this post was submitted on 13 May 2024
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Housing Bubble 2: Return of the Ugly
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You need collusion to make sure all the landlords raise rents by the tax increase. Not every landlord is undercapitalized and lose money over a tax increase so they could not raise rents and steal rents from other landlords.
You still don't need collusion...it's got nothing to do with undercapitalization. The IRS would publish a new rule, the underwriter would increase the escrow payment to cover the new tax liability (meaning the amount the property owner pays the bank monthly would increase) and the owner would increase the rent by that same amount. You would only need collusion if you wanted to raise the rates higher than the tax increase. If you wanted to, for example, increase rents by 2x the tax increase, then collusion could be helpful...but its still super risky. It only takes 1 landlord to not be OK with it to expose the whole thing.
You do need collusion to keep the more profitable landlords from just taking the increased taxes out of their profit. Regardless landlords are proven to be colluding via RealPage so your point is moot.