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Comment by aantix | Hacker News Reader

The renter doesn’t hold the risk. They can walk away.

If you want the profit, then hold the risk.

If you want the freedom of mobility, then rent.

I see you've been rightly downvoted. In the US, landlords also hold little risk, especially if they are corporate. Renters are stuck by leases and in many states, have little recourse to do anything when the property goes bad and the landlord won't fix things.

>landlords also hold little risk

Feel free to expand upon the argument of real estate as a "little risk" investment.

>Renters are stuck by leases

Leases are on average, an order of magnitude shorter than mortgage loans. Less exposure, less risk. Your leverage is to walk away after a year.

Every year they have more equity they can just cash out and walk away. Worst case, they lose the property and their credit gets ruined, exactly the same thing that happens to any renters that have to break their lease. Landlords lose an investment, Renters lose a home and their kids might have to change schools, etc...

>very year they have more equity

offset by property taxes? Maintenance? Inflation eroding the value of the equity. Time/cost of managing the property. Potentially depreciating property values, depending on area?

I've been a landlord. It's a money sink. Tenants brought in cats (against the lease) that peed all over, making the residence smell unbearable. Had to completely rip out carpet, reseal the floors to get the smell out. Ripped out stair case railings.

It's far from "little risk". It was a time and money sink.

The area itself did not appreciate in value. So after all said and done, definitely lost money.

I'm glad to be done.

I didn't "walk away" like the renters could. I fixed the house, the damage that the renters caused, I assumed the very liabilities that the renters get to punt on. Their leverage in the deal worked in their favor that time. They get to just move on.

Did it break you? Did it damage your family? "After all is said and done", you lost money. You walked away.

How is any of that different then a renter where the landlord sells the home, raises the rent (they can do that every year or so), refuses to fix something (or takes forever to find the "best" price), or just starts doing some other crazy stuff? The risk seems pretty similar to me.

The renter does not lose a lot of money. The landlord may end up with enormous debt.

That's very difficult and unlikely to happen under US law. They probably have a corporate entity that will just cease to exist along with any debt. If they don't, bankruptcy or old debt will only impact their credit for afew years.

No different and probably more easily explained then an eviction. Try renting anywhere with an eviction. The risk is largely the same.

> If they don't, bankruptcy or old debt will only impact their credit for a few years.

The idea that you think someone could lose large amounts of money and not have it impact them personally or that there isn't personal fallout perplexes me. This feels like that episode of Seinfeld..

Kramer: It's a write off for them.

Jerry: How is it a write off?

Kramer: They just write it off.

Jerry: Write it off of what?

Kramer: They just write it off!

Jerry: You don't even know what a write off is, do you?

Kramer: No. Do you?

Jerry: No I don't

Are we talking business, or personal? Yes, it hurts; but the ability to mitigate that risk is there for any responsible landlord. The landlord has all the consideration about what type of property to invest in, how to structure their payments, how to increase rent or continue renting at old prices, etc.. The tenant has no ability once they move into a place.

All my experience is in the midwest, where there are essentially no renter protections.

> landlords also hold little risk

Landlords hold all the risk. There's risk of devaluation, risk of renters destroying property, risk of unexpectedly high maintenance costs, risk of insurance/taxes going up more than planned. If anything bad happens to the property, the renter can just walk away, the owner is stuck with it.

I'm not a landlord, sometimes look into it but every time conclude that the risks are far too high for what minimal profit it might bring. So I stick to index funds.

In what world are owners "stuck" with property? The bought an asset, the can sell an asset. Yes, they may need to absorb some losses, but probably not more then then several thousand it will cost a renter to move if the landlord does any number of things in addition to the risks you outlined above.

Yes, landlords have risk. My original point was that renters shoulder the same and more risk.

Rents are small portion of the overall loan size. They have a limited contract.

Less time and monetary exposure.

Renters incur less risk.

The amount a landlord is likely to lose is more then likely less then on years rent. The renter assumes the risk of one years rent and carries that, albeit diminishing, ever year they sign the lease. There are multiple issues that could cause the landlord to lose the house, all of which would also impact the renter. There are multiple issues that could cause the renter to lose their lease, only some of which impact the landlord.

The renter is more likely to carry the financial fallout longer, because they have no assets backing their risk.

By "stuck with it", I meant stuck with the problem. e.g. flood damage renders the place unihabitable (nearly always not covered by insurance even), renter packs up and moves, owner is stuck with the problem and the expenses.

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