Betty and Bob are in an unfortunate situation, but they’re taking a thing of value and charging money to cover all costs, and make a profit. The tenant is therefore paying the mortgage and all repair costs, and then even more to support what amounts to a leech.
It might be a good arrangement for Betty and Bob, but it makes living somewhere more expensive.
Which is the general point. I can be sympathetic to Betty and Bob, but landlords buying houses leaves less houses for everyone else for a ‘job’ that doesn’t add any real value to society. It just props up someone with the economic means to buy multiple houses and make them a living while hanging the rest of us out to dry.
Ok, so we’re going to throw a negative generalization up to support our narrative of ‘ALAB’.
I purchased my home within the last 4 years. Before that my wife rented from the same owner for 10 years. Living in midtown Atlanta, a place that is now full of 1.5 million dollar homes on postal stamp sized lots. That landlord or owner may have had a few properties, we don’t know, but it was a personal rental that was a 2Bed/1bath for 2/3rds the local rate. And they did the maintenance at their expense.
They also have kept up with her afterward, and mentioned that they wish that they could have found another tenant like us. If I rented out a portion of my place while I was living out of town for work? I’d aspire to be as good as they were. Sadly, it’s just me now so maintenance and yard work would have to wait for the weekends.
Let’s just have a little more nuance. Big Corpo is bad, but not everyone who is trying to make a living is.
I’d say there’s a difference between renting out a portion of a house the landlord also lives in and purchasing whole other homes and renting them out.
Besides, no matter how nice the multi-home-owning landlord is, the reality is they don’t purchase homes and rent them out without making a profit on all expected costs, maintenance included. The better deal for the renter renting a whole home would be to own the home and maintain it, because then they’re saving the profit the landlord charges.
A nice polite leech is still a leech.
Sure, everything you purchase in a capitalistic society has profit added to it, but normally there’s also added value. You pay more in the brick and mortar store vs buying online because the added value is getting the item immediately. You pay more for the car part at the mechanics shop vs doing it yourself because having a professional install it adds value.
What value does Jim-bob owning 5 homes and renting them out to make a living add to the tenants?
You make that sound like anyone who’s able to rent a place is able to buy a place, but at least in the US, that’s not alwaxs the case. Sure the mortgage might be cheaper than rent in most cases, but being able to save up enough for that down payment takes a lot. I didn’t have the luxury of living with my parents after high school to save up enough for a down payment on a house, so I’ve had to rent places since then.
Sure maybe all housing should be free, there’s certainly enough homes in the US for that to be possible, but the rest of capitalist society makes that impossible, but that’s not the fault of every landlord ever. Some, sure, but not all.
What value does Jim-bob owning 5 homes and renting them out to make a living add to the tenants?
A place to live without having to handle maintenance/upkeep themselves, to be approved for a mortgage, save up for a downpayment, or to have to sell (and navigate all the mess of that process) when they need to move.
Admittedly, some of the above rely on you having a landlord that isn’t shit.
I know a few people who could afford to buy a rather nice home, who instead seek out short term lease rentals to live in, so they can travel more and not need to be tied down to a specific place.
A place to live without having to handle maintenance/upkeep themselves, to be approved for a mortgage, save up for a downpayment, or to have to sell (and navigate all the mess of that process) when they need to move.
And you end up paying for all of those anyway, plus extra. Minus the equity increase as the house appreciates in value over time. The only party it makes long term financial sense for is the Landlord.
the maintenance costs passed to the renter are dispersed across time as well, so they aren’t having to foot the full cost of say, a new fridge suddenly.
But the landlord charges enough above the mortgage payments to cover that cost, on top of the extra added for profit. The renter could save that extra money, cover the sudden cost of a fridge or washing machine, and have money left over vs renting.
What value does Jim-bob owning 5 homes and renting them out to make a living add to the tenants?
The tenants are able to live in a house that they can’t afford to buy because they don’t have credit and credentials that satisfy the bank.
The tenants are able to move out with a couple months notice if they get a job elsewhere. They don’t have to worry about selling the house or finding a way to pay double mortgages when they move elsewhere… Or, worse, taint their souls by renting out their extra house while waiting for the housing market to improve.
The tenants money is not tied up in a property, they are able to invest it in the stock market which has a higher rate of return than home ownership (which only keeps pace with inflation on average, per Case Schiller).
The tenants don’t have to worry about having money or credit reserved to cover unexpected costs, like the new water heater breaking a year after it was installed.
The tenants don’t get constant calls from scammers claiming they want to py your property for CASH TODAY.
The tenants are able to live in a house that they can’t afford to buy because they don’t have credit and credentials that satisfy the bank.
So they should pay the same expenses, PLUS extra to support the landlord who could meet the bank’s criteria for a loan?
The tenants are able to move out with a couple months notice if they get a job elsewhere. They don’t have to worry about selling the house or finding a way to pay double mortgages when they move elsewhere…
They also don’t have to worry about cashing in on the appreciated value of the house since they moved in…
The tenants money is not tied up in a property, they are able to invest it in the stock market which has a higher rate of return than home ownership (which only keeps pace with inflation on average, per Case Schiller).
Funny joke. My parents bought a house for $90,000 in 1993 that is worth ~$400,000+ today. What percentage of investments could offer such a yield in the same time-frame?
The tenants don’t get constant calls from scammers claiming they want to pay your property for CASH TODAY.
I still get those same scam calls despite not being a homeowner.
Obviously there has to be an incentive for Jim-bob to tie up his retirement savings and credit worthiness in a house that he doesn’t live in. You may not like the fact that people have to qualify for bank loans to buy property, but this is the world we live in. Especially if you happen to be an undocumented immigrant.
Oh, your anecdotal evidence about your parent’s home surely beats my Nobel-prize winning economics study citation. Lucky for your parents they didn’t have to sell it in 2010. Because I have anecdotal evidence for someone who bought a house for $400k in 2004 and then later sold it for $280k after the real estate crash.
Also the increasing property value you mention is due to regulatory capture by home owners who prevent the construction of new rental properties for fear it will “hurt their home value.” Combined with a mass exodus out of the rural areas into urban areas that are not building homes or city infrastructure fast enough to keep up with the increase in residents in the short run, which results in increased prices for homes in the city until those issues are addressed.
None of these things are “working as intended.”
No, you get different scam calls which you assume are the same but are definitely not, since these ones just go out to names on lists of property owners, not random residents.
Betty and Bob are in an unfortunate situation, but they’re taking a thing of value and charging money to cover all costs, and make a profit. The tenant is therefore paying the mortgage and all repair costs, and then even more to support what amounts to a leech.
It might be a good arrangement for Betty and Bob, but it makes living somewhere more expensive.
Which is the general point. I can be sympathetic to Betty and Bob, but landlords buying houses leaves less houses for everyone else for a ‘job’ that doesn’t add any real value to society. It just props up someone with the economic means to buy multiple houses and make them a living while hanging the rest of us out to dry.
You could just buy a house.
Ok, so we’re going to throw a negative generalization up to support our narrative of ‘ALAB’.
I purchased my home within the last 4 years. Before that my wife rented from the same owner for 10 years. Living in midtown Atlanta, a place that is now full of 1.5 million dollar homes on postal stamp sized lots. That landlord or owner may have had a few properties, we don’t know, but it was a personal rental that was a 2Bed/1bath for 2/3rds the local rate. And they did the maintenance at their expense.
They also have kept up with her afterward, and mentioned that they wish that they could have found another tenant like us. If I rented out a portion of my place while I was living out of town for work? I’d aspire to be as good as they were. Sadly, it’s just me now so maintenance and yard work would have to wait for the weekends.
Let’s just have a little more nuance. Big Corpo is bad, but not everyone who is trying to make a living is.
I’d say there’s a difference between renting out a portion of a house the landlord also lives in and purchasing whole other homes and renting them out.
Besides, no matter how nice the multi-home-owning landlord is, the reality is they don’t purchase homes and rent them out without making a profit on all expected costs, maintenance included. The better deal for the renter renting a whole home would be to own the home and maintain it, because then they’re saving the profit the landlord charges.
A nice polite leech is still a leech.
Sure, everything you purchase in a capitalistic society has profit added to it, but normally there’s also added value. You pay more in the brick and mortar store vs buying online because the added value is getting the item immediately. You pay more for the car part at the mechanics shop vs doing it yourself because having a professional install it adds value.
What value does Jim-bob owning 5 homes and renting them out to make a living add to the tenants?
You make that sound like anyone who’s able to rent a place is able to buy a place, but at least in the US, that’s not alwaxs the case. Sure the mortgage might be cheaper than rent in most cases, but being able to save up enough for that down payment takes a lot. I didn’t have the luxury of living with my parents after high school to save up enough for a down payment on a house, so I’ve had to rent places since then.
Sure maybe all housing should be free, there’s certainly enough homes in the US for that to be possible, but the rest of capitalist society makes that impossible, but that’s not the fault of every landlord ever. Some, sure, but not all.
A place to live without having to handle maintenance/upkeep themselves, to be approved for a mortgage, save up for a downpayment, or to have to sell (and navigate all the mess of that process) when they need to move.
Admittedly, some of the above rely on you having a landlord that isn’t shit.
I know a few people who could afford to buy a rather nice home, who instead seek out short term lease rentals to live in, so they can travel more and not need to be tied down to a specific place.
And you end up paying for all of those anyway, plus extra. Minus the equity increase as the house appreciates in value over time. The only party it makes long term financial sense for is the Landlord.
But the landlord charges enough above the mortgage payments to cover that cost, on top of the extra added for profit. The renter could save that extra money, cover the sudden cost of a fridge or washing machine, and have money left over vs renting.
Just a few thoughts.
So they should pay the same expenses, PLUS extra to support the landlord who could meet the bank’s criteria for a loan?
They also don’t have to worry about cashing in on the appreciated value of the house since they moved in…
Funny joke. My parents bought a house for $90,000 in 1993 that is worth ~$400,000+ today. What percentage of investments could offer such a yield in the same time-frame?
I still get those same scam calls despite not being a homeowner.
Got anything else?
Obviously there has to be an incentive for Jim-bob to tie up his retirement savings and credit worthiness in a house that he doesn’t live in. You may not like the fact that people have to qualify for bank loans to buy property, but this is the world we live in. Especially if you happen to be an undocumented immigrant.
Oh, your anecdotal evidence about your parent’s home surely beats my Nobel-prize winning economics study citation. Lucky for your parents they didn’t have to sell it in 2010. Because I have anecdotal evidence for someone who bought a house for $400k in 2004 and then later sold it for $280k after the real estate crash.
Also the increasing property value you mention is due to regulatory capture by home owners who prevent the construction of new rental properties for fear it will “hurt their home value.” Combined with a mass exodus out of the rural areas into urban areas that are not building homes or city infrastructure fast enough to keep up with the increase in residents in the short run, which results in increased prices for homes in the city until those issues are addressed.
None of these things are “working as intended.”
No, you get different scam calls which you assume are the same but are definitely not, since these ones just go out to names on lists of property owners, not random residents.