Landlords actually do a lot of work. Maintenance and dealing with tenants can easily become a full time job if you have multiple properties. A lot of people buy rentals thinking it’s “passive income” and then end up working twice as hard as before.
They also assume all the risk of the property too. Tenants can leave as they please but landlords are stuck with the property if the market turns.
Landlords also absorb all the risk if the tenants skip out on two months of rent and leave the unit with no appliances, dog piss stained floors, a body sized hole in the bedroom wall, a toilet that leaked noticably but never reported resulting in extensive water damage, etc.
While its guaranteed that theres a lot of shitty landlords out there, and a ton of price-gouging corporate management companies (who are the real problem these days eith affordability)… I’m fully convinced every user who says “landlords are the devil” are they, themselves, the Tenants from Hell who do not pay the building they live in the tiniest modicum of respect; then wonder why every landlord hates them and hassles them.
What risk? A landlord that isn’t a complete idiot would have set aside some of their extortion money or required a deposit.
People will assume you are exaggerating but I will back you up here. These things happen and can all easily happen at one property.
Agreed, there has to be a level of understanding. Just because you live in a space and pay rent doesn’t mean you can go wild and let the place crawl with refuse and roaches. I have an upstairs neighbor in my apartment complex that is the quintessential definition of the renter from hell. And we get all their roaches even though we keep the place spotless. And not to paint the landlords as martyrs here, as they have their own issues, but some people have a bad case of main character complex and think the rest of us that have to suffer with the stench and infestation are just the NPCs.
So the 2008 economic crisis never happened? Where I live (Europe) houses are actually going down in value right now too.
Oh wow boo hoo, they have so much risk 😔 they have an entire house that they can sell at any time, who someone else is paying the mortgage of. Oh, the horror! If the market should crash they’ll lose the equity another person paid!
Really the landlords are the victims here, not the tenants paying their mortgage for them plus a little extra for profits. Clearly the tenants have committed the crime of not having good enough credit for a loan, or the crime of not having enough for a down payment, so they aren’t worthy of owning property.
No no it’s the landlord who has the real problems, because they could ein a shaky financial situation of “selling the second house iown” if the market dips!
Yeah, these memes are made by kids who have never actually worked at all, much less at upkeep on a property they don’t live at. They probably whine about taking out the trash every week and beg their mom for new games while thinking they’re independent somehow.
They’re supposed to do all those things but most don’t. I’m a condo super and the owners who own and rent multiple units are the worst. Their tenants are always calling me about every issue, and I have to remind them that I deal with the common areas, not the interior of their unit unless there’s a flood. Those landlords tend to own multiple units and just assume I will deal with their issues, but I won’t. When you own, you’re the super, manager, admin, etc. But most landlords I’ve encountered just wanna collect the check
The places I’ve stayed so far pay a company to deal with these issues in place of the owner.
I can’t speak on what that costs, however.
Management companies typically take a percentage of the monthly rent (can vary wildly from 8% up to 25%+). This also means they have a vested interest in increasing a building’s rent by the maximum legally allowed amount every single year, because it means they make more without doing additional work.
If you have multiple properties you hire someone to do that work. ‘Landlords’ include property companies that own hundreds of units, which is the majority of ownership in the US. Do you think the owners of these companies are doing maintenance and dealing with tenants? The executives are in effect the landlords, and all the work they do is figure out how to make more money off of their company’s investments, aka figure out how to better extract income from tenants.
If you’re talking about the owner of a property company, that’s a company owner not a landlord. Still a tough job to run a company.
What does it mean to be a landlord then? Are you saying the properties owned by these companies have no landlord? I don’t doubt it’s a tough job to run a company, I still don’t think that justifies the amount of our profits we give up to ensure we have shelter.
So apparently buying a house, furnishing it, maintaining it, complying with various codes and regulations, and making the house available for someone to live in for a period of time for a sum of money is “parasitic”. Not sure why, or why the same logic wouldn’t apply to anything of value someone makes available to others for a fee.
Because of nasty landlords happy to evict people or raise rents, Reddit and now Lemmy are full of people saying all landlords are awful morlocks feeding off the pain of everyone. Like everything else nowadays there’s no middle ground in the common arguments either way. Landlords evil, renters saints.
This is a misunderstanding though. People aren’t complaining about individuals who happen to be landlords being nasty. They’re making a systemic complaint about rent-seeking.
A landlord can be a perfectly polite and pleasant person. They’re still engaging in rent-seeking. And that’s the complaint.
You wouldn’t do this if it weren’t profitable. The tenant will end up paying for the furnishings and maintenance many times over in rent, and you will get an appreciating asset that you are gradually paying off the debt for. You’re not getting paid for management, you’re profiting from holding capital in a system designed to benefit those that have capital, and seeking rent for the ownership of that capital.
I wouldn’t hold it against someone in this system we have if they end up buying a property to safeguard their money, but let’s not pretend that landlords are not a parasitic relationship that reduce the amount of housing stock available for people to buy and act as a middle man between a tenant and a property management company.
Why on earth do you think anyone would rent out a house, or pay for all the ancillaries - furnishings, repairs, insurance, legal etc. if they didn’t get a return on their investment, time and effort? Do you also accuse Marriott of being parasites for renting rooms? Or Hertz for renting cars? They do these things because they spent a lot of money to provide something of value that people can utilize for a period of time but they still expect to make money.
Renting is a business. It’s as “parasitic” as any other business were a person pays for something with money and receives something in return. If you are not prepared to rent then don’t. There are other options to having a roof over your head. Buying a house would be one option but there are others.
If you equate rental cars and hotel rooms as the same as shelter used every day I don’t know how you are going to begin to understand the other person’s argument. I hope you can educate yourself about this.
“Buying a house” lol, imagine being so out of touch you think that’s an option for people who can barely handle rent.
Every landlord I’ve had doesn’t do shit. In principle, sure yeah being a landlord can be a bit of work. In practice? They expect it to be a source of passive income
I’ve had the exact opposite relationship with all but one landlord. The one bad landlord relationship I had I sued and won. But I’ve lived in about 6 or 7 places with amazing landlords that took care of the maintenance and everything else. Hell I fell down in a shower busting a big ass hole in the tub once and the landlord replaced it at his own cost.
It’s a very US-centric view because their states seemingly doesn’t enforce rules and regulations while also not having rent control. Creating a situation where landlords can demand pretty much whatever they want in a housing crisis while also not spending their revenue on actually maintaining the apartments they rent out.
The complaint is fair. For them.
I’m on your side mostly but the property prices going up in those 30 years would net you a fortune alone. You could likely sell it as is and triple your money
Well yes it would but not entirely.
The old saying ‘buy land because they aren’t making anymore of it’ is true. As the world population grows, owning large amounts of land will be scarcer and scarcer. Most young people can’t afford a home in any western nation across the world and it’ll only get worse the world over as time goes on and the population continues to grow.
It really depends on the nature of the rental and your area. If instead of building a house you build 4 closely stacked duplexes and charged each one double what the mortgage would be you’d definitely make money, but you’d also be an extortionate leech. In my area someone built 4 nice duplexes on a double lot (probably around 1.5 acres) and is now renting them at $1800 each. The land was probably less than $55k and the cost of construction was likely less than $1 mil. At 5% interest on a 30 year loan their monthly payment would be $5,600, but they’re bringing in $14,400 per month.
$1800 for rent is an extortionate price in my area (it’s big city apartment rental prices, with a pool and gym), even after interest rates went up.
On the other hand, I knew a couple who were landlords for nearly 20 years. They rarely raised the rents and even in 2022 they were still charging <$1000 per month for a full house because that paid the costs and for them it was an investment, not a source of income.
They finally sold their rental homes and made about $70k over what they originally paid on each house. Doing the math that comes out to be a roughly 8.5% annual percentage return without counting the rent gained each month. That’s a fairly solid investment without being a sucky person.
Well for a couple reasons.
- I don’t have a million dollars
- I couldn’t qualify for an investment loan worth a million dollars without making some really poor/speculative decisions
- Being a full time landlord is super profitable and trouble free until it isn’t. If you get some troublesome tenants your sweet business decision can become a freaking nightmare.
- This estimate doesn’t include taxes or insurance
- I think these rental prices are outrageous and I’m surprised anyone agreed to them. Not sure who these people are, but someone took the deal. Maybe there was some sort of arrangement so that they didn’t pay the listed rental price (like x number of months free, waived deposit, etc).
- I wouldn’t be surprised if the owner is overleveraged unless they were already independently wealthy or they got in before the interest rates went up.
For a while between 2020 and 2022, if you had your home paid for, you could take a mortgage out on that property and invest that money and make more money on the return on investment than the payment for the mortgage and the taxes owed on your profits. That’s how low the interest rates were for a while. I have a coworker who refinanced his house for 2% on a 30 year fixed rate, inflation is generally higher than his interest rate. Doing that sort of thing, taking a loan out on one house to invest with, is stupidly speculative but I wouldn’t be surprised if people did it.
It’s hard to get a good return on your investment in residential real estate without using leverage.
For instance: You don’t buy one place outright. You buy 5 with 20% down. You may not have positive cash flow, but at long as it isn’t negative not only do you get all the increase in value, you also get more equity every month as the tenants pay your mortgages.
If you bought it outright and over some period of time the tenants have paid your entire investment and the price of the property doubles, you doubled your money. If you buy 5 and over some period of time the tenants pay your mortgage and initial investment and the properties have doubled in value you have increased your initial investment 10X. And before the big expensive renovations come in, you can sell and buy something else if you’re not equipped to deal with that.
Also if you are just breaking even to get free property but you want to start getting passive income, after a few years you can refi to a longer term and lower your mortgage payments to get in the black every month.
This isn’t advice, fuck anybody buying up single family homes to rent, just showing one way they can generate both wealth and passive income for nothing. Literally nothing if they’re using a property management company.
Fuck anybody buying up single family homes to rent. I know I already said that, but it bears repeating.
I’m not sure what you used to calculate it, but it definitely isn’t only “expensive cities with inherited properties”… I did the math on the last house I rented: lived there for 8 years. It was a duplex in a city in a very cheap cost of living state. Just my rent alone for those 8 years more than covered what the entire duplex was purchased for 3 years prior to me moving in. That means if both sides were occupied, which it was for all but 1 month in the 8 years I was there, it’s paid for in full in 4 years. Even if you “have to renovate” in 30 years, hell even 15 years, you have 10 years of pure profit even after considering insurance and property taxes and probably even maintenence costs…
Maybe your area doesn’t have high demand for rentals or you under-valued your rent price, but there wouldn’t be so many people doing it if it wasn’t profitable.
That’s how a mortgage works. But the point is that after those 30 years you have a million dollar asset. That you had your tenants pay for.
For a regular plebs like us that’s not a winning proposition because we can’t have our money tied up for 30 years but for people who don’t need their money liquid, it’s free real estate
Sure, but I think this example also commingles labor with ownership (as is often the case).
Like you said, your plan involves building a four-family home. That’s labor and worth fair remuneration. It’s just that, in order to get that remuneration you’d be taking payment from tenants who build no equity for their money. Yeah, you’ll have to renovate in 30 years, but you’d still have property and the money paid in rent while they don’t.
A landlord can also simultaneously do valuable work supervising and managing a property. That’s not mutually exclusive with profiting from ownership, and we can separate how we evaluate the two. It even comes up with billionaires: Bill Gates obviously did work worth payment as CEO of Microsoft, it’s just not where he got most of his fortune. It can simultaneously be true that he’s a talented guy who deserved to be paid, but most of his fortune came from exploitative business practices and profiting off of the labor of others.
Also, to be clear, there’s a difference between structural and individual criticism. Obviously slumlords are pieces of shit, but there’s a difference between that and someone who really does work as a property manager doing right by their tenants, or a family renting out a part of their home to make ends meet. I can think that landlords should be judged on an individual basis, while landlording as a thing shouldn’t exist.
I think the main money maker isn’t rent. It’s owning (or at least having a mortgage on) property that doubles in value every ten years.
The rent often just pays for the mortgage and upkeep. The main payday comes when they sell it all off to the next parasite.
That’s how it should work, but home hoarders want an income from rent and so the system doesn’t work.
I disagree. Property prices should not be spiralling out of all sanity at the rate it’s doing, especially in city areas.
That’s what’s causing people to buy them, because it earns more than stocks and shares.
Bricks and mortar should never have been viewed as an investment.
Whenever I do the math on buying a multi-family, I find you’d either not be breaking even or barely breaking even with the mortgage, insurance, and taxes by charging market rent. The current landlord is basically claiming future rents as his own when he sets the asking price at level that takes all of the current market rent price for himself.
If you buy the property and want to have enough to do repairs / renovations and cover unexpected risks like tenants that can’t pay and won’t leave, you HAVE to go up on rent, otherwise you will go broke and lose the property.
Maybe there was a golden age when being a landlord meant instant cash flow and money making opportunities, but I find most of the stuff on the market today are just people looking to cash out all future value in the property and assuming the next landlord will basically just jack up rent to cope with the high cost of that cash out.
Being a landlord is pretty risky. You could end up with a bad tenant that ruins your property or won’t pay and won’t leave. You also are responsible for costly repairs and renovations that can have long breakeven timelines. You have to cover that cost some how, and that is by charging rent. Who would assume that risk without a reward?
Real Estate long-term ROI - 4% per year
NASDAQ long-term ROI - 11% per year
It’s about diversity, and the various tax advantages to owning the property/business/etc.
Good luck getting 11% a year in the stock market. I think your stats include the pandemic and I don’t think we’ll see increases like that again, at least we can’t count on it.
Guidelines for buying rental properties say they should pay off in 10 years.
Buying here is cheaper (1600 per sq meter in the commie blocks part of the city) and rent is about the same. Outside of those blocks you’d usually get copper and no real insulation, with street parking. A brand new apartment in a nice place might net you 15-20 eur per square meter.
Of course, I live in the ass end of Europe where wages are half of what they are in the west so it makes sense our rents, food costs, etc are higher. The peasants shouldn’t have too much to their names.
Tenants also pay any loans associated with the apartment building repairs, or the repair fund collection, not by law but because apartments are in demand and tenants are not. The law actually says it’s the responsiblity of the owner, but there’s literally nothing saying that responsibility can’t be shifted.
The big money’s isn’t in the rent, the rent is just to pay the mortgage and upkeep. It’s that you’re getting in debt that someone else is paying for you while they gaurd your asset which is only gaining in value, you then sell that somewhere in the futute.
On average, the same amount of money dropped into the NASDAQ will have much better overall returns. Real estate ROI is about 4% per year, where the stock market has held close to 11% over the long haul nearly a century.
For small-time landlords, it’s often about “I have a place for me or a family member to live if things go bad”. For bigger ones, it’s the tax-shelter and the low volitility of real estate, as well as diversity in case you need to sell when their stock is down.
Being a landlord isn’t a way for someone who doesn’t have wealth to acquire it. It’s a way to park your existing wealth in quickly appreciating assets preferably purchased from other losers when they lose their asses and collect monthly rent too.
If on day one you have 700k and you purchase an existing property and in 30 days after you rent it out your property is still worth 700k and you are now ahead of the game in 30 days not 30 years.
If you purchased at a reasonable time a year later its worth 750 and you’ve collected 84k 1% of property value per month.
Most owners are in the top 10% to start with.
quickly appreciating assets preferably purchased from other losers when they lose their asses and collect monthly rent too.
I wouldn’t say quickly appreciating, though. It’s a fairly slow growth rate for someone with that kind of money. They diversify into real estate because it creates some tax protections (your costs) and it’s fairly stable. Like buying into a terrible small business, but one that magically won’t fail. The things that could cause total loss to real estate are usually handled in standard insurance, unlike a business that can just tank.
The thing is, as you and the other person said, it’s all about the big companies who own tons of real estate AND the big companies that manage rental properties.
ITT leeches saying “actually consuming your blood is providing a vital service and takes a lot of work”
Or worse, theyre just aspiring to be leeches
Holy fuck the “everything I remotely disagree with is communism” shit in this website is seriously annoying, did I time travel to 1950s America or something. Like I think lemmy might legitimately be the worst for it. it’s putting me off coming here.
Maybe branch out to another instance, I got here through lemmy.dbzer0.com, instances other than lemmy.world seem to be much more tolerable if you are tired of those sorts of comments.
Really? Nothing?
Yes, nothing. Except for repair and maintenance and servicing all those cost and insurance and worrying the tenant doesn’t pay and all those headache people never forsee. Nothing.
You mean all the stuff they can easily outsource and still make a profit? You make it sound like landlords are doing us a favor.
Nope, i make it sounds like you’re someone that’s never think beyond their own perspective.
Edit: to add, it’s survivor bias to think that all home owner on earth are earning huge money from the property and can afford to outsource the work and still make profit.
They seem to provide some kind of vakue to you, otherwise you could just buy a house.
You could just buy a house.
Can you just step back from the keyboard and realize how stupid what you’ve just said is?
Yeah, honestly, small town landlords and building owners have to keep up repairs and constantly monitor the situation so that the tenants don’t burn down or cause an infestation that tanks a 200k USD miminum (it goes a lot higher from there) investment that wouldn’t have been payed off for 13 more years as per the contract for deed.
They also have to file all the receipts, run background checks and keep documents on their tenants, and keep their leases up to date. All of this has to be securely stored for like 6 years.
There is a lot of risk involved in getting shelter to people who need it the most in the USA. Not everything can be a charity, if you’ve got a problem with that system then you don’t have an issue with landlords you have an issue with corporatocracy and real estate moguls on a much larger scale using a necessary resource as a semi-fungible currency. More than 1 in 20 homes in the USA are owned by Chinese investors. I’m sure there are some bad apples but the majority of non-affiliated landlords are just doing what they need to do to minimize financial risks and stay afloat.
Sometimes things like Lawyer Consultation Fees, Eviction Serving fees, Vacancies, and Water Damages forcing you to replace the flooring, the boards, some insulation and vents… It can run into the negative multiple months in a row. Sure they get some of it back after Tax Season, but they still had to pay in Quarterly Taxes up until that point so in order for it to work they need a lot in savings.
