Comment by taxicabjesus | Hacker News Reader

Comment by taxicabjesus | Hacker News Reader

I've been thinking that apartment cooperatives might be a way to break "investors'" stranglehold on housing.

The last landlord I had was a decent fellow - the property was well maintained and he fixed problems promptly. But my rent certainly went to pay his mortgage on the property, and I now have nothing to show for the $thousands I paid him. One time he was showing off the little 8-unit complex to someone he wanted to go into a partnership on another property with him.

My cousin has a few low-end houses that he rents out. He's jokingly referred to himself as a "slumlord", but... rent is what economically strangles his renters.

My grandparents owned both their homes free-and-clear, and stayed in their homes for 40-50 years. This is the hope of anyone who buys a house: independence from the landlord & bank.

The cooperative I'm envisioning would channel rent payments into a fund. After long enough, you'd be able to live there for just maintenance costs, or you could "work off" the monthly fee by contributing somehow. And if a person moves out of the coop, their "equity" could be returned to them over time... Or something like that.

(minor edit on 'work off')

> "But my rent certainly went to pay his mortgage on the property"

Um, yeah. That's the way it works for property investors. Find a property, borrow money to purchase, rent out property to cover mortgage costs. This happens at low scale (individuals) and high scale (property investment companies, REIs, etc.).

> "I now have nothing to show for the $thousands I paid him"

Presumably, you had a job at the time, for which you decided it was an equitable trade to have the job and not buy a property to live. You made a choice, and the outcome from that choice is what you have to show.

You do the math on the rent/buy decision. In places like New York, San Francisco, etc. it's very common to come out on the side of renter instead of buyer. If you're in the mid-west, you are probably buying. But don't say you didn't have nothing to show for the rent.

Your comment fails to even consider the people who don't qualify for a mortgage or have the money for a down-payment.

Relatively few people are in the position of being able to choose freely between buying and renting.

The barriars to financing does not discount the accuracy of his/her/its comments

His comments. :) But "its" would have been interesting.

All you need is for the state to back up the mortgage. Canada had a vibrant coöp housing creation model from the 70s to 1995. The same Crown corp that backed residential mortgages backed the purchase or construction of a building with a 30-year mortgage, which was paid back by members' housing charges (aka rent). They did add extra general subsidies and there is still an affordable housing subsidy tied to it for those who need it (Rent Geared to Income, where you pay only 30% of your income towards rent), but it could still work quite well without that. Once the mortgage is paid you can reduce housing charges or use the extra capital to renovate/upgrade the building.

Equity is never returned to members, they just contribute to cooperative living. Also, members cannot just sell the coöp to profit from increased real estate values; part of the founding charter of the non-profit corporation which manages the coöp says that if it was to disband, the main assets would have to be donated to charity.

> and I now have nothing to show for the $thousands I paid him

You had a roof over your head while you paid him. That's not nothing.

> my rent certainly went to pay his mortgage on the property

Whereas the alternative is for him to not have the property at all because he can't afford it, and you're stuck finding somewhere else to live?

It's interesting how visceral the urge is to own a home when in fact, it's not always the best choice financially.

People love to say "if I had only owned my home I wouldn't have thrown away so much in rent." This is typical in areas that have seen large increases in home prices.

You rarely hear about the opposite which is "I'm $100K underwater on my house" because people don't talk about it when things go south.

Renting and not owning removes you from the whims of the housing market. If your landlord took a 30% hit in the value of his property, as a renter you get to walk away and let him/her deal with it. That's worth something.

A 30% hit in value only matters if you need to sell it. If it's an investment property, you could probably just hold onto it until the market recovers. As long as the value of rent payments > mortgage payment + maintenance costs, it's no skin off your back if the value drops on paper.

In most cases, rent and the cost of owning is related, meaning that if you're 30% under water, the rent will likely only cover 60~80% of your monthly expenses. On top of that, if you had to move away for another job, there are additional expenses around managing rental property remotely.

I'm not sure if Poe's law is working here but, if not, you are talking about condominiums (condos) and, at least in California, they are really popular since the 1970's. In many cities, especially San Fran, the laws actively discourage and prevent the conversion of rentals into condos.

Systems like this exist all over Europe. They are very popular in Denmark for example. But you Americans surely wouldn't want to engage in socialism...

Sounds like you want a condo.

So an llc ...

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