[flagged]
There's a reason why a mortgage with very little down payment is a lot more than comparable rent.
A landlord will happily swallow 50% of your income but a bank will start to feel bad about a ~30% debt to income ratio, so no you can't really.
Reminder that a 300k mortgage over 30 years at 5% costs you 600k in the end, so you're fucked either way, at best your kids might benefit from your investment.
Housing got way more expensive since the 2000s, most people are priced out of buying a house, most can't even qualify for a mortgage to afford an average house.
https://cdn.statcdn.com/Infographic/images/normal/34534.jpeg
The average Joe, well, median Joe in that case, living alone in say France/Germany/UK can barely qualify for a 200k mortgage over 30 years, and that won't get you much unless you plan on living like a student your whole life
It's almost as if the banks know they're very likely to lose money by approving loans people are statistically unlikely to be able to make 360 on-time payments for.
> Reminder that a 300k mortgage over 30 years at 5% costs you 600k in the end
100% true and stated this way makes it sound like it's the evil bankers, but really it's just the way math works.
> most people are priced out of buying a house
I don't think "most" is accurate here, especially if you include areas don't have insane NIMBY restrictions on building like SF and NYC.
This[0] shows there are absolutely places more affordable than others. My one complaint is that if everything gets more expensive the map doesn't really change so it could be better.
And I've heard the rebuttal before about "that's where the jobs are" (false) or "that's where I grew up." I get it, but living in high-demand places is not a constitutional right. Not having your own home in a major downtown metro is not a violation of your rights. If you can't afford to live somewhere, you should move. I'm in the 4th state I've lived in in my life right now. I might be here until I die, I might live in 4 more. Lots of things play into that but a major part of the calculus is whether or not I can afford to live the life I want here.
[0] https://www.visualcapitalist.com/mapped-u-s-housing-affordab...
So its fine for you that there are people owning 20+ properties speculating on profit for basic human needs? Its literally Nestlé "this is MY water" behavior.
If 20 people need homes to live in and can’t afford to build them, suddenly landlords/investors have a place because they built housing inventory where others couldn’t. They won’t do that for free though and why should they.
I remember your username from prior threads, you’re a troll man. Take this crap to Reddit.
The nestle statements about profiting off people’s need for drinking water were universally viewed as disgusting. We shouldn’t always profit off the basic needs of other humans.
Propose pivoting our entire economy all you want, but do it in a way that doesn't cripple it and provides more than a one sided benefit masquerading as having no downside implications.
Yes. In fact, every developed country already does.
> you just removed profit from ~40% of GDP
Is the point of society to maximize profit all the time at the expense of other things, or to provide a good life for people and ensure their basic needs are met?
> provides more than a one sided benefit masquerading as having no downside implications
Of course there are downsides. Rich people will be less rich. Lower class people won’t be so easy to exploit. People will be happier and more content, so there will be less crime and less people in prison.
The fact you prioritize profits over people is both illuminating and horrific. What a terrible place you must live in.
I’m arguing for not just making one single law that X must be profit free as an entire industry without considering anything else. The government here would not provide housing. It would not invest in hospitals. It would not build universities. It would just ban them from being profitable and we’d all suffer because of the lack of supply that results. I think the difference here is I’m thinking if the practical implications of how it would be executed and you’re imagining some hypothetical scenario when it’s executed well. The fact other nations do it isn’t reassuring to me, precisely because we have proven time and time again that we will flat out refuse to look outward for ideas that are effective. We have to put our own stamp on it and mess it up, or just do nothing.
I was a landlord for a bit and what I’ve found is that tenants that have probably never actually owned a property have no ideas about what it cost to own a property and what the landlord is actually making off your rent. Sure even if you pay a few thousand in rent, it may be the landlord only has a couple hundred of cash flow. Then, one repair on the home can easily wipe out a year or more of that. One bad tenants can wipe out a decade of it.
I recall my worst tenants ever. Weren’t even that bad all things considered but the were dirty people. The house was filthy when they moved out. The walls and floors were coated in a grease like film. I had a no smoking policy in the lease but it was obvious they smoked and used the floor as an ashtray. There was a handful of other things that were just broken. Anyways it was a 4 bedroom house that was 2500 sf. I got a few quotes to paint and fix the list of little stuff. The cheapest quote I got was $15k but there was also a $20k and a $30k quote. I decided not to go after these people for the damages but I told them the long list of repairs and because of the condition and cost of repairing it all I would not return their deposit which was only about $2500. Anyway they completely lost it calling me a slumlord and how there’s no way they could have generated that much damage and reported me to the state and wanted to sue me but I don’t think they found a lawyer to take the case. They thought I was marking up all the repairs costs and scamming them. I just sent them all 3 quotes and told them I chose the lowest and wasn’t asking them to pay the excess (I knew it would just be a bad debt). But they went through every line item and said they knew what it cost to paint a house and it was overpriced. This is where the problem is. They’ve never owned a property, never hired a contractor or handyman so they actually have no idea what these things cost. And in my city, construction is booming and everything housing related does seem expensive but it is what it is. There’s no cheaper way to do it besides DIY. But my labor isn’t free either and I’d charge more for my time than the contractors do so that’s not really a solution either.
I love how this conveniently ignores the equity you acquired in this year and almost certainly the appreciation.
I went from renting for a decade plus to buying four years ago and while I have had to make repairs (replace HVAC, which I knew about at purchase, replace electrical main panel), and things can be expensive, there’s definitely a contingent that likes to act like they need more protections as landlords because to listen to them just owning a home means writing a four digit check or credit card transaction every month if not more.
I love how I addressed both those things in my comment and you chose to ignore it or just didn't read
Appreciation is a gamble that you bought at the low or just plan on holding for a very long time and even then, most economists will tell your real estate should appreciate at the rate of inflation - so not a good investment. Rent can go up but that's a gamble too, or just takes a long time to become significant above your mortgage payment. Everything else goes up with time as well - tax, insurance, maintenance, etc. So it doesn't flow through to the bottom line like you think it does.
Equity is not very material either for the first decade or more. Most landlords have a mortgage to pay on that property and you should look into how an amortization schedule works. Your rent payment is mostly going to interest to the bank, not building equity for the landlord.
The landlord is mostly taking on a huge risk in hopes the stars will align and 1) appreciation will happen 2) equity will be built and 3) it's not all eroded by a high maintenance structure or bad tenants destroying the place. The main reason it is so prevalent in the US is, low interest rates for a long period of time allowed leverage (most landlords would not be if they had to pay cash) and shortage of housing inventory and housing cost more to build that many people can ever afford-aka-forced to rent.
Sure, there's plenty of regulations that could be done to falsely manipulate this market. But, so far, the only reason rentals continue to be developed is because of the investment opportunity. If that went away due to regulation, I for one wouldn't trust our government to solve the problem completely and also fund development, renters can't fund it or they wouldn't be renters, and so prices just go up even more because there is now a severely limited supply of rental housing and no ability for investors to deploy capital towards that problem. Like most things related to regulation, you can't just ban something without thinking the problem through more completely and having a holistic solution. If you do, you just are meddling and will screw it up worse than it already is.
What? No. Explain to me how after putting 10% down, I was able to get out of PMI because I had 20% equity after the first 18 months of my mortgage? After all, at 18 months at 3.5% I've only paid down 2.1% of the principal. That's not how that works. Principal != Equity.
> The landlord is mostly taking on a huge risk in hopes the stars will align and 1) appreciation will happen 2) equity will be built
A "huge risk"? No, it's a pretty safe bet. Positive appreciation on home prices in the US has happened 28 out of the last 30 years.
And again, you build equity with each payment of your mortgage, 0.29% per month even factoring in that negative appreciation in, on average, 2 of the 30 years of your mortgage AND zero positive appreciation. Like I said, between May 2021 and November 2022 I was able to garner 4.8% equity due to appreciation alone (net zero I should have gained 5.2% - 18 months at 0.29%/month).
"Hoping the stars will align"? Come on now. Then why bother, if it's such a crap shoot that you're unlikely to ever make a profit on? Out of the sheer good of your heart? No.
Also, coming back to one of your original points:
> Sure even if you pay a few thousand in rent, it may be the landlord only has a couple hundred of cash flow. Then, one repair on the home can easily wipe out a year or more of that.
Then maybe you can't afford to be a landlord?
So there was appreciation, that's great but it's difficult to bank it until you sell the property. Investors usually don't qualify for sub 20% down so PMI is never even a factor. This is timing, which I've also explained. If you buy low and appreciation follows that's great, but it can also go the reverse which is a risk for an investor.
> A "huge risk"? No, it's a pretty safe bet. Positive appreciation on home prices in the US has happened 28 out of the last 30 years.
Positive appreciation is great. But it's doesn't always exceed inflation and if it does you have no control of that and are just hoping it does. I already mentioned it's timing the market in terms of appreciation. If you bought a rental in 2007, you likely didn't appreciate for a decade. That's a long time to have your money locked up and be exposed to risk for nothing. The money down, the risk of bad tenants, the risk of the government ban evictions, squatters, just normal risk of owning a maintaining a property (roof, foundation, plumbing, etc), so much more that you're ignoring.
> Then maybe you can't afford to be a landlord?
No, that takes us back to my original point of why landlords need to make a profit. They're not guaranteed a profit, almost no business is, but it needs to be a part of their calculus. That whole point is actually my counterpoint to your comment about how of landlords shouldn't have profit and are leeches and how they should be forced to sell there property to you after you rented it without risk for a few years - just get a mortgage if that's what you want. It's not the landlords fault if you individually can't afford to buy that property. Go live in rural Nevada, it's cheap.