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Comment by blurbleblurble | Hacker News Reader

Rent and debt are far too often taxation without representation. It's that simple. This is especially true in situations where landlords sit back and collect, without taking due responsibility for the shape of the living spaces they supposedly "own". And people put themselves into these feudal arrangements for so many reasons. That part is not simple.

Why do people want to be landlords over others? Why do you want to live in a world where it is normal to take huge debts, only to hand off the monthly payments to people who are barely treading water?

This whole business of playing musical chairs with our homes and communities is beyond ridiculous. The amount of furniture that gets thrown out every month is shameful in the face of global climate change.

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> Why do people want to be landlords over others?

Incentives.

I'm a small time landlord. I was able to rent out my old house at a rate that covers the mortgage and a manager. When you factor appreciation, equity and tax breaks my net worth increases at a rate of $3k/month even though on paper I barely break even. I'd be dumb to turn down such a deal.

The richest man in California owns the Irvine Company. I assume he faces similar incentives at scale.

On one level, I get that: it is economically sensible to play the landlord role, even at a small scale. And in a lot of ways, you're doing something really important. You're providing someone with a place to live, one that they don't have to worry about taking long-term care of. You've decided that you're going to be a long term care-taker of this home. Assuming you're a good landlord, you really are doing some good for the world.

But would you really be "dumb" if you did things differently? Or would you be following a different set of economic values? Seriously, think about that. I challenge you to rethink your "smart vs dumb" idea. It's "smart" to drive and rely on a car. But on another very important level, it's also incredibly foolish, a.k.a. "dumb".

And I'd argue that what you and your renter have done is also pretty "dumb". Why? Because you and your renters are paying the bank that much for a house. The cost of building a new house is much less. This is an old house, but the bank said "this house is actually worth more than a new house, because you can simply pass the debt onto someone who doesn't have the option of buying a house at this moment, even though they urgently need a place to live". The house itself probably isn't inherently "worth" that much: it takes a lot of work to keep up an aging house. Yet all of this rent money is harvested from the occupant's time/earnings/savings: money that could be invested in the house gets sucked into some exponential function that translates to the bank taking thousands of dollars a month from your renters. Since the bank is so "helpful", you get to keep a very small amount allowance so that you can do repairs/profit. Of course, in the end you'll "own" the house, you'll have paid off your mortgage. Or maybe you'll sell it to someone else, who will enter into a similar agreement with the bank. Regardless, by the time someone has paid off the mortgage, banks will have gotten off with something in the range of 0.5-5x the entire inflated value of the house just for handling sacred paperwork. To me, that's DUMB.

This kind of thing is technically forbidden in Islam, Judaism and arguably Christianity, but not in the USA.

By the way, I'm right there with you in doing dumb stuff like this: I'm a renter.

A lot of what you just said suffers from a pretty big misconception: it's land that's worth money, not the house that's on it.

Every single news story about how some tiny shack in Vancouver or Palo Alto now costs $x has the same problem, so you're in good company. But it's still not the right way to think about this problem.

That's a good point, and according to the board game Monopoly, you're totally right. In the above post I complained that housing costs don't reflect the quality of the housing itself. Land speculation is probably a huge part of that, if not the dominant contributor.

But my whole point is about "rentier capitalism", and it applies whether you're talking about land, houses or SaaS.

In a free market, of course there's gonna be ebbs and flows as people and industry come and go, but look at this chart: http://www.economist.com/blogs/graphicdetail/2016/08/daily-c...

Those huge, correlated roller coaster curves aren't based off of natural fluctuations in land values in all those different places. They're based on a kind of big distributed Monopoly game where a bunch of people frustratedly flipped the board over in 2008. Now we're going in for another round.

Meanwhile, the north pole is melting, and there's tons of work to be done in retrofitting houses for climate change, in switching to new kinds of fuel, planting gardens sustainable agriculture, fixing broken stuff. What are people doing instead? A lot of people spend much of their time doing dog eat dog capitalism. Chasing rent checks and debt repayments. Doing the 9-5 grind. Driving 40 miles a day to work jobs they don't believe in. Not everyone of course, but too many people!

We really need to shed this feudalistic way of doing things, and that's going to take people evolving how we participate in markets, what's considered "smart" or "dumb".

Couldn't this be that the underlying value of the land didn't change at all in 2008? That people still really value land in desirable coastal areas and will do just about anything to get it? That what did change was the amount of capital available to regular people to get it?

Nothing about their underlying desire changed at all.

Would the land really be as valuable as it is if people weren't able to borrow money to purchase it? Someone would still own it and yet the price would largely be capped by the amount that people were able to save, not the amount that people are able to promise to repay. Just like it's been shown that the availability of student loans increases the cost of education, the availability of mortgages increases the cost of real estate. And the banks collect much of that increase by, through financial hand waving, loaning out many times the amount of money we give them to watch over.

Somehow we've institutionalized a system where banks are able to leech money off one of society's most basic needs, shelter, while providing little-to-no benefit overall.

Hey I just wanted to clarify that I don't want to make you feel bad about being a landlord. I just wanted to share some alternative economic logic, and get kinda riled up about poorly managed capitalism. I realize that everyone is doing what they gotta do, and didn't mean to imply that you landlords in general are bad people or something like that. I don't actually think you're dumb for renting out your old house, it's smart given the circumstances. The circumstances are dumb.

In SF people being a landlord is so onerous that people often don't want to be landlords to the point that they'd rather leave highly lucrative space unoccupied forever. And/or rent it out semi-illegally on airbnb.

> Why do people want to be landlords over others? Why do you want to live in a world where it is normal to take huge debts, only to hand off the monthly payments to people who are barely treading water?

Seems like you answered your own question. Being a landlord exposes you to risk and in most cases yields profit.

>Why do people want to be landlords over others? Why do you want to live in a world where it is normal to take huge debts, only to hand off the monthly payments to people who are barely treading water?

I'm not saying it's the bank cartel, but it's the bank cartel.

Being a landlord is no different than collecting a check from your SaaS product. Are we throwing all property rights out the window at the same time?

In some sense, we are throwing all the property rights into the windows of banks and real estate investment offices, where they will conveniently land in some virtual filing drawer to sit with the rest of their spoils.

Banks, real estate, and Silicon Valley.

Except for how the licensor created the software but the landlord didn't create the land.

There is an expectation that a landlord will maintain and support the properties they rent out.

They're charging for the locational value (that, as above, they didn't create), not just for maintenance.

I agree with you - the whole idea of people owning houses they didn't build AND don't live in and somehow getting to make a profit off it is absurd. It's just a way of creating a class system and funnelling money from working people to the lazy. Why should someone get to sit back and collect a profit just because they were born into a rich family and had the privilege to bootstrap free income for life thru property ownership?

It has to stop eventually. I say this as a young Melbournian who will probably never own a house unless the bubble bursts in a very, very big way. Median house price is nearing a million dollars (currently $843,674 [1] i.e. twenty years pay without including any mortgage interest), and those responsible tell us it's our fault because we eat too much avocado.

What work are landlords doing exactly? What value are they creating for the world? What is better about it for them being there? Nothing, nothing, and nothing.

I could say the same about banks and mortgage lenders. Creating absolutely nothing for the world, simply holding housing hostage and collecting a big paycheque for it.

The entire way we think about home ownership has to change.

[1] https://www.domain.com.au/news/melbournes-median-house-price...

I'm not a fan of most landlords but they do provide a service. They're legally on the hook for paying property taxes, making sure the home is up to code, maintaining the grounds and the structure, paying utilities in many cases, carrying various forms of insurance, etc. Sometimes they acquire distressed assets and remodel to add homes back to the supply.

They generally own the property because they've shown they have assets and good credit. The bulk of people that rent have very little assets - so little that the only way they could have decent housing is to rent from the evil landlords. Or move to some non-capitalist country.

I agree with you, but what is the solution? I can't think of any reasonable solution to the stated problem.

I think one great solution is housing coops. There is actually an organization that helps people start and maintain housing coops: http://coophousing.org/

Housing coops have a lot of potential.

Maybe, but the general acceptance process of needing to get approval by the existing neighbors seems to both be the pro & con that prevents more widespread availability of coops

Supply and competition. Vastly increasing supply would bring down prices. But of course that would eliminate the profits of property owners, so is not done.

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