d have been broke.
Bottom line: don’t assume your landlord is getting rich.
well thanks everyone.
I was interested in finding out why my landlord was making certain upgrades to our place but not others (like giving us sweet new windows but not fixing the crappy bleeping plumbing), and maybe seeing how this reflected what he thought was going to happen in the neighborhood, and also how much scratch he is making off of us recent college grads.
I’m more generally interested in the micro/macro factors a landowner in the city has to consider when setting rent prices. Our rent is certainly reasonable for our demographic (three young white sorta educated college kids), but I can’t help but wonder if he may be charging the same or more for less well-off renters in our primarily hispanic neighborhood (I’ve seen five, six, and seven people living in comparable spaces…), because maybe he expects more of our ilk to move in. Probably not, he’s generally a nice guy, but affordable housing/skyrocketing rent prices/yuppie invasions are all big issues in other parts of the city that bother my liberal ass.
hmmm, the windows versus piping thing… well, it may be that people tend to spend more on what shows. I recently sold a house in which I had upgraded all the plumbing and electrical and it had zero effect on the sale while every little blemish that could be seen was detracting from it. I guess this would also affect the rental market as people tend to rent places that look nice… nad find out and complain about the plumbing later.
What he is chraging is going to be determined mostly by the market and has little to do with other factors. It is very possible he is charging dofferent rates to different kinds of people and that just reflects the desireability of different types as renters. Some people would prefer not to have groups of young students and some people would find them desireable tenants depending on circumstances.
Also, he may want to charge more depending on the expected wear and tear and on paying ability. many factors go into it but mainly it is going to be the market because if you can find a better deal across the street then you’ll walk.
Regarding how much he is making, that is a very vague question. Income is what you tenants pay but he has expenses which need to be deducted. What he paid for the property and what he may owe on it are not very relevant except maybe to give you an indication on his situation if you want to negotiate.
Regarding “yuppyfication” (or whatever the word is) of neighborhoods we have had asome threads in the past you may want to search or start a new one if you feel so inclined (probably in GD as it will soon turn that way).
Welcome to the board.