Abstract

In this research, we try to focus on the Rental Property. Rental property is the study of the markets for land and structures, including residential housing, commercial office space, and industrial warehouses. Although much theory has existed for decades regarding rental property markets, questions are being answered today regarding mortgage finance innovation, the rise of suburban business and residential centers, and the effects of zoning laws. PowerPoint presentation will show the demand and supply of the Rental Property from the business point of view. Finally, the paper concludes, with the overall discussion.

Rental Property

Introduction

In many respects, rental property markets are similar to markets for other goods and services. There exist buyers who demand rental property by demonstrating a willingness and ability to pay for property. There are also sellers who supply rental property. One unique feature of rental property is that the goods in question—namely, land and structures—are long-lived. Consuming rental property does not result in the disappearance of the good as with, say, consuming a slice of pizza. Rental property can be purchased and enjoyed today and then sold again tomorrow. In fact, the vast majority of rental property sold in any year was previously owned. Because of this durability, the decision to buy or sell rental property must take a long time horizon into account.

Theory of rental property Markets

Durable goods deliver a flow of services over time to the owner or user of that good. For example, a car lasts many years, and a car will deliver a flow of transportation services each year. Rental property delivers a flow of shelter services, in residential housing, and a flow of retail store space, in commercial rental property. The person who purchases a durable good takes current and all future flows of services into account when making the decision to purchase the good. This is true whether or not the buyer intends to use the services that flow from the durable goods. For example, in the case of a car, although often the buyer intends to drive the car for a number of years after the purchase, car rental companies purchase large amounts of cars in order to charge rent to their customers.

The same is true in rental property, where a large amount is owner occupied, while other people intend primarily to offer for rent the shelter or retail space to others. If the buyer intends to rent the rental property to others, then the buyer's willingness to pay will be based on the rent that can be earned, which is determined by renters and landlords in the rental market for rental property. Renters will be willing to pay rent that is at or below the value that the renter puts on the flow of services. In fact, the dollar value of rent is an easy-to-obtain measure of the dollar value of the flow of services from a property.

Purchasing a piece of rental property today gives the buyer the use of services this year and every year in the ...