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flask_manager | 11 months ago
This can have lots of issues. Imagine something like a good school zone changing, an event that may not be accounted for by the index. Insurance and taxes are determined by current value, that is partially determined by market rent, but the landlord cant adjust.
This also hurts a specific landlord when it comes time to sell, making a tenanted property potentially less valuable (and reducing the incentive to take on a tenant at all). This does not impact the general property value mind, as the tenant only benefits and creates this problem if the index is below the market.
If you want a fair balance, "its mine as long as I pay market rent" is pretty good. "its mine as long as I pay indexed rent" is not great, as it removes the financial benefit of capital investment from the landlord.
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