Cart 0

How to Increase the Value of Real Estate errata

Hi Jack:
I was re-reading your ”How to increase the value of real estate 2nd edition” a few days ago and picked up on a small item you may want to change in future editions.
At the bottom of page 83, you say that rent control was abolished in Sweden in the late 70’s.  If that is the case, it has since been re-instated, although the way it works is rather different than in North America.
Most rental housing in Sweden (I don’t have hard figures, but a fair guess would be above 80%) is owned by non-profit companies run by municipalities.  Nationally, those companies were collectively subsidized to the tune of 3 billion crowns ($400 million US) last year.  The annual rental increases are negotiated between the (politically powerful) tenants unions and the municipal companies.  Whatever is decided at those annual negotiations applies to all landlords, including private owners.  Of course, the private owners do not get any of those governmental subsidies that keep the municipal companies afloat.
Unsurprisingly, there are virtually no private landlords.  I ran the figures on a few dozen 6-8 unit apartment buildings and all were deep in negative cash flow before taxes assuming a 75% mortgage.
Also unsurprisingly, there is an endless housing shortage with people waiting up to 10 years for an apartment in Stockholm.  This has spawned a black market for sublets with illegal “key money” in the 6 digits being paid (extorted) from people desperate for housing.
Probably more information that you need, but in the interest of your book’s factual accuracy, I thought you would want to know.

Jeffrey Lewis