Older buildings should sell for less, to compensate for this risk. If the mortgage payments eat up too much of the rental income then the owner overpaid, and should sell at a price that's more appropriate for the risk associated with the building.
How does this work? The $2m valuation would be based on income from current tenants, would it not? Most rent control laws, and especially not the one in Oregon, don't retroactively change rents charged to current tenants.
That is unless the $2m valuation is based on a speculative estimate of how much rents will go up in the near future?
refurb|6 years ago
Your building might be worth$2M, then a rent control law is passed and suddenly it’s worth $1.5M.
kspaans|6 years ago
That is unless the $2m valuation is based on a speculative estimate of how much rents will go up in the near future?