With the maintenance cost and taxes, I’m actually losing money or breaking even depending on the year.
My tenants are living in a house that they wouldn’t be able to afford on their own in today’s market.
Literally the hottest real estate market in history, after we just came out of the lowest interest rate market in history, and my man up here still can’t even break even on a residence he is renting out to someone else out of the pure kindness of heart.
Maybe you are the rare, golden One Good Landlord, or maybe you’re just some asshole on the internet posting utter bullshit. Who can say?
But I’ve never met any landlord like you IRL. Hell, I’ve never actually met a landlord who owned the property I rented. They always went through property management companies that do all the work for the owner and just forwarded on a chunk of my rental payment at the end of every month.
I do accounting for a lot of landlords. What he’s talking about is cash flow. Almost nobody ends up with taxable income from renting because the rent goes to the mortgage, property tax, insurance, maintenance, etc.
Before you crucify me on a barbed wire Popsicle stick, the part he’s leaving out is the equity he’s building at the tenant’s expense.
When he eventually sells the place, he’ll get hundreds of thousands of dollars that didn’t cost him anything. Whoever lived there just gets memories of that place they used to sleep in.
Almost nobody ends up with taxable income from renting because the rent goes to the mortgage, property tax, insurance, maintenance, etc.
Some of the highest grossing dividend stocks on the market are from REITs. Those dividends are coming from somewhere.
the part he’s leaving out is the equity he’s building at the tenant’s expense.
Sure. They’re paying both the interest and the principle, and they’re not seeing any of the appreciation of the underlying asset. I wouldn’t even call this “at their expense” as there are some risk-benefits to renting (namely, no exposure to liability of the building loses value or falls apart). But its very obvious he’s not suffering for this arrangement.
He’s just not price gouging, either.
Which is probably the best case scenario in any kind of landlord-tenant relationship.
Dude he’s losing money year on year and capital gains carry it through to make it profitable longer term. The problems isn’t “landlords make a profit”, the problem is “speculative investors are removing housing stock driving up costs”.
the problem is “speculative investors are removing housing stock driving up costs”.
In this particular highly-niche scenario, he’s got housing stock that he’s letting at-cost to people who would otherwise be somewhere else in the housing market. So its a push.
The “speculative investors removing housing stock to drive up costs” folks tend to be corporately owned and industry coordinated properties that deliberately keep units open above the clearing rate, in hopes of driving up the prevailing cost of new housing.
Through that lense this guy is no saint.
He’s not saint. He’s just a guy who is giving close personal friends a place to live at-cost. Which would be fine, if this kind of service was available to everyone. Its just that he doesn’t have enough friends or enough units to clear the national backlog.
The “speculative investors removing housing stock to drive up costs” folks tend to be corporately owned and industry coordinated properties that deliberately keep units open above the clearing rate, in hopes of driving up the prevailing cost of new housing.
This is dependant on the market (the post didn’t say where they are), but I understand is true in the US.
In Australia, the speculation is driven by individuals who get incredible tax incentives if their income is above a certain level. Because of this, the housing market is distorted to the point where housing values are detached from rent potential, with all the value being driven by capital gains and tax offsets. This further leads to a situation where it’s often more economically viable to leave a house empty (and therefore not have to maintain the property or deal with tenants) while the value grows and the tax is written down.
This further leads to a situation where it’s often more economically viable to leave a house empty (and therefore not have to maintain the property or deal with tenants) while the value grows and the tax is written down.
Functionally what happened in East Asia, with “Investment Property” glut leading to the Evergrande bankruptcy, the current Seoul real estate bubble, and the 1990s Chiyoda-ku bubble which valued downtown Tokyo at a higher price than the entire nation of Canada.
Housing reform has been on the menu across the Pacific Rim for decades, thanks to the bid-price of land wildly outpacing its utility value.
We own 3 rental properties. 1 we bought from my wife’s grandpa because he was about to sell it to one of those “we buy houses scams” and we’re currently renting it out for about 60% the rent on comparable properties…tenets have been great except for a few months several years ago when dude got hurt and couldn’t work. We worked with them through that, and they haven’t been late since or caused any damage. The other 2 are friends/family that couldn’t afford a place on their own, so we bought it, and they rented it. We generally lose money on those 2. I grew up poor, and we had to move every year or two when we got evicted or when we were actually doing things right, but the landlord wasn’t paying the bank.
There’s a lot of scummy landlords out there, but there’s several of us who aren’t. We charge just enough to cover mortgage and maintenance. The payoff comes after we retire. We can sell the homes (hopefully to the tenets if they’re interested) or supplement our retirements.
I mean, cool. You’re The One Good Landlord who is doing everything at cost and simply extending your credit to friends and family. I suppose I never found this kind of place, because I wasn’t immediate family or friends with someone who could buy and let property to me under their credit scores.
We charge just enough to cover mortgage and maintenance.
That’s not traditionally how the good folks at Brookfield Properties or Invitation Homes do things.
The payoff comes after we retire.
So its less that you’re not making money, and more that you haven’t realized your gains.
It’s really easy. If you’re breaking even, then it’s not worth it to hang on to the property. Unless you enjoy being called on a Sunday afternoon to fix a toilet.
If you are making a profit, then you’re stealing income from your tenants that could be used to buy their own home.
You’re not charging market rate for your property and are giving discounts to friends and family?
You’re a bad capitalist and need to go to capitalist jail (which is like… I don’t know, a Betty Ford clinic to “get clean” and definitely not “do cocaine with other landlords”?)
Are we talking about eliminating renting altogether?
Cause that is what it sounds like in this thread. Folks wanting to completely eliminate renting and drive folks to buy a house Everytime they move.
This ignores things like closing costs, realtor fees, really high property taxes, expensive home repairs, and temporary work assignments.
Maybe you really need a job but don’t want to straight up buy a house and instead rent something until you can find a job back in your local area or you decide it’s time to take the plunge and move for good.
Sure there are many a-hole companies and landlords that try to squeeze their tenants for every dime and treat their tenants like crap (lord knows I’ve run into those), but on the other hand there are folks who need a place to live but haven’t decided where they want to settle down and people who can rent their old property at a decent date based on the low interest they themselves were able to lock down.
Some are folks (like me) who moved but couldn’t afford to keep their house empty for an extended period of time to put it on sale while they’re paying rent or a mortgage in another state. So renting, even if you’re barely breaking even, makes sense.
Better to rent your old house for barely above the costs for the property taxes, homeowners insurance, and mortgage interest, and maintenance costs than to take a 6-12 month hit where you have to pay the above while not living in the house because your new job is in a different state. And that is if you sell in 12 months and don’t take a big hit on the sale.
If you’re buying/selling a house every 3 years then you’re really going to get screwed. I personally went from living in a home I owned (and paying a mortgage on) to renting for 3 years just to understand where I wanted to live in a new state, which areas had the best employers, and wait out on a low APR and decent buyers market.
If I had to buy a house instead of having the option to rent, then I would have ended up buying a house near that employer which would have been over an hour commute from the better job offers I got after I moved here.
Nobody is saying to “get rid” of home rentals, but they are saying get rid of landlords.
Particularly for SFR homes, there’s no reason for a person who is not living there to ‘own’ the property and extract rent. For those who are transient -as you described- there are community land trusts, cooperative housing, limited equity housing coops, and municipal housing that can all fill the role that would traditionally be done by private landlords. Those of us who advocate eliminating private home rental’s for profit do so knowing it wouldn’t happen by choice, and that alternate arrangements for housing would need to be established alongside any legislation that bans for-profit rentals.
Private landlords are systemically problematic because it inflates home values and locks an increasing portion of the population from the option of building equity (or benefiting from community equity, as it were). Nobody is saying you’re a bad person, only that landlords (the category of private capital ownership that collects rent for the use of property) are perpetuating a huge problem and ought to be banned as a matter of benefiting society as a whole. Just like how towns or neighborhoods are democratically governed, homes should be too.
Thanks for sharing alternatives to the status quo. See a lot of people complaining in this thread without proposing what the new system would look like. Guess it’s easier to do that though
Are we talking about eliminating renting altogether?
I’ve asked this very question before on reddit in a genuine attempt to understand what alternative the anti-landlord crowd is advocating for. Aside from the onslaught of personal attacks on my character, the best I could decipher was some sort of system where a landlord could only rent at actual cost of their mortgage, taxes, insurance, maintenance, etc. No profit could be earned. I said no one would be a landlord for free, especially considering the risks of owning land (natural disasters not insured, market crash, etc).
Their “landlords shouldn’t profit off of renters” argument fell apart when I asked profit for who? Was the bank allowed to make a profit on the home loan? Was the insurance company allowed to make a profit on the policy? Could the maintenance and repair folks earn a profit on their services? Could the home remodeling companies make a profit if the home needed updating? Or is every person and entity involved in home ownership allowed to profit from the rental except the landlord? They stopped responding.
Nobody is saying to “get rid” of home rentals, but they are saying get rid of landlords.
Particularly for SFR homes, there’s no reason for a person who is not living there to ‘own’ the property and extract rent. For those who are transient -as you described- there are community land trusts, cooperative housing, limited equity housing coops, and municipal housing that can all fill the role that would traditionally be done by private landlords. Those of us who advocate eliminating private home rental’s for profit do so knowing it wouldn’t happen by choice, and that alternate arrangements for housing would need to be established alongside any legislation that bans for-profit rentals.
Private landlords are systemically problematic because it inflates home values and locks an increasing portion of the population from the option of building equity (or benefiting from community equity, as it were). Nobody is saying you’re a bad person, only that landlords (the category of private capital ownership that collects rent for the use of property) are perpetuating a huge problem and ought to be banned as a matter of benefiting society as a whole. Just like how towns or neighborhoods are democratically governed, homes should be too.
You still didn’t answer the question. So get rid of the landlords means what exactly? You realize there’s about two dozen or so industries whose entire commercial existence is tied to landlords and rental properties, right? Do we get rid of all of them? Or just some? Or just the landlord, who is one small cog in a very big capitalist renting wheel?
Everyone is so oddly and furiously fixated on the landlord as some sort of big bad, and therefore assert that getting rid of the landlord position entirely will just magically make everything awesome. It’s odd to observe otherwise intelligent people stop so outrageously short of the complete picture.
Actually, I think I did, you just didn’t understand it. What we mean by ‘landlord’ can be essentially boiled down to ‘private ownership’. The problem with landlords as a class is that they exert complete control over a ‘property’ while having the least use of it. When Adam Smith wrote about ‘rent extraction’, he was specifically identifying a portion of an economy that was unproductive.
Landlords are defined by their ownership; they could also maintain the property, but what makes them ‘landlords’ and not ‘maintinence workers’ is their ownership over a property someone else is using and charging rent for that use. The other arrangements I listed in my previous comment address that inefficiency by democratizing the use of that asset, instead of allowing the monopoly of the landlord.
It’s odd to observe otherwise intelligent people stop so outrageously short of the complete picture.
Seeing the same thing here. Apparently I’m scum because I’m renting my previous home for -10%/+10% of: mortgage on the lower price I paid 10 years ago, plus property taxes, plus home owners insurance, plus repairs and maintenance.
Apparently I would no longer be scum if I stopped renting it and refused to renew my tenants lease, sold the house and made a huge profit now, and the next person will have to pay brand new closing costs plus a mortgage on double the home value and double the APR.
I’m guessing most folks down-voting the sane responses saying rentals aren’t needed have never tried selling a house (and gone 6+ months paying the mortgage for a house you no longer live in) or don’t know there’s a “break even” calculation that tells you how many years you have to live in the same house before you’re better off than having just rented (realtor fees to sell the house, closing costs, time to sell the home where you’ll still be paying your mortgage + taxes + insurance, time to close, getting credit approval for a mortgage, etc).
Hell, I did the calculation when I had to move to a new state and I was able to rent a house for less than it would have cost me to pay for closing costs and realtor fees when I would have sold the house 3 years later. Not to mention the time to come up with 20% down payment.
But fuck me for not taking the easy way out, kicking out my tenants and cashing in on the current huge property values to sell my old home.
profit for who? Was the bank allowed to make a profit on the home loan? Was the insurance company allowed to make a profit on the policy? Could the maintenance and repair folks earn a profit on their services? Could the home remodeling companies make a profit if the home needed updating? Or is every person and entity involved in home ownership allowed to profit from the rental except the landlord?
If your answer is “anyone and any entity making a profit”, then that’s about two or three dozen different industries (including banks, insurance agencies, title companies, all kinds of home builders, repair folks, etc.). Regardless of my opinion on that argument, your problem isn’t with the landlord, it’s with a huge swatch of industries who are all tied to and profit from renting.
including banks, insurance agencies, title companies, all kinds of home builders, repair folks
It’s only the profit derived from ownership that’s of concern here, none of these other industries (aside from the bank, arguably) apply to the critique.
Fuck no, just the landlords. Housing should be socialised.
Its important to remember that in your example of “barely breaking even” some poor schmuck is paying off your mortgage. So it doesn’t make you a martyr to barely break even, it still makes you a parasite.
Buying house for say 100k at 3% APR, renting it because you were laid off and cant afford moving expenses, rent in a different city, plus paying a mortgage on an empty house for 6 months to a year while it sells. Then years later you still keep it because, while you could sell it and cash in, with the low APR you got on it you can afford to rent it for less than the corporate scum suckers who try to monopolize housing = Parasite
Kicking out your renters and selling said house you bought at 100k for 200k to corporate scum suckers who will turn around and sell it at an even higher price or rent it at really high rates OR someone else who will end up paying way more than the rent I was asking for the place because interest rates are about double and the house has also doubled in price = internet hero
If you move or can no longer afford your house, the property should be absorbed into a community coop (or sold to them) and leased back to the tenant or a new family. You keeping ownership of the home is not a requirement, it’s actually a huge problem.
The only ones insisting on the alternate scenario you just described are landlords who think of themselves as martyrs.
I don’t know which particular Market you’re in, but in the majority of cases, especially around me, if a bank would just fucking approve me for a loan I would pay notably less per month then I pay a landlord for rent.
And it’s not like I even have a bad credit I’m in the 740s but since the fake imaginary value of properties is skyrocketed to the point that even a piece of shit falling apart house is almost a million dollars I can’t get the kind of down payment they want. So despite the fact that the mortgage would literally be cheaper per month I can’t get one.
And that situation exists thanks to people snapping up properties especially large companies and turning them into investment rental properties
Because they aren’t mentioning the part where the value of the house is way more than what they have invested and they will make a fortune if and when they sell lol. I lose money each year on this! But the property value is through the roof and you can borrow against it and get cheaper rates than everyone else.
Because he has unrealized capital gains - in yearly income/expenditure their losing money but big picture, when they sell, they profit.
In Australia, rental returns are paltry (less than 2%) compared to any other investment, but steep tax concessions on and insane capital growth (often higher than 6% annually) incentivises speculative investment in real estate… This is what’s driving up the cost of housing to the cartoonist levels they currently are in. It’s not unusual for these speculators to not even bother with tenants, because like op suggests they often lose money maintaining the property, it’s cheaper to speculate and maybe renovate immediately before selling.
The problem has nothing to do with landlords and everything to do with speculators going for capital gains. Greedy landlords can be a problem where there are no rentals protections, but that can easily be resolved with regulation.
Yes, let’s pretend that housing prices haven’t gone up (lumber shortage, pandemic, what are those things?!)
And let’s live in a world where interest rates haven’t changed in the same time period (2.75% APR should be about the same as a 7% APR mortgage!).
Lastly, let’s ignore closing costs and the huge hunk of money realtors, banks, title companies, surveyors, and so on make every time a home is sold.
The main issue folks have with those generic “fuck all landlords!” posts is that while yes, corporate landlords that monopolize housing and keep raising rents in lockstep and invent fees suck ass, there’s also folks who found it easier to rent right away vs keeping an empty house on the market. Those landlords are paying a 10 year old mortgage with 10 year old lower interest rates, but 2024 property taxes and home insurance.
10 year old mortgage for a home at 2014 prices + current property taxes and insurance + 10% profit margin (the horror) << Brand new mortgage on the same home at 2024 prices and 2024 APR + insurance and property taxes.
Oh and I forgot about mortgage insurance. The person renting their home likely has gotten their mortgage below the cutoff for requiring mortgage insurance.
There are many situations where both the person renting their home and the renter come out way ahead.
The only ones who win by forcing everyone to sell their homes and no longer rent are the banks (more closing costs, prey on folks who aren’t ready to buy a home with high APRs and mortgage insurance, get to close out low APR loans for new higher APR loans), real estate agents and everyone that gets a cut Everytime a home is bought and sold.
That said there is something that can be done for the big investment groups that are buying up homes to jack up prices and corner local rental markets.
you listed two artificial increases in property value, sure lumber was more expensive, that was due to lumber tarrifs under the trump administration.
Sure covid had an effect on newly built houses. We’re well past that stage, that should be normalized by now. We should’ve had a massive surge in house building post restriction, but we didn’t.
I own my own home now, but I’ve rented in the past. Eliminating rentals is an awful idea.
I moved a lot when I was younger: for education, jobs, etc. Buying a house every time I moved (knowing I was likely in an area temporarily) would have been a fucking nightmare – rentals fill a legitimate need.
Sure: fix the problems of price gouging and profiteering. Put strong limits on the number of single family homes one can rent, and outright stop corporations from buying single family homes. Increase protections for tenents and drive slumlords and absentee landlords out of business. But the idea of “just buy a house, lol” is absurd.
Nobody is saying “just buy a house,” because everybody is complaining about how the lack of housing is a major part of the issue. Apart from what you said on imposing limits and increasing protections for renters, the other main issue is to diverge equity from housing. Having the main way to accrue wealth be tied to the basic necessity of having a roof over your head puts a major incentive on people and corporations to buy up property. Housing becomes an investment at that point, not a service. There are people and companies sitting on empty houses because driving up the market by removing inventory is a more profitable investment than actually renting them out.
And if there were more options besides single family housing, people wouldn’t be forced to buy a house every time they moved as well. The US especially is really bad at this. We have high density apartments and condos, and single family homes, but a major lack of medium density housing. If we had more multi-family homes, duplexes, town houses, and smaller scale apartment and condo buildings, this would be a lot less of an issue. With more variety in housing types, the demand for single family homes would be a lot less and would help to reduce housing prices and make things more affordable for those who do want to buy a house.
That doesn’t mean we get a bunch of people with down payments and higher wages to afford these properties though. Housing prices would need to fall a lot for that to occur and if it did, it’d put many of the people who were able to scrape together the money to buy a house underwater on their mortgages.
My tenants are living in a house that they wouldn’t be able to afford on their own in today’s market.
Yes, but: why is the market in the state it’s in? It couldn’t be because a large supply of housing is locked up by landlords, thereby artificially curtailing supply and driving up prices…
I find it hard to believe you’re losing money, unless you don’t understand the economics of it. If your mortgage payment is £450, and rent is £450 that’s an even ratio, of course you have maintenance costs on top of that, so it looks like you’re down X amount on costs but you’re not, you’re up £450 - maintenance. But I seriously doubt you’re charging Equal to your mortgage payment anyway.
I don’t think this is a particularly fair take. Some people bought at high prices because it seemed like the right move (in 2008, for example), market crashes, you’re stuck with your investment even if you’re underwater (upside down).
It’s definitely not fair to assume what his costs are compared to the cost to rent. It isn’t necessary to have the example above to reside in an area where mortgages far exceed rent. Northern Virginia in the USA is a good example, where townhomes can easily exceed 1 million USD, which would typically require a 30-50k+ down payment plus closing costs, and would then be 5k+ in a mortgage. Rent that place for 4500 and that’s a loss on monthly costs, but of course the landlord is earning long term equity (and that is the value, but they may not be turning a profit).
Edit: I’m simply stating that it’s unfair to assume the original commenter is lying about not making a profit. I’m not suggesting they aren’t experiencing a net gain in equity.
Everyone needs housing to live, and housing is increasingly being treated as an investment vehicle by the rich. In many markets, this has decoupled the monetary value of housing as an investment from the use-value it provides normal individuals, causing home prices to increase rapidly.
To your point, our current economic and credit situations have caused home ownership to be essentially impossible for a large number of people. Since home ownership is one of the primary ways individuals can build wealth, this has made it significantly harder for the average family to build wealth - trapping them in debt, making it much harder to save, etc. This is bad for society and for the economy, not to mention inhumane and harmful to millions of families in the US alone.
So, while renting is a necessity in our current economic climate, it is only a necessity for so many due to predatory economic factors preventing them from entering the housing market. Landlords, while necessary in this system, are increasingly corporations rather than individuals, and they are buying up huge swathes of the total available housing - causing increased housing scarcity, pricing more people out of the housing market, and increasing the number of people forced to rent. Individual landlords, as well as landlord corporations, are exploiting the system for profit and either perpetuating the current predatory housing system or (in the case of corporate landlords) deliberately making the system worse for profit, economically harming millions of families and individuals.
So that is why people see landlords as “the bad guy”. Whether or not you in particular treat your tennants decently, you are part of a predatory system and are working to perpetuate that system. It is an interesting moral and ethical dilemma because the system we are forced to exist in creates the necessity for landlords (as you said, some people have to rent), but that same system created the conditions that force so many people to be lifeling renters.
Because the value of housing goes up over time. Practically guaranteed, historically speaking. An asset is just a thing that has value. An investment is an asset that (you hope) will accrue value in the future. Land can be an investment, too. So can digital pictures of monkeys. Really, any asset can be an investment.
yeah but that’s like, entirely counter to the core concept of how this shit works.
And old house is not more valuable than a new house, unless new houses are getting shittier and shittier over time, which last i checked, they aren’t.
I would classify an investment as the explicit example of putting money into something, that you expect to do well, in such a manner that you can realize returns on that investment, normally this does not entail using something. Buying a house, and then living in it for example, is not an investment. Much like buying a car, driving it, and the selling it, generally does not make you money. It can if you hit the market in certain places at certain times, but this is more speculative investing than anything.
And again, shouldn’t apply to houses on account that there should be like 100 million houses in the US at the very least, any time where speculative investment becomes a thing, it’s because there is low supply, and high demand. This literally should not be possible for housing. And if it is, it’s about as moral as trading people for money.
It’s not necessarily about feeling defensive. It’s about trying to stay grounded. I’ve lived in rentals before, but I don’t now, so my experience may not match the experience of renting today. There’s nothing wrong with asking others for input about your own place in society or how you can be better.
Not OP byt if you are seeing critique of what you do everywhere around you, it’s hard to not be defensive, no matter how much you stick out of the average thingdoer. You simply start feeling as if it was aimed at you.
Sure. We’re all edgy 14 year olds who have never worked, paid rent, or a mortgage.
Moralizing about landlords isn’t really the point—it’s not about the individual it’s about the social role in society. The reason landlords are bad is because their social role extracts wealth from the system and from their tenants and is nonproductive in economic terms. Yes, many landlords take advantage of this social position and act egregiously, but there are landlords who are kind and generous to their tenants. But this split doesn’t mean anything in the larger social context, which is why moralizing about these things isn’t generally productive. Same goes for capitalists as well.
You’re right except the ‘millennials’ part. Just Lazy and entitled people. Usually those left leaning that think they deserve everything without working for it.
I live a life that doesn’t involve being on the internet, checking my comments every single day. Often go days or weeks without checking. What brings you back day after day?
Regardless, you’re not seeming to argue in good faith. I’m not saying it’s all of one group or the other. In no way did I insinuate ALL lazy and entitled people are left leaning, but that it’s usually the ones that ARE left leaning that think they deserve everything without working for it. No where did I insinuate that ALL left leaning people are this way as well. You obviously don’t understand nuance, so I’ll just leave it here.
I am a landlord and also have a full time job. I also spend my time fixing my units.
With the maintenance cost and taxes, I’m actually losing money or breaking even depending on the year.
My tenants are living in a house that they wouldn’t be able to afford on their own in today’s market. Being able to live near their work.
So why am I the bad guy?
Literally the hottest real estate market in history, after we just came out of the lowest interest rate market in history, and my man up here still can’t even break even on a residence he is renting out to someone else out of the pure kindness of heart.
Maybe you are the rare, golden One Good Landlord, or maybe you’re just some asshole on the internet posting utter bullshit. Who can say?
But I’ve never met any landlord like you IRL. Hell, I’ve never actually met a landlord who owned the property I rented. They always went through property management companies that do all the work for the owner and just forwarded on a chunk of my rental payment at the end of every month.
I do accounting for a lot of landlords. What he’s talking about is cash flow. Almost nobody ends up with taxable income from renting because the rent goes to the mortgage, property tax, insurance, maintenance, etc.
Before you crucify me on a barbed wire Popsicle stick, the part he’s leaving out is the equity he’s building at the tenant’s expense.
When he eventually sells the place, he’ll get hundreds of thousands of dollars that didn’t cost him anything. Whoever lived there just gets memories of that place they used to sleep in.
Some of the highest grossing dividend stocks on the market are from REITs. Those dividends are coming from somewhere.
Sure. They’re paying both the interest and the principle, and they’re not seeing any of the appreciation of the underlying asset. I wouldn’t even call this “at their expense” as there are some risk-benefits to renting (namely, no exposure to liability of the building loses value or falls apart). But its very obvious he’s not suffering for this arrangement.
He’s just not price gouging, either.
Which is probably the best case scenario in any kind of landlord-tenant relationship.
Dude he’s losing money year on year and capital gains carry it through to make it profitable longer term. The problems isn’t “landlords make a profit”, the problem is “speculative investors are removing housing stock driving up costs”.
Through that lense this guy is no saint.
In this particular highly-niche scenario, he’s got housing stock that he’s letting at-cost to people who would otherwise be somewhere else in the housing market. So its a push.
The “speculative investors removing housing stock to drive up costs” folks tend to be corporately owned and industry coordinated properties that deliberately keep units open above the clearing rate, in hopes of driving up the prevailing cost of new housing.
He’s not saint. He’s just a guy who is giving close personal friends a place to live at-cost. Which would be fine, if this kind of service was available to everyone. Its just that he doesn’t have enough friends or enough units to clear the national backlog.
This is dependant on the market (the post didn’t say where they are), but I understand is true in the US.
In Australia, the speculation is driven by individuals who get incredible tax incentives if their income is above a certain level. Because of this, the housing market is distorted to the point where housing values are detached from rent potential, with all the value being driven by capital gains and tax offsets. This further leads to a situation where it’s often more economically viable to leave a house empty (and therefore not have to maintain the property or deal with tenants) while the value grows and the tax is written down.
Functionally what happened in East Asia, with “Investment Property” glut leading to the Evergrande bankruptcy, the current Seoul real estate bubble, and the 1990s Chiyoda-ku bubble which valued downtown Tokyo at a higher price than the entire nation of Canada.
Housing reform has been on the menu across the Pacific Rim for decades, thanks to the bid-price of land wildly outpacing its utility value.
I mean he still owns the fucking property after his tenants have paid it off.
Idgaf if he is doing this out of the kindness of his heart, still a land bastard.
We own 3 rental properties. 1 we bought from my wife’s grandpa because he was about to sell it to one of those “we buy houses scams” and we’re currently renting it out for about 60% the rent on comparable properties…tenets have been great except for a few months several years ago when dude got hurt and couldn’t work. We worked with them through that, and they haven’t been late since or caused any damage. The other 2 are friends/family that couldn’t afford a place on their own, so we bought it, and they rented it. We generally lose money on those 2. I grew up poor, and we had to move every year or two when we got evicted or when we were actually doing things right, but the landlord wasn’t paying the bank.
There’s a lot of scummy landlords out there, but there’s several of us who aren’t. We charge just enough to cover mortgage and maintenance. The payoff comes after we retire. We can sell the homes (hopefully to the tenets if they’re interested) or supplement our retirements.
I mean, cool. You’re The One Good Landlord who is doing everything at cost and simply extending your credit to friends and family. I suppose I never found this kind of place, because I wasn’t immediate family or friends with someone who could buy and let property to me under their credit scores.
That’s not traditionally how the good folks at Brookfield Properties or Invitation Homes do things.
So its less that you’re not making money, and more that you haven’t realized your gains.
So basically someone else is paying your mortgage and giving you equity without generating any equity themselves.
So your tenants would be able to do that themselves if they were able to buy the property instead of renting it.
Which is what you are taking from your tenants in exchange for…?
It’s really easy. If you’re breaking even, then it’s not worth it to hang on to the property. Unless you enjoy being called on a Sunday afternoon to fix a toilet.
If you are making a profit, then you’re stealing income from your tenants that could be used to buy their own home.
You’re not charging market rate for your property and are giving discounts to friends and family?
You’re a bad capitalist and need to go to capitalist jail (which is like… I don’t know, a Betty Ford clinic to “get clean” and definitely not “do cocaine with other landlords”?)
Capitalist Jail is the one where you don’t pass “Go” and you don’t collect $200
Those people are able to live in the house you took off the market (thus driving up the price of housing) and pay off your mortgage.
Are we talking about eliminating renting altogether?
Cause that is what it sounds like in this thread. Folks wanting to completely eliminate renting and drive folks to buy a house Everytime they move.
This ignores things like closing costs, realtor fees, really high property taxes, expensive home repairs, and temporary work assignments.
Maybe you really need a job but don’t want to straight up buy a house and instead rent something until you can find a job back in your local area or you decide it’s time to take the plunge and move for good.
Sure there are many a-hole companies and landlords that try to squeeze their tenants for every dime and treat their tenants like crap (lord knows I’ve run into those), but on the other hand there are folks who need a place to live but haven’t decided where they want to settle down and people who can rent their old property at a decent date based on the low interest they themselves were able to lock down.
Some are folks (like me) who moved but couldn’t afford to keep their house empty for an extended period of time to put it on sale while they’re paying rent or a mortgage in another state. So renting, even if you’re barely breaking even, makes sense.
Better to rent your old house for barely above the costs for the property taxes, homeowners insurance, and mortgage interest, and maintenance costs than to take a 6-12 month hit where you have to pay the above while not living in the house because your new job is in a different state. And that is if you sell in 12 months and don’t take a big hit on the sale.
If you’re buying/selling a house every 3 years then you’re really going to get screwed. I personally went from living in a home I owned (and paying a mortgage on) to renting for 3 years just to understand where I wanted to live in a new state, which areas had the best employers, and wait out on a low APR and decent buyers market.
If I had to buy a house instead of having the option to rent, then I would have ended up buying a house near that employer which would have been over an hour commute from the better job offers I got after I moved here.
Nobody is saying to “get rid” of home rentals, but they are saying get rid of landlords.
Particularly for SFR homes, there’s no reason for a person who is not living there to ‘own’ the property and extract rent. For those who are transient -as you described- there are community land trusts, cooperative housing, limited equity housing coops, and municipal housing that can all fill the role that would traditionally be done by private landlords. Those of us who advocate eliminating private home rental’s for profit do so knowing it wouldn’t happen by choice, and that alternate arrangements for housing would need to be established alongside any legislation that bans for-profit rentals.
Private landlords are systemically problematic because it inflates home values and locks an increasing portion of the population from the option of building equity (or benefiting from community equity, as it were). Nobody is saying you’re a bad person, only that landlords (the category of private capital ownership that collects rent for the use of property) are perpetuating a huge problem and ought to be banned as a matter of benefiting society as a whole. Just like how towns or neighborhoods are democratically governed, homes should be too.
I knew I liked you.
Thanks for sharing alternatives to the status quo. See a lot of people complaining in this thread without proposing what the new system would look like. Guess it’s easier to do that though
I’ve asked this very question before on reddit in a genuine attempt to understand what alternative the anti-landlord crowd is advocating for. Aside from the onslaught of personal attacks on my character, the best I could decipher was some sort of system where a landlord could only rent at actual cost of their mortgage, taxes, insurance, maintenance, etc. No profit could be earned. I said no one would be a landlord for free, especially considering the risks of owning land (natural disasters not insured, market crash, etc).
Their “landlords shouldn’t profit off of renters” argument fell apart when I asked profit for who? Was the bank allowed to make a profit on the home loan? Was the insurance company allowed to make a profit on the policy? Could the maintenance and repair folks earn a profit on their services? Could the home remodeling companies make a profit if the home needed updating? Or is every person and entity involved in home ownership allowed to profit from the rental except the landlord? They stopped responding.
I’ll just copy paste my response from above.
You still didn’t answer the question. So get rid of the landlords means what exactly? You realize there’s about two dozen or so industries whose entire commercial existence is tied to landlords and rental properties, right? Do we get rid of all of them? Or just some? Or just the landlord, who is one small cog in a very big capitalist renting wheel?
Everyone is so oddly and furiously fixated on the landlord as some sort of big bad, and therefore assert that getting rid of the landlord position entirely will just magically make everything awesome. It’s odd to observe otherwise intelligent people stop so outrageously short of the complete picture.
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Actually, I think I did, you just didn’t understand it. What we mean by ‘landlord’ can be essentially boiled down to ‘private ownership’. The problem with landlords as a class is that they exert complete control over a ‘property’ while having the least use of it. When Adam Smith wrote about ‘rent extraction’, he was specifically identifying a portion of an economy that was unproductive.
Landlords are defined by their ownership; they could also maintain the property, but what makes them ‘landlords’ and not ‘maintinence workers’ is their ownership over a property someone else is using and charging rent for that use. The other arrangements I listed in my previous comment address that inefficiency by democratizing the use of that asset, instead of allowing the monopoly of the landlord.
I would really have to agree.
No, you didn’t. And the drivel you just wrote still didn’t answer the question. At this point it’s clear that it’s intentional.
Tell me you have no idea how property ownership works without telling me you have no idea how property ownership works.
“No you”. Nice one. Good luck friend, this back and forth is pointless.
Good luck yourself.
Seeing the same thing here. Apparently I’m scum because I’m renting my previous home for -10%/+10% of: mortgage on the lower price I paid 10 years ago, plus property taxes, plus home owners insurance, plus repairs and maintenance.
Apparently I would no longer be scum if I stopped renting it and refused to renew my tenants lease, sold the house and made a huge profit now, and the next person will have to pay brand new closing costs plus a mortgage on double the home value and double the APR.
I’m guessing most folks down-voting the sane responses saying rentals aren’t needed have never tried selling a house (and gone 6+ months paying the mortgage for a house you no longer live in) or don’t know there’s a “break even” calculation that tells you how many years you have to live in the same house before you’re better off than having just rented (realtor fees to sell the house, closing costs, time to sell the home where you’ll still be paying your mortgage + taxes + insurance, time to close, getting credit approval for a mortgage, etc).
Hell, I did the calculation when I had to move to a new state and I was able to rent a house for less than it would have cost me to pay for closing costs and realtor fees when I would have sold the house 3 years later. Not to mention the time to come up with 20% down payment.
But fuck me for not taking the easy way out, kicking out my tenants and cashing in on the current huge property values to sell my old home.
Again: nobody is saying you’re scum, they’re just saying it would be better if we didn’t have landlords.
But if you like to play the victim go off I guess
Maybe follow the thread?
https://lemmy.world/comment/9580949
Edit:
Idk what you meant to link to there but I saw no personal attacks
Updated with the specific quote. The sentiment of which has been echoed in this thread multiple times.
Housing should be socialised, with any profits being put back into expanding housing stock.
Whose profits? See my post above:
If your answer is “anyone and any entity making a profit”, then that’s about two or three dozen different industries (including banks, insurance agencies, title companies, all kinds of home builders, repair folks, etc.). Regardless of my opinion on that argument, your problem isn’t with the landlord, it’s with a huge swatch of industries who are all tied to and profit from renting.
It’s only the profit derived from ownership that’s of concern here, none of these other industries (aside from the bank, arguably) apply to the critique.
Your question is literally answered in a sibling comment.
Fuck no, just the landlords. Housing should be socialised.
Its important to remember that in your example of “barely breaking even” some poor schmuck is paying off your mortgage. So it doesn’t make you a martyr to barely break even, it still makes you a parasite.
Buying house for say 100k at 3% APR, renting it because you were laid off and cant afford moving expenses, rent in a different city, plus paying a mortgage on an empty house for 6 months to a year while it sells. Then years later you still keep it because, while you could sell it and cash in, with the low APR you got on it you can afford to rent it for less than the corporate scum suckers who try to monopolize housing = Parasite
Kicking out your renters and selling said house you bought at 100k for 200k to corporate scum suckers who will turn around and sell it at an even higher price or rent it at really high rates OR someone else who will end up paying way more than the rent I was asking for the place because interest rates are about double and the house has also doubled in price = internet hero
No room for nuance, got it.
If you move or can no longer afford your house, the property should be absorbed into a community coop (or sold to them) and leased back to the tenant or a new family. You keeping ownership of the home is not a requirement, it’s actually a huge problem.
The only ones insisting on the alternate scenario you just described are landlords who think of themselves as martyrs.
I don’t know which particular Market you’re in, but in the majority of cases, especially around me, if a bank would just fucking approve me for a loan I would pay notably less per month then I pay a landlord for rent.
And it’s not like I even have a bad credit I’m in the 740s but since the fake imaginary value of properties is skyrocketed to the point that even a piece of shit falling apart house is almost a million dollars I can’t get the kind of down payment they want. So despite the fact that the mortgage would literally be cheaper per month I can’t get one.
And that situation exists thanks to people snapping up properties especially large companies and turning them into investment rental properties
If you’re losing money with your properties, why not just sell them to your tenants for an affordable price?
Because they aren’t mentioning the part where the value of the house is way more than what they have invested and they will make a fortune if and when they sell lol. I lose money each year on this! But the property value is through the roof and you can borrow against it and get cheaper rates than everyone else.
Because he has unrealized capital gains - in yearly income/expenditure their losing money but big picture, when they sell, they profit.
In Australia, rental returns are paltry (less than 2%) compared to any other investment, but steep tax concessions on and insane capital growth (often higher than 6% annually) incentivises speculative investment in real estate… This is what’s driving up the cost of housing to the cartoonist levels they currently are in. It’s not unusual for these speculators to not even bother with tenants, because like op suggests they often lose money maintaining the property, it’s cheaper to speculate and maybe renovate immediately before selling.
The problem has nothing to do with landlords and everything to do with speculators going for capital gains. Greedy landlords can be a problem where there are no rentals protections, but that can easily be resolved with regulation.
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Yes, let’s pretend that housing prices haven’t gone up (lumber shortage, pandemic, what are those things?!)
And let’s live in a world where interest rates haven’t changed in the same time period (2.75% APR should be about the same as a 7% APR mortgage!).
Lastly, let’s ignore closing costs and the huge hunk of money realtors, banks, title companies, surveyors, and so on make every time a home is sold.
The main issue folks have with those generic “fuck all landlords!” posts is that while yes, corporate landlords that monopolize housing and keep raising rents in lockstep and invent fees suck ass, there’s also folks who found it easier to rent right away vs keeping an empty house on the market. Those landlords are paying a 10 year old mortgage with 10 year old lower interest rates, but 2024 property taxes and home insurance.
10 year old mortgage for a home at 2014 prices + current property taxes and insurance + 10% profit margin (the horror) << Brand new mortgage on the same home at 2024 prices and 2024 APR + insurance and property taxes.
Oh and I forgot about mortgage insurance. The person renting their home likely has gotten their mortgage below the cutoff for requiring mortgage insurance.
There are many situations where both the person renting their home and the renter come out way ahead.
The only ones who win by forcing everyone to sell their homes and no longer rent are the banks (more closing costs, prey on folks who aren’t ready to buy a home with high APRs and mortgage insurance, get to close out low APR loans for new higher APR loans), real estate agents and everyone that gets a cut Everytime a home is bought and sold.
That said there is something that can be done for the big investment groups that are buying up homes to jack up prices and corner local rental markets.
you listed two artificial increases in property value, sure lumber was more expensive, that was due to lumber tarrifs under the trump administration.
Sure covid had an effect on newly built houses. We’re well past that stage, that should be normalized by now. We should’ve had a massive surge in house building post restriction, but we didn’t.
You sound honest, but usually the internet speaks of generalizations. You may be an exception to that norm.
Otherwise; no, you don’t sound like the bad guy
The big corps making profits is what the post is about, I think.
Oh boy does it.
If we remove landlords from the picture, we get a bunch of housing on the market.
I own my own home now, but I’ve rented in the past. Eliminating rentals is an awful idea.
I moved a lot when I was younger: for education, jobs, etc. Buying a house every time I moved (knowing I was likely in an area temporarily) would have been a fucking nightmare – rentals fill a legitimate need.
Sure: fix the problems of price gouging and profiteering. Put strong limits on the number of single family homes one can rent, and outright stop corporations from buying single family homes. Increase protections for tenents and drive slumlords and absentee landlords out of business. But the idea of “just buy a house, lol” is absurd.
Nobody is saying “just buy a house,” because everybody is complaining about how the lack of housing is a major part of the issue. Apart from what you said on imposing limits and increasing protections for renters, the other main issue is to diverge equity from housing. Having the main way to accrue wealth be tied to the basic necessity of having a roof over your head puts a major incentive on people and corporations to buy up property. Housing becomes an investment at that point, not a service. There are people and companies sitting on empty houses because driving up the market by removing inventory is a more profitable investment than actually renting them out.
And if there were more options besides single family housing, people wouldn’t be forced to buy a house every time they moved as well. The US especially is really bad at this. We have high density apartments and condos, and single family homes, but a major lack of medium density housing. If we had more multi-family homes, duplexes, town houses, and smaller scale apartment and condo buildings, this would be a lot less of an issue. With more variety in housing types, the demand for single family homes would be a lot less and would help to reduce housing prices and make things more affordable for those who do want to buy a house.
That doesn’t mean we get a bunch of people with down payments and higher wages to afford these properties though. Housing prices would need to fall a lot for that to occur and if it did, it’d put many of the people who were able to scrape together the money to buy a house underwater on their mortgages.
Yes, but: why is the market in the state it’s in? It couldn’t be because a large supply of housing is locked up by landlords, thereby artificially curtailing supply and driving up prices…
From your description it sounds like land lording isn’t working for you. Why not sell?
It’s still worth it for appreciation and 1031 exchanges.
Really weird way to run a charity. I think youre lying
I find it hard to believe you’re losing money, unless you don’t understand the economics of it. If your mortgage payment is £450, and rent is £450 that’s an even ratio, of course you have maintenance costs on top of that, so it looks like you’re down X amount on costs but you’re not, you’re up £450 - maintenance. But I seriously doubt you’re charging Equal to your mortgage payment anyway.
I don’t think this is a particularly fair take. Some people bought at high prices because it seemed like the right move (in 2008, for example), market crashes, you’re stuck with your investment even if you’re underwater (upside down).
It’s definitely not fair to assume what his costs are compared to the cost to rent. It isn’t necessary to have the example above to reside in an area where mortgages far exceed rent. Northern Virginia in the USA is a good example, where townhomes can easily exceed 1 million USD, which would typically require a 30-50k+ down payment plus closing costs, and would then be 5k+ in a mortgage. Rent that place for 4500 and that’s a loss on monthly costs, but of course the landlord is earning long term equity (and that is the value, but they may not be turning a profit).
Edit: I’m simply stating that it’s unfair to assume the original commenter is lying about not making a profit. I’m not suggesting they aren’t experiencing a net gain in equity.
Everyone needs housing to live, and housing is increasingly being treated as an investment vehicle by the rich. In many markets, this has decoupled the monetary value of housing as an investment from the use-value it provides normal individuals, causing home prices to increase rapidly.
To your point, our current economic and credit situations have caused home ownership to be essentially impossible for a large number of people. Since home ownership is one of the primary ways individuals can build wealth, this has made it significantly harder for the average family to build wealth - trapping them in debt, making it much harder to save, etc. This is bad for society and for the economy, not to mention inhumane and harmful to millions of families in the US alone.
So, while renting is a necessity in our current economic climate, it is only a necessity for so many due to predatory economic factors preventing them from entering the housing market. Landlords, while necessary in this system, are increasingly corporations rather than individuals, and they are buying up huge swathes of the total available housing - causing increased housing scarcity, pricing more people out of the housing market, and increasing the number of people forced to rent. Individual landlords, as well as landlord corporations, are exploiting the system for profit and either perpetuating the current predatory housing system or (in the case of corporate landlords) deliberately making the system worse for profit, economically harming millions of families and individuals.
So that is why people see landlords as “the bad guy”. Whether or not you in particular treat your tennants decently, you are part of a predatory system and are working to perpetuate that system. It is an interesting moral and ethical dilemma because the system we are forced to exist in creates the necessity for landlords (as you said, some people have to rent), but that same system created the conditions that force so many people to be lifeling renters.
i’ve never fucking understood why people consider housing to be an investment, it’s a fucking assest.
even land isn’t an investment, why the fuck would a house be an investment.
Because the value of housing goes up over time. Practically guaranteed, historically speaking. An asset is just a thing that has value. An investment is an asset that (you hope) will accrue value in the future. Land can be an investment, too. So can digital pictures of monkeys. Really, any asset can be an investment.
yeah but that’s like, entirely counter to the core concept of how this shit works.
And old house is not more valuable than a new house, unless new houses are getting shittier and shittier over time, which last i checked, they aren’t.
I would classify an investment as the explicit example of putting money into something, that you expect to do well, in such a manner that you can realize returns on that investment, normally this does not entail using something. Buying a house, and then living in it for example, is not an investment. Much like buying a car, driving it, and the selling it, generally does not make you money. It can if you hit the market in certain places at certain times, but this is more speculative investing than anything.
And again, shouldn’t apply to houses on account that there should be like 100 million houses in the US at the very least, any time where speculative investment becomes a thing, it’s because there is low supply, and high demand. This literally should not be possible for housing. And if it is, it’s about as moral as trading people for money.
Oh yeah for sure. The fact that houses are allowed to be investments is obscene
gotta love economics, i still fail to see how housing is any different than a car, and the fact that they’re treated differently is just weird.
You’re not a bad guy, you just fill a role that perpetuates a bad problem.
What is a better solution to the problem?
community land trusts, cooperative housing, limited equity housing coops, and municipal housing
All of that is currently available but it doesnt meet the need. As far as government supplied housing, that is a disaster at best.
You asked what other options there were, and I provided them.
We don’t need landlords, we can safely eat them and be just OK 👌
Who then is going to provide housing at a supply that is sufficient?
You’re confused: landlords don’t provide housing, contractors do.
Who pays the contractors?
Sure, you’re certainly their hero
If you weren’t making a profit, you would sell it. So, doubt.
They may not be earning profit, but they’re definitely building equity that can be cashed in at retirement. No real reason to doubt the statement.
https://youtu.be/m1m7WmKJZyQ
JT for the win. 🏆
You’re not.
Do they pay more in rent than your mortgage payment? Because that would mean that they absolutely could afford it.
If they can go back in time and get the same APR and buy the house for the same price…
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It’s not necessarily about feeling defensive. It’s about trying to stay grounded. I’ve lived in rentals before, but I don’t now, so my experience may not match the experience of renting today. There’s nothing wrong with asking others for input about your own place in society or how you can be better.
Not OP byt if you are seeing critique of what you do everywhere around you, it’s hard to not be defensive, no matter how much you stick out of the average thingdoer. You simply start feeling as if it was aimed at you.
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and to be fair, it is aimed at them, they just don’t have the self awareness to realize the difference between criticism and targeted harassment.
We would be able to afford homes if people like you didn’t buy up a bunch, clearly more than you need to live in, driving up prices
You’re not, Lemmy is just filled with young naive quasi communist morons. It’s really breathtaking how dumb this community is, financially.
Sure. We’re all edgy 14 year olds who have never worked, paid rent, or a mortgage.
sorry that i dont want to dump 10s of thousands of dollars into a property that i will have no stake in, or ownership over.
you’re not, these people simply can’t comprehend not being handed everything on a fucking platter.
Elaborate on who you consider “these people”.
Lazy and entitled millennials, obviously. /s
that is probably the actual answer tho
You’re right except the ‘millennials’ part. Just Lazy and entitled people. Usually those left leaning that think they deserve everything without working for it.
Is your assumption that lazy and entitled people are left leaning? And\or that left leaning people don’t work therefore, they are lazy and entitled?
Either way its all assumptions and generalizations but, I’m curious what brings you back here after 4ish days.
I live a life that doesn’t involve being on the internet, checking my comments every single day. Often go days or weeks without checking. What brings you back day after day?
Regardless, you’re not seeming to argue in good faith. I’m not saying it’s all of one group or the other. In no way did I insinuate ALL lazy and entitled people are left leaning, but that it’s usually the ones that ARE left leaning that think they deserve everything without working for it. No where did I insinuate that ALL left leaning people are this way as well. You obviously don’t understand nuance, so I’ll just leave it here.
Its cool, I get this little red notification when there’s a reply or something. I do use this application daily so you got me there.
I’m glad you live a life. I wish you the best.