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No one really understands our struggle
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this post was submitted on 23 Aug 2023
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I'm a land lord, did exactly what people say we all did. 15 years ago I bought two 200k homes for 30k each.. they are an income plan for my kids so they don't have to necessarily worry about taking a better paying job instead of something they want to do. Probably a little naive now. But I run the houses at a bare minimum profit just so the government won't come after me due running a loss on my taxes. I have raised rent only enough to do that. I pay for a property management firm to take care of the properties so that the tenants have 24 hour response to issues. I've had the same tenants for 12 years in both properties. Every 4 years or so I have one of the rooms that the tenants want renovated. It's a right off so doesn't costa fortune ava the house gets slowly updated. Not every landlord is an asshole. Some of us play the long game without screwing people. But I realize that I am part of the problem. I am part of the reason for less supply in the market. But selling my properties will make my children's lives less secure and I'm not willing to do that. So i do partially deserve some of the blame.
I don't see you having any blame. Supply and demand for housing includes everything, including rentals. You would be part of the problem if you bought those places and left them empty as vacation spots or something. You didn't, you're supplying them to people who I'm guessing wouldn't be able to buy them themselves. You're not driving up the cost of housing. I'd argue that, since you're charging less than you could, you're actually lowering it.
He literally is driving up the cost of housing. Rental markets are quite seperate to the actual housing market and people who own 3 houses, drive up the cost of buying a house. There is a good chance they can't afford to rent, yes, but only because of people like him buying housing they dint need to make a profit, they can afford the rent, so they would also He able to afford the mortgage for it if given the chance.
Have you purchased a house? Because this part is simply not true. You have to have a percentage of the cost up front. The more you have, the smaller the payments. Lots of folks who are renting out places put a lot down so the mortgage payments (and what they charge for rent) are much smaller than a first-time buyer can afford. Then you have the cost of property tax, maintenance, and repairs that the renter isn't liable for.
This is very much the problem with the Canadian real estate bubble. People are paying rental prices now that absolutely could have paid for a house 5 years ago. But now they are paying a dangerously high portion of their income. The problem is that their rental prices that they pay now wouldn't make the payments on the house today.
Not for myself, but yes, I have. And that's kind of my point. You have these arbitrary barriers to entry on home ownership that are designed to keep poor people out, since the can't afford these costs upfront, and can't save for them because they are either paying their landlords mortgage instead, or are paying money directly to the bank/asset manager/ whoever owns their rental. So it's in the banks best interest to not give them a mortgage.
And a mortgage plus maintainable and tax and everything else will be cheaper than renting, because if it wasn't landlords wouldn't be making money, so would raise rent
I think "designed to keep poor people out" is way off. People selling a product want nothing more than for other people to buy their product. The sellers of the house aren't the ones setting the mortgage details - they have nothing to do with it, they just want to sell the house.
But few people can afford to buy a house outright, so they have to borrow money. The bigger the percentage of the purchase price you have to borrow, the more the payments are going to be. That's not to punish poor people, it's because they're putting up their money so you can buy something, in return for them making a profit on their money.
You're still not getting it. Let's say I want to live in a house that costs $600k, but I don't have it. If I were to find a lender who would finance the whole thing (doubtful), the mortgage payments would probably be around $3k a month, and I can't afford that either. But let's say you have $300k to put down, so only have to finance another $300k, and your payments are more like $1500 a month, which I can afford. I pay you the amount that covers your mortgage, you end up paying property tax and other costs, but my rent is going into your property. If I live there for three years, you've gotten $54k in equity, even if the house's value itself didn't go up any, for just the cost of taxes and maintenance. Meanwhile, I got to live in a house that I flat out couldn't afford.
I was not blaming the people selling the house, I was blaming the banks for putting an arbitrary down payment on getting a mortgage to keep poor people out of home ownership, which benefits the banks as they are all heavily involved in property investment so benefit from more people renting either by directly being the landlords or simply from the increased housing demand from landlords wanting to buy as many properties as possible, thus driving up housing prices, which drives up mortgages and makes them more money.
Like you say, the banks male their money from interest on the loan, so the 20k down-payment they require is an arbitrary barrier to entry.
No, I get it, you're just making up a scenario that doesn't really happen. Like sure a landlord could in theory pay half the price of a house just to reduce mortgage costs so they can rent it out at half the market rate AND pay property tax and maintenance out of pocket, out of thr kindness of their golden hearts. They could also just buy the house outright and let you live in it for free and just make their profit off of the increase in house value. But obviously they won't. The landlord is going to charge you market rate for that 600k house which will almost certainly be more than 3k, because why wouldnt they? And even if they did, are the going to rent directly to you? Or are they going to advertise it and get a slew of offers of people wanting to live in a house for half price and so someone a little bit richer than you will offer them, say 1,750 for the house, because of supply and demand. And the vast majority of people aren't trying to live in houses they can't afford, they are just trying to live.
And even then, it's still not ethical, you're still exploring people for profit for their basic needs without adding any value to the system.
How the heck did you find not one but two 200k houses for 30k? Or are you saying you bought them for 30k and now they're worth 200k? Either way holy balls I wish I could do either of those lol
I assumed they meant they were just worth $30k when they bought them. That is a pipe dream that probably won’t happen again in any of our lifetimes.
This shows one of the most common things landlords tell themselves to justify it.
You tell yourself this, to make you feel better, but you don't acknowledge that almost all the money your tenants pay you is profit, since they are paying for the mortgage. Even if you rented at 0 immediate profit, for the entire time until you paid off the houses, you would have actually made 1.2million in profit, since you now own 2 houses at 600k each.
And those families, instead of paying a mortgage and ending with hundreds of thousands of dollars in equity, that they could refinance, or use to buy a better house or leave as inheritance for their kids, now have nothing, as all that money has gone to you.
There is no such thing as an ethical landlord. Even the """good""" ones are still exploring people's basic need for shelter to make them rich.
If you really wanted to be a "good" landlord offer those families the chance to buy the house with the 15 years of down payments they already made to you to start it off. But as you said they're an "income plan" for your kids I don't think you would do that.
I mean, I get what you're saying. And perhaps if my financial situation was better I could consider the option to offer the houses to the tenants. But as you suspect I will not trade my children's financial security just to be charitable. The rent I charge is 30%-40% below market value. I suspect if you were in my position you wouldn't be so inclined to give away your wealth either.
I was in your position, when my grandparents died I inherited a house, that people encouraged me to rent out. Instead I sold it and invested the money (specifically into a green energy fund.) As that way I still have my financial security, without being a landlord.
I realize you aren't going to agree, but these two situations aren't the same thing.
Why not?
Because to start with, I invested and risked my own money a much less bubbled deal estate market with a significant amount of my available capital. You invested someone else's money. I took all the risk, and you want me to give away all the profits from that risk. Even your "green" investments take advantage of workers, buy off shore parts, cost people their jobs. Why don't you donate all your profits to those people. Your entire argument is so steeped in hypocrisy that it's hard to even know if you're not just a troll.
No. I invested my own money? Idk where you're getting this idea from?
I took much more of a risk than you. Real Estate is typically more stable than stocks.
If you want to be ethical, yes.
In the sense that there is no ethical consumption under capitalism. But that argument is just whattaboutism.
Because investing in those sectors is beneficial to them, it helps those companies raise funds, which benefits both the workers of those companies as well as promotes green energy which benefits all of us. Landlordism detracts value from the market.
I guess its easier to say this, so you can dismiss whatever I have to say so you dont have to go through the process of introspecting on your life and your choices to think about if you're actually doing the right thing, and maybe even coming to the conclusion you arent and needing to change your behaviour. That sounds like a lot of effort so its easier to just assume everything you do is right and just and anyone that criticises you is wrong by default. That way you get to keep living your life however you like without worrying about silly little things like morality.
This is getting old. Regardless you said you inherited a house, fwiw. You live how you want. I live in the way I want. I admit my part in Canada's housing crisis. But I couldn't sell my children's future for moral high ground. You come across as sanctimonious. You speak from an imagined high ground with the assumption that you know what is good for everyone. That's your right. So you do you. Have a good one.
I was just pointing out you could secure a future for your children without being a landlord. But like I said. Its obvious you dont give a shit. So just dont act like you do.