Forgive my lack of understanding, but why are we assuming that landlords have an inalienable right to make a profit on their investment and why are we expected, as taxpayers, to bail them out for...
Forgive my lack of understanding, but why are we assuming that landlords have an inalienable right to make a profit on their investment and why are we expected, as taxpayers, to bail them out for poor decision-making?
It’s more that landlords have a right to do what they want with their property, including setting prices. So when the government forces them to lower prices, or not take in rent, they are arguing...
It’s more that landlords have a right to do what they want with their property, including setting prices. So when the government forces them to lower prices, or not take in rent, they are arguing they should be compensated.
If they are landlords they can't do whatever they want with their property as they're held to certain restrictions and regulations already. If you want to go further though, the government...
If they are landlords they can't do whatever they want with their property as they're held to certain restrictions and regulations already. If you want to go further though, the government regulates eviction processes and puts all sorts of restrictions and requirements on the parties of such civil actions. It's within their purview to regulate that. Landlords were still legally entitled to rent, they just lost an enforcement mechanism due to an emergency.
Which seems very reasonable to me, in that a number of laws and regulations can be shifted during emergencies to ensure safety, prevent price gouging, or limit the spread of disease.
I don’t think there’s anything wrong with the government applying some emergency provisions, but there’s also nothing wrong with the landlords asking the government for compensation. It’s quite...
I don’t think there’s anything wrong with the government applying some emergency provisions, but there’s also nothing wrong with the landlords asking the government for compensation. It’s quite common for the government to compensate private actors when they force policies or force acquisition of assets in an emergency. The government reasonably enacting some emergency powers, the landlords reasonable are asking for compensation when the government forced them to take measures that would lose them income.
It’s fair on both sides. The court will decide. Well, the pressure of a court loss will make them settle out of court, but the same thing regardless.
I'm not taking a stance on it, just felt it was worth expanding from "they can do what they want" and the idea they were forced to lower prices, to a more accurate picture of where governmental...
I'm not taking a stance on it, just felt it was worth expanding from "they can do what they want" and the idea they were forced to lower prices, to a more accurate picture of where governmental authority and action existed.
I'm curious how many of them sought/acquired the PPP loans and also are suing now though.
I would say again: why is it the taxpayer's problem? The average American lost money due to job loss due to the pandemic but they're not getting taxpayer money in compensation. Why are landlords...
I would say again: why is it the taxpayer's problem? The average American lost money due to job loss due to the pandemic but they're not getting taxpayer money in compensation. Why are landlords to be guaranteed a profit at the taxpayer's expense?
They did! Multiple people I knew got an extra $600/week in addition to the standard unemployment. I think in general trying to make everyone as whole as possible is a good thing. Edit: I don't...
due to job loss due to the pandemic but they're not getting taxpayer money in compensation
They did! Multiple people I knew got an extra $600/week in addition to the standard unemployment. I think in general trying to make everyone as whole as possible is a good thing.
Edit: I don't think the average American lost their job either. Unemployment was 14.8% at the peak which absolutely sucked, but isn't the average experience.
And? You have a right to challenge the government in court in the US. May that never change. It seems like the government has already agreed on a settlement that would pay them $1.6b in damages....
And? You have a right to challenge the government in court in the US. May that never change.
It seems like the government has already agreed on a settlement that would pay them $1.6b in damages.
This is the purpose of a court system. They, as a plaintiff, have a claim that the government unlawfully imposed financial harm on them, and way we determine the truth of it is in court. Evidently there was a good amount of truth.
Settlements aren't decided by the court in the same way as actual judgments would be. They are an agreement between the parties to (essentially) stop the lawsuit in exchange for whatever's in the...
Settlements aren't decided by the court in the same way as actual judgments would be. They are an agreement between the parties to (essentially) stop the lawsuit in exchange for whatever's in the settlement agreement. Sometimes judges need to approve what's in a settlement agreement, but a settlement does not entail that the court found for or against any party. It does not serve as direct evidence of "truth", as you would say, because settling the case is an alternative to the actual process of litigation that would do that. The biggest inference one can draw from a settlement is that both parties determined that it was a better tactical choice than continuing the lawsuit, but this can be due to a large number of reasons, many of which have nothing to do with the merits of either party's claims (for instance, it's quite common to agree to a settlement just to avoid the cost, both financial and otherwise, of dragging a court case on).
The degree of settlement is a direct reflection of the state of the trial. The settlement in this case is quite large - the government isn’t going to settle 1.6b to you from a nuisance suit. It...
The degree of settlement is a direct reflection of the state of the trial. The settlement in this case is quite large - the government isn’t going to settle 1.6b to you from a nuisance suit.
It means that the government estimated the total cost of the punishment and trial costs to be over 1.6b. We know that the legal costs won’t be close to 1.6b which means it’s mostly that they think they’ll lose quite badly in court.
This is ignoring a great number of factors that go into determining whether one will accept a settlement at what amount beyond solely doing arithmetic with the dollar amounts, such as the other...
This is ignoring a great number of factors that go into determining whether one will accept a settlement at what amount beyond solely doing arithmetic with the dollar amounts, such as the other terms of the settlement agreement, and that's without even considering the influence of the political bent of the current administration (and even if that's not the primary reason for this settlement, believing it has zero effect on the decision-making here is naive at best). A settlement does definitely reflect the parties' beliefs in their chances at trial, but much more indirectly.
They’re not. There’s a lot of industries that get subsidies, directly or indirectly. The auto industry, the energy industry, the farming industry. It’s easier to name industries that don’t have...
They’re not. There’s a lot of industries that get subsidies, directly or indirectly. The auto industry, the energy industry, the farming industry. It’s easier to name industries that don’t have any subsidies.
Landlords get less subsidies than most industries tbh, since there’s no exports in it. This is a special case where the government directly forced them to do something that would cause losses.
Private individuals get it, too. Remember that during COVID there was blanket unemployment insurance that was much higher than normal.
So frustrating. My understanding is that these “losses” actually kept the landlords in business. At the end of the day, people lost their jobs. A large number of evictions combined with a low...
So frustrating. My understanding is that these “losses” actually kept the landlords in business. At the end of the day, people lost their jobs. A large number of evictions combined with a low number of people willing to move would have made rents fall. Instead, rents increased over the pandemic. Perhaps I’m misunderstanding the situation, but I think the net loss for the landlords would have greater had the pause on evictions not occurred.
"On average" doesn't really seem relevant here? Some landlords might not have had any losses, but other landlords did. It's not like the landlords that had high rents and paying tenants would have...
"On average" doesn't really seem relevant here? Some landlords might not have had any losses, but other landlords did. It's not like the landlords that had high rents and paying tenants would have helped other landlords that were losing money.
Although, it might have turned out that way for large landlords that were diversified.
So, I think part of the issue is the viewpoint that entering the property market as a risk-free investment. This can extend into the rental market being viewed as a risk free business. So, when...
Exemplary
So, I think part of the issue is the viewpoint that entering the property market as a risk-free investment. This can extend into the rental market being viewed as a risk free business. So, when factors outside of their control made them unprofitable (or less profitable), they are trying to recoup there losses in court.
I see their argument, where government action reduced their income, and therefore they should be compensated. However, I do not think that businesses that have their revenue impacted by temporary or permanent legislation changes should be compensated by the government. It just seems like it would be a weird precedent to set, since it would result in bankrupting the government or immobilizing it.
As a western Canadian heading into forest fire season, I think it would be weird if the government paid businesses their lost revenue for the period that they were forced to evacuate. However, the argument between the hypothetical businesses suing the government for revenues lost during an evacuation and these landlords lawsuit are pretty similar.
This idea that landlords view real estate as risk-free investments is a straw man. I've never heard any landlords claim that; it's almost always the opposite. Otherwise, maybe @Sycamore should be...
This idea that landlords view real estate as risk-free investments is a straw man. I've never heard any landlords claim that; it's almost always the opposite. Otherwise, maybe @Sycamore should be throwing every dollar into real estate.
Potentially with landlords explicitly it might be a straw man, as I have not researched that in general. Real estate being viewed as risk-free though is not a complete straw man, as I have heard...
Potentially with landlords explicitly it might be a straw man, as I have not researched that in general. Real estate being viewed as risk-free though is not a complete straw man, as I have heard people hold that viewpoint (although unsure if they owned any properties or not).
I don't doubt that! It's all over Tildes and Reddit (one of many overlapping opinions). But until people actually sink money into it, I think they're being a bit too dismissive of the costs of...
I don't doubt that! It's all over Tildes and Reddit (one of many overlapping opinions). But until people actually sink money into it, I think they're being a bit too dismissive of the costs of providing a rental unit.
Bingo. It's impossible to have a mature discussion about the topic. Don't get me wrong, I will be the first to say that there are large landlord firms that are unhealthy for humanity and there's...
Bingo. It's impossible to have a mature discussion about the topic.
Don't get me wrong, I will be the first to say that there are large landlord firms that are unhealthy for humanity and there's ABSOLUTELY price fixing and other illegal activity going on. We've also just got a natural problem in that yes, if you can afford to, when you move you might as well rent out your old place rather than sell, getting a % of the proceeds some management company will take.
Any sort of property management has pretty heavy risks and dealing with tenants/cam/upkeep SUCKS. There's a reason the rental market should exist, but there's also a reason it needs to be better regulated.
Thanks for the ping @gary ! A good reminder that real-estate is not risk-free.. (i did somewhat consider investing in real estate thinking it was reasonably safe but not wanting to be a landlord...
Thanks for the ping @gary ! A good reminder that real-estate is not risk-free.. (i did somewhat consider investing in real estate thinking it was reasonably safe but not wanting to be a landlord was the major reason to avoid... )
Boo hoo your free ROI had a downturn for a year. Sell one of your properties to the rightful owner: the tennant. Best thing we could do for this world is emminent domain all housing to the current...
Boo hoo your free ROI had a downturn for a year.
Sell one of your properties to the rightful owner: the tennant.
Best thing we could do for this world is emminent domain all housing to the current residents and ban the entire practice.
I don't know about that. Owning a home isn't even desirable for a lot of people. Personally, even though I own one now, there were times in my life where even though I could afford a down payment...
Best thing we could do for this world is emminent domain all housing to the current residents and ban the entire practice.
I don't know about that. Owning a home isn't even desirable for a lot of people. Personally, even though I own one now, there were times in my life where even though I could afford a down payment on one, I didn't want to be tied to a massively expensive, illiquid asset that I have to spend a lot of time and money maintaining.
Most of the time I'd rather just outsource all of that that to someone else and rent, to be honest.
If I don't like the place I live, I could just decide not to renew my lease without all of the trouble of finding a buyer and going through the closing and negotiation process.
Lol. You say that like landlords maintain more than they are legally mandated to. And you do pay dearly for that abstraction of having somebody else call a plumber for you. Which I've often had to...
Lol. You say that like landlords maintain more than they are legally mandated to. And you do pay dearly for that abstraction of having somebody else call a plumber for you. Which I've often had to do anyway when renting if I didn't want to wait 2 weeks for a functional toilet.
In this highly unlikely scenario, it becomes possible to simply the whole process, because home improvements and maintenance provide no more value than putting new tires on your car. Once you eliminate the idea of an investment property, a home becomes no more an asset than the road you drive on. You just move in and out. No buying or selling. You improve it if you want it. You hire a property manager if you don't want to do maintenance.
I mean, it depends on the rental I guess, but most of the rentals I've stayed at, the landlord did maintain more than they're legally mandated to, because they knew I wouldn't renew my lease if...
I mean, it depends on the rental I guess, but most of the rentals I've stayed at, the landlord did maintain more than they're legally mandated to, because they knew I wouldn't renew my lease if they didn't.
I don't see how you can simplify the whole process of home maintenance either. I mean, yeah, I could hire a property manager for my own house, but I then have to oversee them. The fact that houses are expensive means I have to care quite a bit about how well that home maintenance is performed. It's the most expensive thing I own, after all.
Somehow turning houses into not investments doesn't change that. I'm liable for this extremely expensive thing that costs more than everything else I own put together. There's no getting around it being a long arduous process if I want to sell it, because I'm putting quite a bit of effort into making sure I get the best price for it. Even if I was guaranteed to not make a significant amount of money off of the sale, I'd still want to not get ripped off. All of that is even before financing is brought into the conversation, because the moment you involve a lender, any sale becomes a lot more complicated.
I don't have to deal with any of that with a rental. I just sign a lease and move in. If the housing market crashes, well, that sucks for my landlord, but it's not my problem. If a tree falls through the place and destroys it, hopefully I'm not in it, and it sucks for all my stuff, but I'm not on the hook for the damage.
I don't have to arrange for the grass to be mowed, the exterior to be pressur washed and painted, roof replacement, AC maintenance and inspection, sprinklers, mold, exterminators, and blah blah blah, all the other little annoying things that you need to do if you own a house. I just pay one person one sum once a month.
Honestly, residential real estate isn't even a particularly lucrative investment, so it's not like renters are missing out on a whole lot even from a pure financial standpoint.
My current lease stipulates that I must pay for snow removal, maintain the yard and garden, and cover all repairs under $100 out of pocket. I have to pay a $200 annual lease renewal fee, a...
My current lease stipulates that I must pay for snow removal, maintain the yard and garden, and cover all repairs under $100 out of pocket. I have to pay a $200 annual lease renewal fee, a mandatory $45 "convenience" fee that gives me access to pay online and they send me a $15 air filter (that I have to install myself) 3x a year.
This is the second best landlord I ever had. The best was an old lady who just let us deduct everything we paid for directly from our rent payment.
Honestly, residential real estate isn't even a particularly lucrative investment.
If this were true landlords would be tripping over themselves to liquidate their properties.
All that above is on top of me paying approximately $800/mo over what it would cost to buy this home. Over 5 years, that'll cover a roof replacement, water heater replacement, window replacement, dishwasher replacement, washer/dryer replacement, and a bit leftover. For things that shouldn't need replaced more than once a decade.
If my landlord has a roughly equivalent mortgage to what I would have, in a year I netted him $8,000 against the principal, all of the taxes, and another $9k cash. Not accounting for regular housing market inflation (on the order of 3-5%), that accounts for on the order of 4% growth on money invested. That beats out the average investment by a large margin.
Sounds like your state laws are pretty terrible - the fees you listed are illegal in my state. You can be responsible for some level of snow removal, which is generally the case if you’re not in a...
Sounds like your state laws are pretty terrible - the fees you listed are illegal in my state. You can be responsible for some level of snow removal, which is generally the case if you’re not in a large complex, but that’s about it.
I don’t think anyone disagrees that some landlords are awful, maybe even many, but much of that is resolvable with far less extreme state and local policies than what you’ve proposed. It’s not like slumlords don’t exist here, but at least you generally have easy and inexpensive access to recourse when you get a landlord that tries to screw you over.
4% is generally not considered a great return on an investment. You could get that from a high yield savings account. Inflation alone was 2.6% last year. The s&p 500 gained 17% (an unusually good...
4% is generally not considered a great return on an investment. You could get that from a high yield savings account. Inflation alone was 2.6% last year. The s&p 500 gained 17% (an unusually good year, but still, it averages around 10).
Most investments are also far more liquid than real estate.
People can obviously do better than 4% annual returns in real estate, and the average is higher, but not by much. I don't think the fact that people invest in real estate is really the root cause of why housing is expensive though. It's an attractive investment in some cases, but it's not like it's this amazing cheat code to free money, and renting isn't a bad idea or "throwing money away" like a lot of people say it is. You're paying money in exchange for a place to live ultimately. It's a service fee just like parking or a hair cut or renting a car. It can be something where you're taken advantage of, if can be something where you're getting an incredible deal, or it can be something mutually beneficial on both sides. It just depends on the specific situation.
Between 2008 and 2016, a 1% APY on a savings account was typical. It would be less of a problem if renting was actually a choice, and not something that is mandatory until you can save a giant wad...
Between 2008 and 2016, a 1% APY on a savings account was typical.
It would be less of a problem if renting was actually a choice, and not something that is mandatory until you can save a giant wad of money. Which is incidentally very difficult when you're getting gouged for rent.
Also, we are talking the difference between investing extra money, and transforming your 50% of your wages into 25% equity.
The only time renting makes financial sense is if you're moving cities more than once every three years.
That doesn't seem well thought out... wouldn't it punish those who saved up to buy, and reward those who spent it all? Many (not all, sure) "rent seeker" are really just looking for a somewhat...
Sell one of your properties to the rightful owner: the tennant.
Best thing we could do for this world is emminent domain all housing to the current residents and ban the entire practice.
That doesn't seem well thought out... wouldn't it punish those who saved up to buy, and reward those who spent it all? Many (not all, sure) "rent seeker" are really just looking for a somewhat safe way to invest money for retirement. there are negativities associated to this behavior, but why suggest they should lose everything.
I hope your savings aren't tied to carbon intensive activities for exemple, otherwise you might feel hypocritical to blame landlord for the negative consequence of their saving strategy...
FWIW, emiminent domain usually requires paying out the current owner. In the unlikely event this policy were to gain traction, it would likely involve paying out a percentage of ownership to...
FWIW, emiminent domain usually requires paying out the current owner. In the unlikely event this policy were to gain traction, it would likely involve paying out a percentage of ownership to current owners and wiping out the highly circular mortgage debts across the board.
Remember: Homes are in actuality a depreciating asset, little different from a car. They only ever appreciate in value with a combination of inflation and insufficient supply.
Fixing retirement plans is a somewhat seperate problem... one we used to have in the form of pensions. But any passive income that almost purely relies on extraction of a poorer person's income is an evil one. Being a landlord in retirement is, in essence, saying "You're going to fund my retirement because I own this home. I don't care that it prevents you from saving for your own home, and I'm gonna give this to my kid when I die, so that you can fund their lifestyle too."
Generally speaking, I would like a system where money has an expiration date, avoiding the entire concept of long-term savings entirely.
But since you asked, given that I'm stuck inside the system as it is, my savings are in a combination of index funds, managed funds I have no control over (and can't change), and government securities. Or in other words: tied about as closely as possible to the collective efforts of society. My savings is also a drop in the bucked compared to my day to day living expenses. Buying an EV and installing solar did 10x more to help than having the same amount abstractly invested in a solar investment company. But I also opted to sell my old house instead of putting it up for rent. It had a value over double the rest of my savings combined.
Forgive my lack of understanding, but why are we assuming that landlords have an inalienable right to make a profit on their investment and why are we expected, as taxpayers, to bail them out for poor decision-making?
It’s more that landlords have a right to do what they want with their property, including setting prices. So when the government forces them to lower prices, or not take in rent, they are arguing they should be compensated.
If they are landlords they can't do whatever they want with their property as they're held to certain restrictions and regulations already. If you want to go further though, the government regulates eviction processes and puts all sorts of restrictions and requirements on the parties of such civil actions. It's within their purview to regulate that. Landlords were still legally entitled to rent, they just lost an enforcement mechanism due to an emergency.
Which seems very reasonable to me, in that a number of laws and regulations can be shifted during emergencies to ensure safety, prevent price gouging, or limit the spread of disease.
I don’t think there’s anything wrong with the government applying some emergency provisions, but there’s also nothing wrong with the landlords asking the government for compensation. It’s quite common for the government to compensate private actors when they force policies or force acquisition of assets in an emergency. The government reasonably enacting some emergency powers, the landlords reasonable are asking for compensation when the government forced them to take measures that would lose them income.
It’s fair on both sides. The court will decide. Well, the pressure of a court loss will make them settle out of court, but the same thing regardless.
I'm not taking a stance on it, just felt it was worth expanding from "they can do what they want" and the idea they were forced to lower prices, to a more accurate picture of where governmental authority and action existed.
I'm curious how many of them sought/acquired the PPP loans and also are suing now though.
I would say again: why is it the taxpayer's problem? The average American lost money due to job loss due to the pandemic but they're not getting taxpayer money in compensation. Why are landlords to be guaranteed a profit at the taxpayer's expense?
They did! Multiple people I knew got an extra $600/week in addition to the standard unemployment. I think in general trying to make everyone as whole as possible is a good thing.
Edit: I don't think the average American lost their job either. Unemployment was 14.8% at the peak which absolutely sucked, but isn't the average experience.
Because the taxpayer, in the form of the elected government the taxpayers elect, made them do something they didn’t want to do?
No one forced landlords to become literal rent seekers and all investments have risk ¯\_(ツ)_/¯
And? You have a right to challenge the government in court in the US. May that never change.
It seems like the government has already agreed on a settlement that would pay them $1.6b in damages.
This is the purpose of a court system. They, as a plaintiff, have a claim that the government unlawfully imposed financial harm on them, and way we determine the truth of it is in court. Evidently there was a good amount of truth.
Settlements aren't decided by the court in the same way as actual judgments would be. They are an agreement between the parties to (essentially) stop the lawsuit in exchange for whatever's in the settlement agreement. Sometimes judges need to approve what's in a settlement agreement, but a settlement does not entail that the court found for or against any party. It does not serve as direct evidence of "truth", as you would say, because settling the case is an alternative to the actual process of litigation that would do that. The biggest inference one can draw from a settlement is that both parties determined that it was a better tactical choice than continuing the lawsuit, but this can be due to a large number of reasons, many of which have nothing to do with the merits of either party's claims (for instance, it's quite common to agree to a settlement just to avoid the cost, both financial and otherwise, of dragging a court case on).
The degree of settlement is a direct reflection of the state of the trial. The settlement in this case is quite large - the government isn’t going to settle 1.6b to you from a nuisance suit.
It means that the government estimated the total cost of the punishment and trial costs to be over 1.6b. We know that the legal costs won’t be close to 1.6b which means it’s mostly that they think they’ll lose quite badly in court.
This is ignoring a great number of factors that go into determining whether one will accept a settlement at what amount beyond solely doing arithmetic with the dollar amounts, such as the other terms of the settlement agreement, and that's without even considering the influence of the political bent of the current administration (and even if that's not the primary reason for this settlement, believing it has zero effect on the decision-making here is naive at best). A settlement does definitely reflect the parties' beliefs in their chances at trial, but much more indirectly.
So why are landlords the only segment of society that gets taxpayer subsidized and guaranteed profits?
They’re not. There’s a lot of industries that get subsidies, directly or indirectly. The auto industry, the energy industry, the farming industry. It’s easier to name industries that don’t have any subsidies.
Landlords get less subsidies than most industries tbh, since there’s no exports in it. This is a special case where the government directly forced them to do something that would cause losses.
Private individuals get it, too. Remember that during COVID there was blanket unemployment insurance that was much higher than normal.
America's landlords should count themselves lucky we don't load them all up in the backs of unmarked vans and send them off a cliff
Well, we've got a long and proud history of dirt farming in this country, why not subsidize rentseeking?
So frustrating. My understanding is that these “losses” actually kept the landlords in business. At the end of the day, people lost their jobs. A large number of evictions combined with a low number of people willing to move would have made rents fall. Instead, rents increased over the pandemic. Perhaps I’m misunderstanding the situation, but I think the net loss for the landlords would have greater had the pause on evictions not occurred.
"On average" doesn't really seem relevant here? Some landlords might not have had any losses, but other landlords did. It's not like the landlords that had high rents and paying tenants would have helped other landlords that were losing money.
Although, it might have turned out that way for large landlords that were diversified.
So, I think part of the issue is the viewpoint that entering the property market as a risk-free investment. This can extend into the rental market being viewed as a risk free business. So, when factors outside of their control made them unprofitable (or less profitable), they are trying to recoup there losses in court.
I see their argument, where government action reduced their income, and therefore they should be compensated. However, I do not think that businesses that have their revenue impacted by temporary or permanent legislation changes should be compensated by the government. It just seems like it would be a weird precedent to set, since it would result in bankrupting the government or immobilizing it.
As a western Canadian heading into forest fire season, I think it would be weird if the government paid businesses their lost revenue for the period that they were forced to evacuate. However, the argument between the hypothetical businesses suing the government for revenues lost during an evacuation and these landlords lawsuit are pretty similar.
This idea that landlords view real estate as risk-free investments is a straw man. I've never heard any landlords claim that; it's almost always the opposite. Otherwise, maybe @Sycamore should be throwing every dollar into real estate.
Potentially with landlords explicitly it might be a straw man, as I have not researched that in general. Real estate being viewed as risk-free though is not a complete straw man, as I have heard people hold that viewpoint (although unsure if they owned any properties or not).
I don't doubt that! It's all over Tildes and Reddit (one of many overlapping opinions). But until people actually sink money into it, I think they're being a bit too dismissive of the costs of providing a rental unit.
Bingo. It's impossible to have a mature discussion about the topic.
Don't get me wrong, I will be the first to say that there are large landlord firms that are unhealthy for humanity and there's ABSOLUTELY price fixing and other illegal activity going on. We've also just got a natural problem in that yes, if you can afford to, when you move you might as well rent out your old place rather than sell, getting a % of the proceeds some management company will take.
Any sort of property management has pretty heavy risks and dealing with tenants/cam/upkeep SUCKS. There's a reason the rental market should exist, but there's also a reason it needs to be better regulated.
Thanks for the ping @gary ! A good reminder that real-estate is not risk-free.. (i did somewhat consider investing in real estate thinking it was reasonably safe but not wanting to be a landlord was the major reason to avoid... )
Boo hoo your free ROI had a downturn for a year.
Sell one of your properties to the rightful owner: the tennant.
Best thing we could do for this world is emminent domain all housing to the current residents and ban the entire practice.
I don't know about that. Owning a home isn't even desirable for a lot of people. Personally, even though I own one now, there were times in my life where even though I could afford a down payment on one, I didn't want to be tied to a massively expensive, illiquid asset that I have to spend a lot of time and money maintaining.
Most of the time I'd rather just outsource all of that that to someone else and rent, to be honest.
If I don't like the place I live, I could just decide not to renew my lease without all of the trouble of finding a buyer and going through the closing and negotiation process.
There are advantages to renting versus owning.
Lol. You say that like landlords maintain more than they are legally mandated to. And you do pay dearly for that abstraction of having somebody else call a plumber for you. Which I've often had to do anyway when renting if I didn't want to wait 2 weeks for a functional toilet.
In this highly unlikely scenario, it becomes possible to simply the whole process, because home improvements and maintenance provide no more value than putting new tires on your car. Once you eliminate the idea of an investment property, a home becomes no more an asset than the road you drive on. You just move in and out. No buying or selling. You improve it if you want it. You hire a property manager if you don't want to do maintenance.
I mean, it depends on the rental I guess, but most of the rentals I've stayed at, the landlord did maintain more than they're legally mandated to, because they knew I wouldn't renew my lease if they didn't.
I don't see how you can simplify the whole process of home maintenance either. I mean, yeah, I could hire a property manager for my own house, but I then have to oversee them. The fact that houses are expensive means I have to care quite a bit about how well that home maintenance is performed. It's the most expensive thing I own, after all.
Somehow turning houses into not investments doesn't change that. I'm liable for this extremely expensive thing that costs more than everything else I own put together. There's no getting around it being a long arduous process if I want to sell it, because I'm putting quite a bit of effort into making sure I get the best price for it. Even if I was guaranteed to not make a significant amount of money off of the sale, I'd still want to not get ripped off. All of that is even before financing is brought into the conversation, because the moment you involve a lender, any sale becomes a lot more complicated.
I don't have to deal with any of that with a rental. I just sign a lease and move in. If the housing market crashes, well, that sucks for my landlord, but it's not my problem. If a tree falls through the place and destroys it, hopefully I'm not in it, and it sucks for all my stuff, but I'm not on the hook for the damage.
I don't have to arrange for the grass to be mowed, the exterior to be pressur washed and painted, roof replacement, AC maintenance and inspection, sprinklers, mold, exterminators, and blah blah blah, all the other little annoying things that you need to do if you own a house. I just pay one person one sum once a month.
Honestly, residential real estate isn't even a particularly lucrative investment, so it's not like renters are missing out on a whole lot even from a pure financial standpoint.
My current lease stipulates that I must pay for snow removal, maintain the yard and garden, and cover all repairs under $100 out of pocket. I have to pay a $200 annual lease renewal fee, a mandatory $45 "convenience" fee that gives me access to pay online and they send me a $15 air filter (that I have to install myself) 3x a year.
This is the second best landlord I ever had. The best was an old lady who just let us deduct everything we paid for directly from our rent payment.
If this were true landlords would be tripping over themselves to liquidate their properties.
All that above is on top of me paying approximately $800/mo over what it would cost to buy this home. Over 5 years, that'll cover a roof replacement, water heater replacement, window replacement, dishwasher replacement, washer/dryer replacement, and a bit leftover. For things that shouldn't need replaced more than once a decade.
If my landlord has a roughly equivalent mortgage to what I would have, in a year I netted him $8,000 against the principal, all of the taxes, and another $9k cash. Not accounting for regular housing market inflation (on the order of 3-5%), that accounts for on the order of 4% growth on money invested. That beats out the average investment by a large margin.
Sounds like your state laws are pretty terrible - the fees you listed are illegal in my state. You can be responsible for some level of snow removal, which is generally the case if you’re not in a large complex, but that’s about it.
I don’t think anyone disagrees that some landlords are awful, maybe even many, but much of that is resolvable with far less extreme state and local policies than what you’ve proposed. It’s not like slumlords don’t exist here, but at least you generally have easy and inexpensive access to recourse when you get a landlord that tries to screw you over.
4% is generally not considered a great return on an investment. You could get that from a high yield savings account. Inflation alone was 2.6% last year. The s&p 500 gained 17% (an unusually good year, but still, it averages around 10).
Most investments are also far more liquid than real estate.
People can obviously do better than 4% annual returns in real estate, and the average is higher, but not by much. I don't think the fact that people invest in real estate is really the root cause of why housing is expensive though. It's an attractive investment in some cases, but it's not like it's this amazing cheat code to free money, and renting isn't a bad idea or "throwing money away" like a lot of people say it is. You're paying money in exchange for a place to live ultimately. It's a service fee just like parking or a hair cut or renting a car. It can be something where you're taken advantage of, if can be something where you're getting an incredible deal, or it can be something mutually beneficial on both sides. It just depends on the specific situation.
Between 2008 and 2016, a 1% APY on a savings account was typical.
It would be less of a problem if renting was actually a choice, and not something that is mandatory until you can save a giant wad of money. Which is incidentally very difficult when you're getting gouged for rent.
Also, we are talking the difference between investing extra money, and transforming your 50% of your wages into 25% equity.
The only time renting makes financial sense is if you're moving cities more than once every three years.
That doesn't seem well thought out... wouldn't it punish those who saved up to buy, and reward those who spent it all? Many (not all, sure) "rent seeker" are really just looking for a somewhat safe way to invest money for retirement. there are negativities associated to this behavior, but why suggest they should lose everything.
I hope your savings aren't tied to carbon intensive activities for exemple, otherwise you might feel hypocritical to blame landlord for the negative consequence of their saving strategy...
I kind of get that but I also think that's pretty unfair to say when the cost of buying a home as so so so so rapidly outpaced the rise of income.
FWIW, emiminent domain usually requires paying out the current owner. In the unlikely event this policy were to gain traction, it would likely involve paying out a percentage of ownership to current owners and wiping out the highly circular mortgage debts across the board.
Remember: Homes are in actuality a depreciating asset, little different from a car. They only ever appreciate in value with a combination of inflation and insufficient supply.
Fixing retirement plans is a somewhat seperate problem... one we used to have in the form of pensions. But any passive income that almost purely relies on extraction of a poorer person's income is an evil one. Being a landlord in retirement is, in essence, saying "You're going to fund my retirement because I own this home. I don't care that it prevents you from saving for your own home, and I'm gonna give this to my kid when I die, so that you can fund their lifestyle too."
Generally speaking, I would like a system where money has an expiration date, avoiding the entire concept of long-term savings entirely.
But since you asked, given that I'm stuck inside the system as it is, my savings are in a combination of index funds, managed funds I have no control over (and can't change), and government securities. Or in other words: tied about as closely as possible to the collective efforts of society. My savings is also a drop in the bucked compared to my day to day living expenses. Buying an EV and installing solar did 10x more to help than having the same amount abstractly invested in a solar investment company. But I also opted to sell my old house instead of putting it up for rent. It had a value over double the rest of my savings combined.