I think I do. I’ve been managing properties for some 20 years. Mostly commercial.
What I’m saying is that in order to understand why the landlord doesn’t just cash in on 50 years of rent, you first need to understand the difference between the profit/loss and assets/liabilities sections in a financial statement.
The tenants (income) are not paying for the building (asset). They only need to cover the interest (cost) from the loan (liability) in order for the the landlord to make money (profit).
The only time it makes sense to compare the rental income to the value of the asset is for the annual asset evaluation.
If the landlord waves the evaluation and rent around like OP says, it just shows that the landlord doesn’t understand it either and is just throwing numbers into the air to impress people.
I think I do. I’ve been managing properties for some 20 years. Mostly commercial.
What I’m saying is that in order to understand why the landlord doesn’t just cash in on 50 years of rent, you first need to understand the difference between the profit/loss and assets/liabilities sections in a financial statement.
The tenants (income) are not paying for the building (asset). They only need to cover the interest (cost) from the loan (liability) in order for the the landlord to make money (profit).
The only time it makes sense to compare the rental income to the value of the asset is for the annual asset evaluation.
If the landlord waves the evaluation and rent around like OP says, it just shows that the landlord doesn’t understand it either and is just throwing numbers into the air to impress people.