Buying something to rent it out is clearly investing.
Buying something to fix it and re-sell it is usually also seen as investing.
Buying something to use it (live in it) could also be an investment but usually isn't seen as such because it's assumed that you only live in one place.
If it appreciates, cool. I can make more money when I move somewhere else and use that to leverage my next house WHICH I LIVE IN.. If it goes down, bummer, but I can still use that to leverage my next house WHICH I LIVE IN.
I bought the house to live there, not as a financial instrument. The financial thing is secondary.
If the market goes up or down, I cant do shit about that.
But you pick on the fact that I'm talking about a primary (and in my case, sole) residence, and this article is talking about parasites that buy hundreds or thousands of homes to then turn back around and gatekeep living spaces.
Id say tax those vultures out of a company. They do nothing good, and cause boundless suffering.
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So most of the percentage increase is done by mom-and-pop investors rather than groups like Blackrock, Vanguard, etc. With that said the article definitely tries to paint the picture that all of these investors are institutional ones, and burying that important lede.
I get the hate against institutional investors going in and buying up entire neighborhoods. But the sentiment that we should just abolish landlords is rather dumb IMO. There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.
Having recently bought a home, I think there isn't so much of a gap and in many cases the gap is inverted: it's cheaper to buy than to rent.
By that time their fixed mortgage will be far below local rent, so the money they save vs. renting every month will easily cover those repair costs.
Only $10k? I've planned for and budgeted for repairs and additions averaging 20% of the loan for the lifetime of the house. It's still cheaper to buy than to rent even with 20% on top of PITI.
It's cheaper because I'm paying myself when I pay my mortgage: if I decide to sell then a lot of that mortgage is now returned to me. You will never pay yourself the same way by renting.
If I don't sell then 20% on top of PITI is what I was paying in rent anyway.
As opposed to... being able to afford the rent with the same added costs? Take my area for example: rent in my neighborhood has increased to $2000/month. My mortgage remains at $1500/month (taxes, insurance, HOA included). What added costs amount to $500 extra/month? It's not water, sewage, trash, electricity, or gas! Those costs exist for renters just as much as owners. It's not basic maintenance... that has not cost me anywhere near $6000/year. So what are the added costs that landlords are "saving" renters from?
Utilities will generally cost a bit more. But the real killers with home ownership tend to be large expenses that come due all at once. Roof needs to be replaced, AC unit needs to be replaced, major appliance replacement, foundation problems, any number of expensive things can and will come up.
In my case I had to replace the dishwasher. I wanted a quiet one, so it ran about $1200. I bought it on credit and got 0% financing. So my housing price increases by $100 for the next year.
Now if I were renting? $2000/month. The landlord gets the absolute cheapest dishwasher they can find. It maybe runs them $300. So the landlord would be saving me ... $-475.
Paying $5700 extra a year to avoid a $300 added cost makes no sense. Paying $6000 a year in perpetuity for a one-time expense that lasts the next 20 years also makes no sense.
The point is that the tenant is not being protected from any added costs, they are paying way above market value for them.
All these expenses (plus a profit margin) are built into the rent, of course.
Two ways the owner handles them: Either they have enough money saved that they can absorb the spikes in cost, or, they contract some maintenance plan they have to pay every month but smooths out the costs to avoid surprises.
It's not like OP is going to buy the home and let it sit vacant.
as they should.
If the owner of the property lives in the community, the rent that is being paid to that owner is much more likely to be circulated locally. If the rent goes to a foreign company, it's removed entirely.
Upkeep and maintenance would also occur regardless of who the owner of the property is, so it's not like they're creating "new jobs" because it's foreignly owned.
I think this is only possible when large scale investors 'corner the market' by buying up a large percentage of homes in a given area. They can then control the rents because there is little competition.
On the other hand, if nearly every rental home is owned by a separate investor then each owner is competing with all the other small investors for tenants. They have competition and might be forced to keep the rents lower.
Rents are being affected by every investor, including those that own only two houses. Perhaps more explicitly by large companies with hundreds or thousands of properties, perhaps not. I've certainly spent enough time on threads in which people who own only a single rental property in addition to their own home compare notes on how to raise rents for more income in their pockets.
Honesty the best thing I can do is to build more units on the land I own. That is challenging though so it takes time and capital.
You can thank single family home zoning and how difficult the city makes it to build for the rising rents. The landlords I know are very pro building. 14 units is more income than 4.
With all of the regulations, risks, and high interest rates forced on landlords, I am wondering what you mean by "unfairly"? One bad tenant in Seattle, could mean months without income and even massive property damaged with no ability to recover damages.
As a small time landlord (I rent a few rooms in my primary residence), I feel that the rent I can charge is way below the risks of a bad tenant.
Sounds worse when you put it that way though.
Not everyone can afford a SFH, there isn't enough land. Not everyone can afford to build. Not everyone wants to have massive switching costs when they need to move.
Tenants are more than welcome to form LLCs and collectively purchase land and build or buy existing housing. This is called Tenant in Common. Maybe that is a business (non profit) idea for you, make TiC easier.
My point here is that a blanket statement such as "landlords bad" doesn't match the experience of everyone out there.