> I'm naturally going to go onto rental search sites and look at what similar houses in the area are renting for, and probably ask something pretty close to that.
Or, Say I own and house, and I want to rent it out. I would calculate how much I would have to charge for rent for it to be worthwhile to me. Why would I care what anyone else is charging?
Because you want to maximize your profit and get the most from your investment. You also want to see, generally speaking, if it is even reasonable that anyone would to rent out your house at that price
It’s generally good to have an economy where you can just exchange the market price for the thing, vs. the “price” is low but the actual criteria for getting access to stuff is connections, bribes, waiting, luck, conformity, etc.
You can of course advertise at any price you want.
But, if the price you calculate this way is too large, no one will rent your house.
And, if the price you set this way is too low, you're leaving money on the table, which you may or may not be fine with. If the difference is high enough, someone might even pay you the rent you asked for, but then rent it out themselves to someone else for the higher price, and pocket the difference, which you may feel cheated by.
Generally when you first build / buy a property the market rent is below your calculated needed rent. however with time you pay the property off and inflation raises the amount the market allows you charge. Thus you need to follow the market price and invest for the long term. In year 40, you can charge below market rent and be fine, but until then you haxe to charge as much as the market allows to break even vs other investments.
Because the rental market is detacted from the prices in the ownership market. Rents can be much higher or much lower than the carrying costs of owning.
If you just charge what you need to cover costs you may find yourself with a vacant apartment.
That's like saying people shouldn't invest in farms, or pharmacies, or water pumps because there are poor or mentally disabled people who have trouble securing and affording those products.
The difference is whether the good in question is being produced by investment, or monopolized by investment. This has been enshrined in law for over a century.
You want to make more money in housing? Build more housing.
Or, Say I own and house, and I want to rent it out. I would calculate how much I would have to charge for rent for it to be worthwhile to me. Why would I care what anyone else is charging?