Can leaving a property vacant be more beneficial than renting it out?

Question

I live in a major US city with strong demand for housing. Last year, a house on my street was purchased, but no one has ever moved in. During the first few months of this, my initial thought was that the buyer's plans had been disrupted by the craziness of Covid. As we are approaching the one year mark of the sale, I'm struggling to make sense of the situation.

• If the owner's intent was to move in, surely they could have done so by now. If this was their original plan, but is no longer their desire, the market is strong enough that they could break even or profit by reselling.
• If the property was meant to be an investment, why would it not have been rented? In this market, this property could easily rent for $20K annually. Even if the owner is not interested in acting as a landlord, this could be outsourced to a third party property management company.

Is there some arrangement that would make leaving the property vacant for a year more advantageous than renting it out, even in the face of high demand for housing?

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Edit after feedback in comments/answers:

The house appears to be very modern, and sold above the going rate in the area. It is unlikely that the buyer was planning on flipping the property.

Answer 1

As a landlord myself, I can tell you that the eviction moratoriums have us all being a lot more cautious when screening potential tenants, because it is very difficult to get out of a bad tenant situation right now. That said, a year is an awful long time to sit on a property without income.

If they bought the house as a flip they might be timing the market to maximize the run up on housing prices. If this is their intent it might be worth not dealing with a tenant that is hard/impossible to evict on a property you expect to turn over in a year or two.

Answer 2

Tenant rights in major cities can be so strong as to incentivize vacant housing.

A interviewee in an academic study

believed rent control increased vacancy as landlords either remove units from the market (to avoid the regulation) or take longer to find the right tenant because you only get “one bite at the apple.”

Answer 3

Some tenants are hard on houses. They paint the rooms weird colours, they cause damage you can't get back from their deposit, they go without paying the rent for months at a time then leave unexpectedly, leaving a mess behind you have to tidy up. If you only plan to have the house empty for 6 months, getting tenants for supposedly a year is likely more trouble than it's worth.

Answer 4

Plans change. Perhaps it has been the owner's intent to move in "next month" for the past 11 months, but they have been unable to do so for one reason or another. To go through the trouble and risk of getting a renter for just one month might not make much sense. If the intent was not to let the property sit vacant for so long, the vacancy is actually a series of rational (but shortsighted) decisions, which have only become irrational in hindsight.

Different people will have different time horizons for what's "worth it". To become a landlord, one must put in some effort to learn about local law, advertise, screen tenants, etc., or hire a property manager and do all the accompanying research on good property management companies, etc. Many might not want to go through the hassle and risk of becoming a landlord for the sake of one month's rent, some might not bother for 6 months' worth, while some might not even be bothered for a year or more of rent.

Answer 5

Securing a tenant is a strong commitment to a course of action, and in that sense creates an opportunity cost because it forecloses other options you might have, such as selling or moving in yourself. You lose out on a little bit of income in exchange for keeping your other options open.