>>21692234What you might not understand is the real estate market in modern times is not just a "normal" market. It's intricately connected to the banking system.
The federal reserve issues loans to banks. The banks need to invest the money to pay off the loan. This is a tremendous quantity of money we are talking about, so they need a big fat market they can invest in. Of course they can give business loans and such, but it's piddlesticks compared to the quantity of money we're talking about. So the two markets of choice are the Real Estate market, and the Bond market.
Therefore the rent you charge on a house actually tracks with the federal interest rate, along with the opportunity cost of buying bonds.
So if the house is $1 million and the interest rate is 3%, you can expect a rent of about $2,500/month.
Of course there's extra expenses in between the margins. Such as the upkeep expense, risk of damage to the house, and so forth. That's where the landlord makes his margin.
The big issue is when tactics come into play. Like when landlords get a local monopoly.
