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Thanks for the information.

For the sake of discussion, if people are simply walking away from their houses, where are they going? People still need a roof over their heads, so where are these people staying? Are they renting? If this is the case, then things are looking magnificent for cashed up investors…dirt cheap housing and an increased demand for rentals.

If I had more guts and knowledge, I'd be investing in US to generate real income.

fWord .. the real answer is a lot deeper and complex

firstly .. simple is 100% right. They have rental controls enforced in the US in a lot of areas, New York, Michigan. I'd hesitate to name all the areas but rental controls are a no-no for long term investing. It means that they pay a FIXED rate by the govt for that type of property. So your gas bills your water bills all go up BUT THE RENTS REMAIN THE SAME. It kills both the long term value of the property and the incentive for the landlord to improve the property. Just for your information we had rental control in Australia in the middle of last century. And it killed the rental and investment market STONE DEAD. If you look at all the 60s apartment building in places like St Kilda and surrounds .. that was based purely on catchup.

What happens with rental control is .. you have all these people looking .. but NO-ONE wants to move. Why would you? The rent is fixed and if you do want to move, you sub-let it to a 'relative' while raking in the difference. At the expense of the landlord .. who graduates to a position of just wanting to DUMP the property to get something for his money. Thats part of the problem in the US now. There is too much ranting about cruel landlords and tenants as victims. The end result is a socialised market in which property for rental is hard to get and landlords are a dying business. Of course eventually people realise they stuffed up, and review the rental controls. But tenants vote too and lots of times they vote rental controls back in. If the situation changes .. jump in. But until then .. be 100% wary of this.

How bad can it get? I can get you a 21 apartment complex in Detroit Michigan, a mix of singles and studios in reasonable condition, fully tenanted with rent controls for a mere 435k .. thats 21 apartments returning 56k. On paper it all looks good but once u know the real cost its a hot potato just to be holding it.

There are rent controls in very few States, specifically California, DC, New Jersey, New York and Maryland. Even if there are rent controls in these States each individual city has the right to opt in or out of it. Also most rent control laws exist on apartments built before a certain time which is normally late seventies.

The majority of States have laws that specifically stop rent control from occurring.

While  about 20% have neither laws that permit or exclude it.

Rent control would stop me from investing in any area that enforced it. Most states allow you to charge what you want but they have caps on housing assistance, section 8,   which is normally in excess of what the local market will pay anyway. Rents in many areas are down due to the amount of properties on the market especially in the 'shadow market' the market which is not apartment communities, there is a large demand for rentals as people who are foreclosed and those who rent off those who are foreclosed need to move, also especially in South Florida where there are an abundance of new housing units, condos etc renters are actively trading up to much nicer units/developments, however the low base of housing means returns of 15-18% net are achievable in b/c class areas/developments.

Regards,

Mark
Spyglassltd