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Comment by Mikeb85 | Hacker News Reader

And Thomas Piketty was right...

Also, this isn't exactly a revelation for those who are in businesses that hinge on physical location (retail, restaurants, etc...). Landlords provide little of value, in most cases did nothing to earn their money (around here the landlords in downtown business districts are the descendants of those who owned that property 100+ years ago) and merely act as parasites.

In the case of those who own residential properties, they merely bought at the right time, and due to the scarcity of land are earning far more than whatever value they're providing.

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If it is such an easy way to make money, why doesn't everybody simply buy some land. You can pool resources if as an individual you can't afford it.

Land is expensive. People that sit on land, in booming areas know this, and will either:

- Not sell

- Ask for ridiculous amounts

As the old real-estate saying goes: "Location, location, location".

Furthermore, land as has a pretty long-term maturing period. It can easily take 10-20 years for land to go from cheap to really expensive. Oftentimes that process involves rezoning of land, and eventually gentrification.

Lots of cities are plagued with the same levels of bureaucracy and regulations as SF, where it can take 10 years from planning to first shovel in ground.

You could have a perfectly fine spot of land in a major city, but because it's not zoned for your use, it's essentially worthless now - but everyone knows that it could be very valuable 10-15-20 years from now.

And lastly; There are tons of real-estate investors that focus 100% on these kinds of things.

None of the things you mention seem to support the original claim.

The original claim was that landowners are basically just freeloaders, making easy money.

Land presumably can't cost ridiculous amounts, only what people think it will be worth - how much money they can make with it.

That it takes years to maybe appreciate, maybe not - wouldn't that indicate that perhaps it is not so easy to make money with it after all?

Some landlords have seen their buildings value and the rents they can command go up well over 100%. There are landlords whose buildings were paid off decades ago. And all these landlords pay property tax on their purchased price, not the current value of the property. And I can tell you in LA county that you will absolutely not loose money on real estate if you ride out a business cycle. Its a perfect system designed for a parasite by parasites and supply comes to market in paltry controlled drips.

If it is a perfect system, again, why doesn't everybody do it? Just because of the property taxes?

Everybody is free to buy land, no?

Also I don't think people can just ask for arbitrarily high rents wherever they want. It is a gamble to buy in a location where rents will rise.

People then only see the winners and not the losers and get envious.

Take some risks of your own, then complain.

The vast majority of middle class people's wealth is in their homes.

The only reason not everyone does it is because they don't have the prerequisite capital (and pooling wealth usually doesn't work because people suck at sharing, although I do know people who have done it, even without being in a romantic relationship).

The returns are 1% of capital invested, if you invest the $50 million needed to buy a well-located lot today.

If your grandfather bought the same lot for $600 in 1922, the returns today are quite something.

It’s very hard to become a large-scale land owner today, unless you happen to own a time machine.

Not necessarily- but it takes financial savvy and raising capital and a lot of hard work...sorta like building a tech startup. In fact, I had this conversation this week randomly with 2 different groups of former tech execs...they are leaving tech and applying their skills to engineering commercial and residential real estate portfolios...they have each been dabbling for the past few years but now growing disgruntled with tech (not for financial reasons, more quality of life stuff). They each started small ~$50K initially, and use debt and tax law efficiently. They look for underpriced areas across the US (without giving away any proprietary info, mostly Midwest).

The returns are consistently well north of 10%, and that includes deals pre-2008. Naturally that may be harder to do at scale.

But the point is you don’t need a time machine, you need skills, effort, discipline and focus.

You don't have to be large scale to earn rent.

And why not buy something today that can be worth millions for your grandchildren?

Because it is not so easy, after all.

So you think it is unfair that somebodies grandfather bought land, and it appreciated? Do you think ownership in general is unfair, or what exactly is the unfair part?

I think its unfair that the source of these gross profits is due to limiting supply to the market and avoiding as much tax burden as possible. Fair would be if anyone could build anything anywhere however high and were taxed according to todays value. Real estate is not a free market, demand is massive and building supply is continually opposed to keep prices high.

Nevertheless, if the rules were known in advance, it seems the game is fair.

For example if you ponder buying a plot of land, presumably the rules there would factor into your decision. If there was already a rule of "no skyscrapers", then everybody could have factored that into their decision.

It would likewise be unfair to change rules after the fact, because it would devalue people's investments.

As for tax rules, I can't comment. But that is a fault of the government, not of the landlords.

https://www.nytimes.com/interactive/2016/05/19/upshot/forty-...

Alas, mostly the rules have changed quite a bit to favour the incumbetents and the grandfathered-ins

and who gets to change the laws? If it is the current residents at the time, maybe that is fair, too?

Because the state of California gives enormous tax advantages to ultra long term landowners, they way to make money in being a landlord is to inherit property, not to buy it.

Because not everyone can come up with 50k to put 5% down on something that wont start printing you money for 10 years. 4/10 americans can’t come up with $400.

But if you can afford it there is no better investment. Practically no home in LA county lost money over an arbitrary 10 year period. The problem is the source of these profits is from squeezing middle and working class renters absolutely dry.

You could pool resources, and start with smaller investments.

Personally I don't believe it is really so easy. But that is the narrative of the leeching landlords.

The claim was that being the owner of high-priced land is easy, not that becoming the owner of high-priced land is easy. Your question is essentially asking why people don't decide to just time the market successfully or inherit valuable estates.

But that is the point - it was not easy to become owner of those high-priced lands, so maybe it is not fair to simply describe it as leeching and parasitic. People took risks to get there.

In the same vein, would you all say people who earn money in the stock market by investing in the right things are just leeches and parasites?

When do people deserve anything?

Just wondering how deep the socialist attitude runs.

They generally didn't just decide to become wealthy. They got lucky about price movement.

They got lucky, by taking risks. People who don't take risks want to get their share in the winnings, but not their share in the losses.

So investing in something is stupid, because if you are successful you don't deserve it?

When is anything deserved?

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