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Comment by ChuckMcM | Hacker News Reader

Never sure what people are trying to imply when folks buy real estate via an LLC but this is the key quote: "What is more, ownership of shell companies can be shifted at any time, with no indication in property records."

Selling property is a cumbersome and difficult process, selling an LLC is trivial. If you own a property as an investment then you may want to liquidate some or all of that property at a given time to cover other costs. Not really very easy to do if you have to go through a title process. Contrast that with selling someone half interest in an LLC which owns the property. That is easy to do, requires only a notary, and voila you've got cash. I'm all for having direct ownership on your primary residence but for vacation homes, or investment properties, using an LLC is just a whole lot smarter from a money management perspective.

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We could have a healthier, more rational discussion here on HN if we all could be more critical of popular libertarian dogma[1], and not take it as self-evident that private ownership of land is both a right and good economics[2][3].

[1] By “popular libertarian dogma” I refer to popular dogma that isn’t necessarily supported by and may even contradict true libertarian principles.

[2] For a critique of private land ownership, read about Georgism (https://en.wikipedia.org/wiki/Georgism) and Geolibertarianism (https://en.wikipedia.org/wiki/Geolibertarianism). Are you a Real Libertarian, or a ROYAL Libertarian? (http://geolib.com/essays/sullivan.dan/royallib.html) makes the case against land as private property very plain.

[3] If you believe in the free market and it's ability to find the "right" price for everything, even the abstract (e.g. the time value of money), then how can you support a government enforced system that allows a finite amount of money to purchase an infinite amount of something, which is what ownership of land in perpetuity amounts to? How can $10,000 or even $10,000,000 be the price of full rights over a plot of land for an infinite amount of time?

Heh we could but then we wouldn't be talking about what we're talking about :-). As my philosophically focused friends tend to point out you can talk about anything at all, and still not have a discussion of substance.

I understand the debate about property ownership, but you can either choose to discuss using the system we have in place, or you can talk about the system itself. But trying to talk about both at the same time robs both points of view from the first principles they are starting from. Any argument in one system can be refuted by changing the principles in the other.

The land ownership system, currently in place in the US, may or may not be morally reprehensible and unfair, but that is not the issue to which the NY Times speaks.

Good post. It's important to recognize that libertarianism is itself a diverse collection of philosophies, many of which resemble georgist, anarchist and even some strains of socialist thinking at their foundation. These variants all tend to differ on notions of property as first principal.

I think the 'traditional dogmatic libertarianism' you mention can best be described as paleoconservativism or something similar. It is one end of an extreme with complete disregard of property as the other extreme.

Georgist treatment of land as property is interesting because it doesn't actually deny land as private property, it just treats it as a negative externality to the commons and demands a Pigovian land value tax as recompense. This same philosophy can be extended to any tragedy of the commons, be it environmental, land use, radio bandwidth, etc. One may make property of these things, but at infinite cost for the privilege of such monopoly; a privilege that is guaranteed not by one's own right, but by the social contract of the state.

I have always considered myself a libertarian, but recent issues like these have me really questioning how "smart" the free market really is.

I think it goes beyond land ownership too. In theory, I should not be judging other people's values and what they choose to spend their own money on. But when the free market tells us to dedicate our resources to building things like $500,000-per-month apartments, I am not sure I am willing to blindly agree.

https://revaluate.com/blog/highest-rents-in-nyc/

Best comment in this entire thread.

Infinite ownership of land and "I got here first, screw you" mentality doesn't work when everybody wants to live in the same place.

The "property owned by LLC" issue isn't a _huge_ problem until it's abused. LLC fixes a lot of problems with inheritance and probate, etc.

Look at the property records for Woodside (a city zoned _only_ for residential mansions). Everything is an LLC, but most of them are under the names of the owner (e.g. "Betty Big House LLC") with traceable property tax records.

The strange thing about Woodside LLCs are seemingly nobodies own them. Why does the "philanthropy administrator" at Stanford own a $20 million estate in Woodside? Blarg. It's really nice house too: http://www.trulia.com/homes/California/Woodside/sold/7397232...

I rent a guest house in Woodside. I really love it. It is the only place that feels "rural" but still able to commute to the valley below. Its nice to be able to rent a sizable house that was 2x the size of my Palo Alto apartment for the same price.

I don't see any negative effects of the LLC property ownership. Woodside is a very tight nit community and I never really felt any wealth gap effects, even though there are a lot of people who are just ranchers. Its not like the people who live in these mansions steam roll over everybody and get what they want they work together to make sure Woodside remains the way it is (small town feel, rural, ranches, horses, etc.)

Its rather unfair to go "blarg" just because someone has a nice house.

Indeed. In many jurisdictions, you can also avoid the tax you pay when the property owner changes (stamp/registration duty)

Why do we allow LLCs to own residential real estate at all, though, unless they're actively working management companies of rental buildings? It seems like the obvious solution to this loophole is to disallow LLCs from owning residential real estate unless they're management companies that take responsibility for renting out and maintaining the building.

Preventing dirty foreign money from entering the real estate market is one of the defining issues of the 21st century. Personally, I think it would be tragic to have all the world's great cities to be owned by Davos shitheads and ex-KGB oligarchs and narcobarons. Let's start fighting this now.

That's more or less what Copenhagen's done, though it dates back to some old history rather than being really carefully planned out this way. Most of the central city apartments are structured as either owner-occupied cooperatives, or nonprofit housing associations, and only natural people can buy into (in the former) or rent (in the latter) such property. Furthermore they have to be resident natural people, meaning that you declare the apartment as your primary residence, so that cuts out people buying for investment rather than housing purposes. Or rather you can invest, but only in one unit at a time. It also cuts out speculation from people who don't live in Denmark, unless they lie and say they do. But beyond the risk of being caught directly, declaring Danish residency makes you liable for Danish income tax, which is not something most wealthy foreigners want.

As a result, despite Copenhagen getting really popular as a culinary/cultural/etc. destination in the past decade, housing is still cheapish (1-bd ~$800-1100/mo, 2-bd ~$1300-1600/mo).

Because there are valid reasons to own property through an LLC.

For example: investing in residential real estate?

1/ What if an investment fund wanted to buy and hold 20 apartments in a building?

2/ What if I wanted to invest in a property, partially backed by debt (hence the need for limited liability)?

What if an investment fund wanted to buy and hold 20 apartments in a building?

That should be illegal in and of itself. People can't afford apartments because "investors" have bought them all to jack up the prices as rent instead of property. If we had true market-clearing prices for ownership (instead of "the rich get richer and use more money to buy more property to get more money to buy more property"), everybody could be less rentfucked.

It's "excessive landlord" syndrome. Why should one guy be allowed to own 40 apartment buildings full of residents who have lived there 20 years? Shouldn't they own their own living conditions instead of being locked into capitalist "I got here 3 years before you, now I own everything, and you are my source of income forever" mindsets?

Not sure i understand. Whether an individual buys a home or an investor buys 20, it doesn't change the price.

Yes it does make a difference because the wealthy individuals who own many units can drive up the price by restricting supply. They can influence zoning laws and block new high-density construction to protect their profits.

That still doesn't make sense. If you have no one living in an investment unit you're losing money. Could an owner of manu units increase pricing by not renting/selling at market rates? Sure but they'd be losing money.

And yet it happens all the time. There are many units in my city in very desirable locations that have been empty for a long time. Often they do temporarily allow people to live there ('anti-squat'), but they can be kicked out at a month's notice and have basically no rights.

What makes this so frustrating is that anyone moving to the city has to either pay exorbitant amounts of money for tiny apartments or rooms, or live far out of the center.

I'm not Seiji, but I think he wants to make illegal for both investment companies and private individual to own more than a certain number of apartments, in order to prevent real estate price to go up and up, to which I wholeheartedly agree.

In most cities renters are people who can't or won't plausibly finance the unit themselves. Units are expensive and worth a lot.

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