Hacker News Reader

Comment by yardie | Hacker News Reader

I've got to hand it to Bloomberg for finding 3 of the most extreme cases of the, "think of the poor rentseekers" they could find. I know a few landlords. After meeting them I know I could never seriously become one. We were having drinks while one was on the phone working on evicting someone. Apparently, he didn't have a choice, dems the rules.

1. The woman sitting on 27 units and only making $24k, is seriously over leveraged. Sounds like she took on more debt than she could reasonably manage and expect her tenants to be the safe bet even though she isn't.

2. Family owned Mott St apartments. Something is wrong with this story as well. If they owned the properties for a century (1st wave Taosinese immigrants I bet) they should be printing money. Chinatown rents are high for old, low amenities buildings. There is a whole lot more to this story because someone is lying.

3. Something tells me they refinanced one too many times and pumped the equity out of their property. Property bought in the 90s is worth 3x as much today so where is the renters money going exactly?

View on HN

> "think of the poor rentseekers"

There's a pervasive culture in the US right now around "but think of the businesses" that you see pushed by lots of folks small and large.

As someone who launched a product in February which has struggled due to COVID, it would seem SO tone-deaf of me to go out and say stuff like "think about the business owners!" when people are losing their jobs, not able to make bills, and all while facing a very serious and deadly disease.

An example of this is, "keep going to your favorite restaurants because they're sure to be hurting!" Excuse me, but due to having more time at home + having my financial anxiety/risks dialed up I'll be cooking as much as I possibly can.

Sorry for the rant but this is a time we should be putting people first. I find the whole "but think of the businesses!" narrative to be horribly tone deaf when people are unemployed in record numbers with infection/death rates that are continuing to go up.

Warning: I'm also pretty biased here towards rent seekers too because last month the electrical panel to my apartment building caught on fire and the landlord has been doing everything in their power to put the hurt on us to the point that I've had to lawyer up. They're doing stuff without permits from the city, have had issues with inspectors, have lied to us saying it's an "act of god", they're claiming a non-powered unit is habitable, etc. We're in the process of moving out and things are OK as we're with family. Honestly, I picked a lower-monthly-rent apartment to work on my startup and this is all really my fault for trying to live below my means.

How do you not see that businesses are run by people too? If their business suffers (rental or otherwise) they suffer just like you would if you were laid off.

Simply put - I don't expect anyone to care about my business struggles when we are in the middle of a pandemic. I'd rather people look out for themselves vs. putting out marketing copy that's just a weird ask for sympathy/charity when I am aware everyone is suffering.

> How do you not see that businesses are run by people too? If their business suffers (rental or otherwise) they suffer just like you would if you were laid off.

So are dictatorships. The fact that Kim Jong Un is a person is not enough to make me sympathetic to his troubles. A lot more context is required to figure out if one should be sympathetic or not to a businessman's situation.

But, as a rule of thumb, I'd say business owners are due less sympathy than your typical working man. At a minimum they have far more capital than a typical person has, which usually means they have far more income, too.

If it brightens your day your product looks cool.

Businesses are a mix of a bunch of things at once: organizations that provide employment (and so, wages, that people need to live + taxes to the government + spending power for downstream businesses), organizations that pay taxes to the government directly, assets that generate returns to owners, productive capacity for goods (some are essential, some are not, and some are essential for national security), centers of research and development (powering innovation that may improve people's lives), social associations (providing structure and community to the people that work there), culturally relevant institutions (think a locally famous restaurant or factory - Katz's Deli or Tennessee Whiskey) and many more.

So, when a politician wants to pass a bill to help certain businesses, you have to ask which of these are they SAYING they want to improve, and which of these they ACTUALLY improve. If you pass a bill that reduces taxes for capital gains, it's usually proposed as a way to produce more jobs (more capital available for investment), but it may mostly be adding to the returns one enjoys from ownership (in an economy where capital is abundant.) The opposite might be true if the economy is capital-starved.

As far as businesses go, land-ownership and management is clearly rent-seeking, and an unproductive use of capital. Human society doesn't gain new products or services or save labor by the mere increase of land prices. If anything, as we see with the homelessness crisis, it can be totally counterproductive. Using my rubric above, landlords aren't providing many of the benefits of a business (no R&D, not many jobs), so they should be lower on the ladder of businesses worth saving. I would much rather support the bailout of a restaurant with a long history than a landlord.

After all, if returns the fruits of risk taking, losses must be the fruits of losing those bets.

While you're experiencing that financial anxiety/risk, it's fractal and hitting everyone to different degrees. For people who can order from their favorite restaurants, coffee shops, etc, they should be encouraged.

For the buyer, it makes them feel good supporting their local economy instead of just Amazon. For the small business owner, it increases the odds that they'll make it. For the employee, a more stable job/employer reduces their financial anxiety/risk aka fear in that area.

A good chunk of the economy is based on confidence. Ordering from restaurants doesn't solve problems directly but may give people a fighting chance.

And I'm sorry for your shitty landlord. I hope karma, your lawyer, and the law hammer him.

Totally agree with your statement and frankly - it's just one of those things that is multi-faceted. I would say that those who are well off and capable of buying luxury/service products should probably dial it back too but that's just my frugal "I'm in a crisis" brain speaking!

> I hope karma, your lawyer, and the law hammer him.

It's a her. Also they'll get off with a minimal amount of fees with the city and that's about it. Courts are shut down indefinitely etc. and with a pay-to-play legal system where representation costs me $350/hr they're just throwing up smokescreens and telling us "take us to court". They'll get away with everything in this circumstance because by the time I'd see ANY money back I'll already be in the hole. Would we win? Maybe... but man is that one heck of a risk/liability.

The deposit, etc. are all moot, and so are the current legal fees - I knew this from day #1 as multiple lawyers wouldn't touch it knowing it was not profitable for me as the client. I still decided to get a lawyer in this circumstance because I need to protect myself for the rent that they're trying to collect in regards to the unit being not habitable. Basically I needed to get representation so that if/when they inevitably harass me with collections or attempt an eviction while we're moving out I'm ahead of the ball with a fully documented case. Hopefully I deter from these threats by showing them I can afford an attorney + document + work with the city...

All-in-all I'm out thousands, displaced with family, and as a 1099 contractor no other landlords want to touch me due to COVID and increased risk on their behalf for someone without a W2 + 6 months of employment history. We're looking at having to pre-pay 3-6 months worth of rent + deposit upfront for even the crappy places to take us... Wooooo =(

> I picked a lower-monthly-rent apartment to work on my startup and this is all really my fault for trying to live below my means.

Better you, having the means to lawyer up and even outright move, than someone else living "at their means" (aka stretched thin) who would have no choice but to just take the abuse.

FWIW swapping in a new residential service panel is basically a one day job. Your situation doesn't sound like the result of greed, but rather outright stupidity.

> than someone else living "at their means" (aka stretched thin) who would have no choice but to just take the abuse

Yep - due to it being a lower-rent complex I feel for the people who have been living there for over a month without power. Lots of those folks have nowhere to go... it's just freakin' horrible what they're doing and how they're treating people =(

It's also greed - they've been awful to us through this entire thing outright lying to our face trying to get it pinned on our rental insurance. Then the fact that they were doing all of this without permits from the city... oof.

Thanks for this though - I definitely need to hear it.

When my parents were renting houses we spent a lot of time on them. Most of the money from rent goes to the mortgage, property tax, insurance, and maintenance. You can get some back on maintenance if you put in some sweat equity. This was how they were going to afford retirement, by working their asses off.

There is very little left over as positive income. Maybe 10% if you are lucky, which makes up a little for the huge headaches. It can be really bad if you get bad renters. You get some back as equity over time and that is nice, unless the housing market crashes.

As for evicting people, it sucks. Once you start eviction you are stuck paying someone else's mortgage. In fact you are also paying to evict them too. Some renters go from house to house just paying a deposit and first month's rent then sitting on the house for as long as possible. If you try to be nice to them and give them more time they will bankrupt you.

In the meantime they are actively trashing the house, peeing on walls, keeping dogs in the fireplace like it's a kennel without cleaning it for months, putting holes in walls, flooding bathrooms, and spreading feces inside wall spaces. Then when you finally get them out by offering to give them back their deposit (Cheaper than eviction) they move in next door and trash the next poor landlord's place.

If you are doing background checks and credit checks you can keep the above from happening for 95% of cases. However the moment you start being nice and renting to that poor family on section 8 funding because "Someone has to" you are back cleaning poop out of your walls after paying their mortgage for 6 months and being called a "Slum Lord" because the people you rented to have trashed the pristine house you put hundreds of hours into.

No one is forcing anyone else to be a landlord.

The point is that you are contributing a LOT as a landlord. Not just "Rent seeking."

A successful (above water) landlord, by definition, must extract more value from their tenants than the landlord contributes.

You mean you had to work as if you had a regular job, and you ended up with a free house at the end of it.

Nope, the market crash wiped out all the value of the house. Barely broke even after selling. Pretty much worked for free cleaning piss and poop out of walls, carpets, fireplace, and yard.

>Once you start eviction you are stuck paying someone else's mortgage.

This is actually the your (the landlord's) mortgage, not someone else's. That is one part of the risk of an investment vehicle that allows more tax write downs than most other investments.

Just like other investments, the pain is much less dramatic if you aren't over levered. If you are, profits are good until they aren't. Higher risk comes with that higher reward.

This is exactly it. The notion that they easily shift that ownership of the mortgage onto their renters saying "stuck paying someone else's mortgage" feels like mental gymnastics as it 100% is your name on that debt and not your renters.

A lot of landlords don't seem to really understand that their rental properties are a business and an investment, and thus inherently have risk. Fewer still really comprehend that the little landlords generally are carrying a lot more risk than the bigger property management companies. They just keep being shocked and offended when they seemingly discover this risk for the first time all over again.

I think you're right, a lot of people underestimate just how risky the real estate market is. Back in the 90s it was seen as a low-risk endeavor. Pretty much guaranteed money and tons of cheap leverage to max out returns. After all, everyone needs houses and the population just keeps going up faster than houses could be built. Especially with immigration.

However the cheap leverage and massive influx of foreign investment kinda fell off which made prices drop like a rock in 2008. I wouldn't be surprised to see it happen again in late 2020 and 2021 when a bunch of people see balloon payments from deferred mortgages.

Someone is enjoying the benefit of living in a house they didn't pay for, nor work hard maintaining. They are essentially taking for free what you have spent a lot of time, money, and effort on while literally shitting all over it. Also, you have no recourse to recover the costs they are incurring on you. The mental gymnastics occurs when someone tries to say it's YOUR fault that someone is taking advantage of you.

> more tax write downs than most other investments.

Just to be clear for other readers. The only special tax write downs for real estate is depreciation, which isn't a write-down, it's a deferral. (OK, yes you can escape the deferred tax by dying)

Having a mortgage is irrelevant to the tax situation. Mortgage interest is not treated any different than interest on any other business or investment financing. Even the margin interest in our brokerage accounts is deductible.

You're forgetting that you're increasing your equity. The positive income at the end is just candy.

Equity isn't great for cash flow while you are giving free shelter to your squatter and his family. But it can help you get you that cash-out refi you'll need to pay for the remodel after it got trashed

> You're forgetting that you're increasing your equity.

Only if the house's value doesn't go down. Like if the house needs to be torn down because it's been destroyed by a flood, the market crashes, or the major employers in the area leave.

Sorry, how does someone who is renting have a mortgage?

Do you consider paying your own mortgage, in your own name, which causes you accumulate wealthy, the act of paying somebody else's mortgage?

I can't see how what you say makes any sense, unless I go to that interpretations (which still makes no sense), but which makes me dislike landlords even more.

Anybody who doesn't think the work of being a landlord is worth it should get our now and dump their equity into index funds or something.

I think a lot of folks are having feelings about this line

>stuck paying someone else's mortgage.

What he meant was that when someone is not paying the rent, and you are evicting them, you are paying for the living expenses for a stranger who may holding your property hostage, who may be actively abusing the property, who may be deliberately prolonging the experience.

This does not feel good to pay out of your own pocket to shelter someone else's family for any amount of time. There is no recourse to recover the money. Your best outcome it to just get the property back as soon as possible, even if that means rewarding the bad tenant with more money. And in most places in the US now, evictions are not even possible due to virus lockdowns.

Not paying rent is theft. It hurts financially and emotionally when people steal from you.

And for the soft-hearted landlords who didn't screen properly, or took a chance on a sob-story, it was already months of slow-pay or no-pay before you started the eviction. Can you imagine someone stealing 4-6mo of living expenses from you?

Oh please, landlords are not employees working at the behest of their bosses, they are businesses that are in the business of selling a basic necessity of life: housing.

Compare these supposed woes to any contractor and their clients, and this sort of bellyaching would be just be laughed at. "Theft"!!! Come on.

Any landlord who thinks in these moral terms deserves to lose their shirt. It is a business!!!

And on top of that, it's not web design or some other sort of service. They are literally providing somebody's home. I have zero sympathy for any landlord that gets into such a business and then bellyaches about evicting somebody.

This is a cost of doing business. 4-6 months of rent should be cash on hand to deal with these sorts of things, and many (most? all?) mortgages for rental properties demand that you show you have that much cash before you can even get the mortgage. So even the banking industry is requiring these amateur landlords to learn basic biz before they can enter the game.

There's huge asymmetry here, landlords have lots of wealth, lots of flexibility, lots of recourse and backup plans, but their tenants often do not and often have no safety net whatsoever. If landlords start advocating for a basic social safety net, I may start to have sympathy. And some of their tenants might be deadbeats. But I've come across a tooooon of really shitty landlords, a few people that hit hard times that are doing their best to pay rent with their extremely limited means, and basically zero of the supposed deadbeat that landlords say are their perpetual problem.

> Compare these supposed woes to any contractor and their clients, and this sort of bellyaching would be just be laughed at. "Theft"!!! Come on.

I don't follow. The contractor isn't forced to work for months without pay against his will if the client stops paying.

> This is a cost of doing business. 4-6 months of rent

Losing 4-6 months of rent erases multiple years of profits on that property

> There's huge asymmetry here, landlords have lots of wealth, lots of flexibility, lots of recourse and backup plans, but their tenants often do not

By your logic all business owners similarly are very wealthy and can absorb large losses. So all businesses have a duty to give way several years of profits to needy customers. Food is a necessity of life. Do restaurants have a duty to let customers eat for free?

The sentiment is: You are paying a mortgage for a house you don't get to use or rent out. You have a couple thousand dollars coming out of your pocket every month that is eating away at the small bit of money you made on that house. There is no guarantee that you will get that money back.

Pretty much the point is that being a landlord isn't a free ride. Often you need to put in a lot of work and you take a big risk investing in a house that can be destroyed or made worthless by factors completely outside your control.

I thought background and credit checks were a thing. Unless you’re scraping the bottom of the barrel for renters.

>Once you start eviction...they are actively trashing the house, peeing on walls, keeping dogs in the fireplace like it's a kennel without cleaning it for months, putting holes in walls, flooding bathrooms, and spreading feces inside wall spaces.

How many times did this happen to you and your family? Do you mind sharing the court documents if they are public?

I'm sure understand why such a grand claim would require some evidence and diligence, right?

Oh I believe it, happened to my dad. Also to one of his friends. And the appartment over my gf's old place. After the tenant moved out they had to tear up the floor and take the unit down to the studs to get rid of 10 worth years of cat pee.

I can see both sides. But being a landlord is agreeing to run something closer to a public utility than not.

I believe it too. My dad's seen some crazy tenant behavior as well: serial scammers, grow-ops, massive humidity damage from the raising of illegal 3m-long African pythons... in Canada btw.

Happened twice, but we never went to court. The second time was the worst. First time it was mostly just ruined carpets and cleaning 4 feet of solid trash out of the 1/4 acre back yard.

It's 10 times easier to get someone to leave on their own accord by giving back a deposit. Tenants would rather have the cash in hand than squat. This was in California so eviction is a 6 month process that costs a lot in legal fees.

> There is very little left over as positive income. Maybe 10% if you are lucky, which makes up a little for the huge headaches.

Let's not forget that you, when you are using the rent to pay off mortgage, you are building capital - even if 90% of the rent is allocated to costs already.

> Once you start eviction you are stuck paying someone else's mortgage.

Your mortgage. But go on...

> Some renters go from house to house just paying a deposit and first month's rent then sitting on the house for as long as possible. If you try to be nice to them and give them more time they will bankrupt you.

Some renters are people just trying to get by. They have kids who are traumatised by the constant lack of housing security. They, themselves, may be unable to gather the resources to secure their own future by finding a better job, growing more valuable skills, etc. But I notice you don't raise them as the special case that drives your decision making, only the (more unlikely) case that you lose out.

>so where is the renters money going exactly?

I think with a lot of land lords, in high COL areas especially, the question of "where isn't the money going" is obvious and more important. It's definitely not back into the property. It's not making improvements to make the property more amenable to tenants. No new windows/insulation. The cheapest utilities and fixtures.

The worst part is, is that they can basically cash out whenever they want. People will buy the property to do the exact same thing.

As they say, play stupid games, win stupid prizes. It seems that most tenants are over leveraged. I'm weathering this pandemic just fine because I scrapped together a little extra every month and don't live in a posh area with 60% of my income going to rent.

Perhaps they should take a look at the majority of "luxury" apartment landlords and see just how poorly they were/are doing. The name itself entitles them to charge over $2k/mo in major metro areas in the northeast US.

They are entitled to charge whatever they want. They bought/invested/renovated the place.

Using homes as investment vehicles never seems to sit right with me.

Jeopardy: Oh I'll take #3 for a month's worth of rent!

A: it goes to the banks, who do literally nothing to care or maintain for the housing or support the renters.

Existential question: how is this different from taxation without representation?

>how is this different from taxation without representation?

there's a layer of abstraction! Duh!

Before you could tar and feather the collectors, and shoot the foreign soldiers who attempted to enforce. The money went to a far off land, which would eventually give up.

Now, another faceless drone in a suit will simply replace the collector, the soldiers are domestic and called police, and the money is distributed to a large amount of people via fake work jobs in the financial industry who will fight tooth and nail to preserve the system.

I mean, if it's a fight you want to pick its eminently winnable. In big enough numbers.

It's different because you have representation.

Landlords are subject to the laws of the land, so you actually have your government representative making laws about what your landlord has to do and how much they can charge you for it.

You're also your own representative with your landlord. If you have a problem with your situation, you can talk to your landlord and try to work it out. That's the thing that representatives are supposed to do with the government. It doesn't guarantee results, but you have representation.

It's also different from taxation without representation because it's much easier to opt out of a bad landlord than it is to opt out of a bad government.

Taosinese?

A dialect of Chinese, probably an old spelling.

https://en.wikipedia.org/wiki/Taishanese

Reply on news.ycombinator.com