Why Does the Big-Money Invest In Landlord Unfriendly Cities?

[William Coet]

Hello,

Despite all of the warnings to only invest in landlord friendly states, there are massive investments made in cities like New York San Fran. etc.  that are considered landlord unfriendly. 

Why is this?  One theory is that the investors see population increasing in these areas and are willing to deal with the ridiculous local laws

[Matthew Drouin]

@William Coet it’s a different business model altogether.

I love highly desirable areas that attract highly skilled high income college educated workforces.

They tend to be more liberal and therefore the landlord tenant laws.

The percent of their income that goes to rent is typically much less than 20% so a rental increase of 5-10% is nothing to them.

They are typically lower cap rate areas and therefore every dollar of net operating income that is earned is explosive to the underlying asset value.