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What a benevolent lord!
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this post was submitted on 19 Mar 2024
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Taxes, maintenance, a management company but probably most of all the interest on the insanely large loan you took out to get it. We “bought” a house with a 30 year loan and if we were to rent it out right now at market rate, there would be no profit. We would probably take a small loss other than the opportunity to hold the property hoping that the price of housing continues to rise. It hasn’t risen since we bought the house a couple of years ago. If you’re old enough to remember 2008, then you also know that it doesn’t always go up. Sometimes it goes down pretty dramatically and you’re left holding the bag.
If the house sits empty between tenants, those costs don’t go away. So for me, in my one bathroom house, that would be $2,400 a month (not including maintenance.) Where is that money gonna come from? I don’t have it because I’m paying rent somewhere else to try and make more money to dig my way out of this hole in this hypothetical situation.
So why not sell? To sell it, we have to pay 6% to real estate agents. If we actually owned the house, not just a massive soul-crushing loan, fine. But we don’t. So that 6% is a SHITLOAD of money when you borrowed all of it besides the 15% down payment that was two people’s life savings plus begging for more from relatives. So selling means half your combined life savings and the money you begged from relatives, poof gone.
Most people have a mortgage like this and amortized interest rates mean that in the beginning, 90% of the money you give the mortgage company goes straight to interest because you pay off 30 year’s worth of interest up front so that they’re sure they get their profit (and because paying the full 5% interest on a note that big every year would be impossible for most people.)
People who bought recently, have a mortgage and a single home that they rent out are not making any profit in areas with expensive housing. It’s not like houses are cheap to “buy” in the first place. They get you good.
Why buy at all then? Because I don’t like landlords telling me what I can and can’t do. So much so that I gambled it all on “buying” a place.
Loan interest payments are absolutely not something that should be converted by rent - you just take someones labour to pay for something in order for you to eventually own it.
Regarding the intentionally low liquidity market - that bullshit is by design. The government to allow (much less mandate) real estate agents to not get payed in fixed amounts is just grotesque. They dont provide any service and are not really responsible for anything.
I think we have a cap at 2% (but EU is slowly working towards banning any financial advice where the adviser gets payed in % of something because then it's in their interest for the price to go up). But most importantly, I can draft the contract myself (or ask a lawyer to do it for a minimal fixed fee if Im too lazy to look online for examples) & pay nothing to real estate agents. I can't imagine paying an extra 6%, that shit is formed basically as taxes, but go directly to private entities instead.
What in saying is that actual landlords and real estate agents have an interest in hiking prices for something they have extra but its a necessity for everyone.
Wait, why would people buy houses with 30y loans just to rent them?
“Loan interest payments are absolutely not something that should be covered by rent - you just take someone’s labor and to pay for something in order for you to eventually own it.”
Where will the money come from then? I’m not rich, I can’t afford to lose money every month renting out a place for less than it costs me. I also can’t afford to sell it. The concept sounds great to me though, I shouldn’t have to pay any interest just for a place to live. Hell, I shouldn’t have to pay anything at all. Help me go burn down the mortgage company and tax office and then I can let people live there for free if I have to leave town for a few years. Everyone wins. Except the people with money to lend of course, so you’ll need to have cash to buy a house, which means only the rich will have houses.
“Wait, why would people buy houses with 30y loans just to rent them?”
Because you didn’t buy it to rent it, you bought it to live in, but your situation changed. You need to move for work or family and that move may be temporary. You can’t sell your house without taking a massive loss and anyway, you’ll probably just get laid off again in the city you moved to to find work. Or maybe the aging parent you left to care for finally died and you want to come home, maybe you took a 2 year gig in another country to try and make more money. Maybe you dream of coming home to retire there after you spent all your good years working somewhere shitty.
The alternative is to sell your house and buy another one in the new place which can be financially disastrous (ask me how I fucking know) or sell and rent, knowing that you might well never be able to afford another house due to interest rates rising.
I’m not selling my only home and taking a massive financial loss to help reduce housing prices by 0.00001%. Fuck that.
For the record I’ve never rented my house out because I dislike the idea of renters as much as I dislike landlords. But in retrospect, I wish I had done exactly what we’re talking about in this thread because then I could at least go home, even if the renters trashed the place, at least I’d have a place. Now I can’t go home, I’m just trapped in this new place.
Some people on Lemmy seem to be under the impression that everyone who “owns” a home is a French Duke lounging around in Ibiza eating soft cheeses and drinking fine wine with your rent money. It’s weird and I don’t understand it because if you’ve ever tried to buy a house and used the “what will my monthly payment be” calculator, then you would know that being a landlord is not profitable unless you have a lot of cash, a lot of houses and/or decades of time.
I would actually line more people to be ready to go "burn things down", literally is optional, figuratively is a must.
Things that are in abundance but can be made scarce by hoarding (relatively speaking, and as a movement that you as one person can't go against so you rent your place out as others that can in fact do) annoy me. So yes, burn the system down, we can do things (net) better. And lenders in regulated markets are not even a big part of the problem (outside of general financial crisis of various reasons).
And no, absolutely this is not a system you fight as an individual not participating in it somehow. These are important, big, and complicated reforms that will get a lot of push back from lobbies, but ultimately need the support of majority.
And also 'can't afford to sell' imho shouldn't be a thing in equal society, it's such a reduction on movement and options for a lot of people that don't get advantages as others do for no particular reason in their power.
About the French Duke (lul), but for real - a huge part of gen-z (not supported by parents or a fund) have given up on ever owning a house (much more so alpha gen I assume). And that is a huge mental fatigue owners don't have or easily forget if they had it.
Also, best wishes with things, lets hope it changes for the better soon (even if the 'better' isn't a better system but just better pay ... which afaik is the only real solution to getting some capital, investing, play the dirty game, get ahead of others that can't participate etc).
“I would actually like more people to be ready to go "burn things down", literally is optional, figuratively is a must.”
That’s one thing we agree on for sure! The way things are trending is not sustainable and people will only put up with so much, so things will have to change at some point.
Thanks for letting me vent haha. I hope you get your own money pit and plant some nice trees in the yard someday.
Haha, literally plant seeds or like just feed seeds to chickens or something is the luxury dream of mine, increasingly so.
Quite a lot of trends in a lot of aspects affecting life quality (human & nature) are horrifying. And to think we are way past the point of French revolution in wealth inequality, and Russian as well. 8h shifts 5 days a week, commute, lack of options, financial obligations and necessary costs, etc really keep people down & from protesting. I like that unions are striking, things must change somehow.