The dynamics of this are really complicated! Here is an old but amazingly thorough write-up worth grocking: https://techcrunch.com/2014/04/14/sf-housing/ …
This explains something I never realized: landlords who finance their buildings with mortgages instead of owning them outright have more incentive to raise rents.https://medium.com/@goldfine_48628/how-landlords-juice-their-profits-part-i-leverage-8d9ff15f366c …
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Did you say wework
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It’s not only the leverage mechanics, it’s the composition of the holders. The more AirBnB like entities and broad institutional ownership take control of housing that is geared at looking at fund return timeframes, the more pressure to juice short cash flows, rent prices.
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Should be something disclosed to all potential renters. Or limited in covenants.
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They’re just leveraged so on a percentage basis, the raised rent makes a greater impact. It’s a function of the leverage not the rent at its core.
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It doesn't really explain very well the increased risk of going broke with more leverage.
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Pretty basic, more revenue + leverage = higher profits.
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They take more risk and higher return is needed to cushion downside not just enhance return
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