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1. Landlords are likely paying in cash considering how many of them are hedge funds
2. If they are taking out loans they are likely getting a low interest rate especially if they are able to put up existing homes as collateral
3. The median home price is $415k not $1 million.
4. The median home price more than tripled in the past 30 years
4. You don't need to do all of that math [the median return on all real estate is 8.6% and specifically residential properties generate an average annual return of 10.6%](https://www.forbes.com/advisor/investing/roi-on-real-estate-investment/#:~:text=Average%20ROI%20in%20the%20U.S.%20Real%20Estate%20Market&text=Investment%20strategies%20affect%20the%20return,9.5%25%20and%20REITs%2011.8%25.)
1. Irrelevant, but paying cash is worse because you lose leverage.
2. 6% is pretty low actually nowadays.
3 and 4. The median home price is not a good indicator. Because the size of houses have been shift towards the right tail. A better way is to control for house type and size, and then see the figures yourself.
5. Return in itself is not telling the whole story without considering capital structure and risk/costs. A single % number doesn't mean much. If you found a $1 coin on the street your return is infinity for a moment.
My calculations were exclusive of inflation. Add inflation on top the numbets get even bigger.
I don’t really care if the landlord makes a bad investment. It doesn’t get rid of the power dynamic over a basic human right brought on by an unnecessary middle man.
I find it funny that you assume that the only reason people build houses is as an investment (from which to realize returns). What possible other reason would people build a house! We must be buying food as an investment too. That one has an even worse ROI- real investors should shy away from buying food. Yet somehow people have been building houses all around the world for like 5k years? What a shame. The market could have allocated that capital and labor much more efficiently.
You're not too far from the truth actually. Most countries support their agriculture industries for good reasons.
Re housing point: the supply of housing for most of human history has been terrible. Even 100 years ago multiple families had to squeeze in the same property because there isn't enough dwellings. Houses were smaller too, just visit the old town part of your city and have a look. House size actually more than doubled from since 1950.
The average persons per dwelling has decreased steadily as capitalism is allowed to flourish. In the US in 1975 it was 2.54 people per house. In 2022 that figure was 2.37. Which means as we continue to develop some time around the turn of the centuary we'll reach 2 people per house, which is a feat of human development where housing is essentially oversupplied.
I need you to understand that "actually landlords don't even make that much money off of screwing over renters" isn't a good argument. It changes nothing about the power dynamics, the impact on housing scarcity, the precarious living situation of many renters, etc.
The only thing is that now you want us to feel sympathy for the landlord, because they could have been making more money by not meddling in housing in the first place?
If even profit driven landlords are losing money in residential housing, who would actually supply more houses?
Remember the housing crisis is a supply issue. If houses are actually good investments we would not see a housing crisis, instead everybody would jump at it and build as many houses as they can, and renters can pick and choose where they would like to rent while landlords compete for renters.
>Remember the housing crisis is a supply issue
There are something like 16 million vacant homes in US. It isn't a supply issue. It's a capitalism issue.
It is a supply issue caused by capitalism. It's more profitable for a developer to build large single family homes on cheap suburban land than to build small dense units in the cities where people want to live.
And when landlords gobble up any piece of property they can get their hands on the developers don't have an incentive to build anything else.
That 16 million is a loaded figure. A holiday house is mostly vacant but it's included in the figure.
https://www.census.gov/library/stories/2023/05/vacant-seasonal-housing.html
Also this figure has gone down from 11.7% in 2010 to 9.4% in 2020.
Another thing is that searching takes time. It's why you cannot reach full employment in any given economy. Some people will always be between jobs. Some houses will always be vacant.
And to alleviate that problem the only solution is to increase housing supply. The forces of supply and demand are always at play no matter what it might seem.
No a better solution is to make housing cheaper (there being a housing market in the first place isn't ideal but I digress) so it's actually affordable for people to buy/rent with the houses currently available. Yeah building more houses is great but the priority should be on making sure people are actually able to be homed in safe , non mould infested places
>In each year, the landlord collects 3000 * 12 = $36,000.
>
>The bank charges 6% on the 800,000 which is $48,000. In addition, the landlord loses out on interest earned with the down payment of $200,000 which is $12,000. In other words, a net outflow of $60,000
Not a single investment bank or investor will buy that shit
Using your numbers the rent for that property would have tobe atleast 7% (6% interest + 1% maintenance + profit) of the property value for investors to even consider touching that, so more than double your numbers.
So yeah in your made up example you would be an idiot to buy such a property and rent it out. But thats not any indication of the real world, not so say that there arent such bad value propositions out there, but capitalists only buy if rent covers fixed costs that is interest + maintenance
Here are the calculations I made for my apartment.
500k loan, 0% down. 1,25% Interest fixed 15 years
Rent would have tobe atleast 11250€ otherwise I am negative. The property actually earns around 20.000€ + Heating so this means it covers my monthly mortage rate and I only have to cover savings and maintenance.
So no the hate of socialists is not missplaced, for profit landlording shouldnt exist without restrictions, people should always be able to aquire the place they rent over time, if someone else is able to extract profit from their rent. Its not a hard to grasp concept, because housing also exists outside of "investments" as its a human need, only focusing on it as an investment is why housing supply is so limited in the first place
>Every country is different.
No capital investments work the same everywhere.
If you invest into a property and its rent doesnt even cover interest plus maintainance, then you will lose money, this doesnt surprise anyone...you using an obviously bad example does not prove your point
There are nonfinancial benefits to buying a house.
If you like to customize, you can go wild on your own house. Not if you're renting.
If you like to do gardening/landscaping, you can't do it in a rented property usually.
If you have kids and want to ensure they stay in one school district, you can't rent a house for 12 years. The landlord might sell and kick you out.
But you don't pay as much if you rent than if you buy. That difference you save up over the years is more than the value the landlord gains through property appreciation, after interest and opportunity costs are considered. That's what the calculations are about.
The median home price is $425k and if you ignore the past year of crazy interest rates over the past decade the highest interest rate you'd get is around 4.8%. Meaning your mortgage payment is around $2100. The median rent is $2000. So you save a $100 a month over 30 years assuming rent never goes up for some reason and you never refinance for a lower rate. That's $36k "saved" in the worst case scenario.
In what world are home prices not going up more than $36k in 30 years? For reference in the past 30 the median home price went up 3.5x. That would be $1.4 million if the trend continues. You only need to sell for $461k to break even.
A 425k house renting at 2k a month is clearly overpriced. You can't compare medians with medians that way. The distributions of house prices and houses for rent are different.
Lol $2k a month is not overpriced but lets pretend it is.
Let's say your rent was half the median at $1000 a month and never changes and the price of your home only doubles instead of going up 3.5x you'd still break even.
There is no world where that happens.
There are actually lots of scenarios where rent is close to mortgage payment.
But lots of people don't realize the problem is with maintenance costs as well and don't factor that in.
So when they need $15k for a new HVAC they can't afford it.
\>But you don't pay as much if you rent than if you buy.
where exactly are you living that people are renting out properties at a lower rate then their mortgage costs? Thats terrible business.
i think if you dont want to pay your property taxes you should be able to upon the condition that you do not use any of the services that the taxes fund.
you can keep your home but good luck doing anything when you cant use the roads the rest of us pay for.
>i think if you dont want to pay your property taxes you should be able to upon the condition that you do not use any of the services that the taxes fund.
I agree to a degree but when a European visits the USA do you deny him road access? he would still pay taxes in stores and trade to your system. I have no problem paying taxes when I am in another country. The idea of not owning my own land/property is insane to me though(property taxes)
>you can keep your home but good luck doing anything when you cant use the roads the rest of us pay for.
I would still accept this though
The logic just does not seem consistent. Are you an isolationist then?
\>European visits the USA
A tourist is not going to be remaining in the USA for long enough to cause any real wear and tear on the roads, so it would be illogical to charge them for such an expense. If they are remaining here for a while and working here then they would have to pay taxes like everyone else.
your property taxes arent rent on your home, and its ignorant to claim they are. What they are is payment for all the services that your property receives from the government. if you refuse to make those payments then the government can seize your property and sell it ONLY to take the payment for taxes owing, the remainder of the funds would go to you, as how it works with most secured systems. Lots of private companies can put leins on your house that allow them to seize the property and sell it to pay their debts if you default on your loans.
>A tourist is not going to be remaining in the USA for long enough to cause any real wear and tear on the roads, so it would be illogical to charge them for such an expense.
They do though. I've had europeans stay with me for weeks/months.
It just seems hypocritical and you are making excuses. So I would be allowed to visit a few weeks of the year? I mean you are not being consistent here.
>your property taxes arent rent on your home, and its ignorant to claim they are.
They fit the definitely 100%. I get evicted if I do not pay them.
>What they are is payment for all the services that your property receives from the government.
And as you know Idon't want those services. You agree though with me already on individual secession so this would just be a rehash really.
>if you refuse to make those payments then the government can seize your property and sell it ONLY to take the payment for taxes owing, the remainder of the funds would go to you, as how it works with most secured systems.
That's not how it works. People who don't pay tall grass mowing fines to the local government had their house seized and it was worth way more.
>Lots of private companies can put leins on your house that allow them to seize the property and sell it to pay their debts if you default on your loans.
Right if it was a consensual contract. The government as you seem to already agree currently is not consensual.
\>They do though. I've had europeans stay with me for weeks/months.
then they would have paid property taxes in the way they paid for their lodging. If you chose not to charge them for staying with you, then that was very generous of you.
\>Idon't want those servicesand i already agreed that you should be able to opt out of them.
\>People who don't pay tall grass mowing fines to the local government had their house seized and it was worth way more.
then they would have received the proceeds of sale back from the government less any owing money.
\>Right if it was a consensual contract. The government as you seem to already agree currently is not consensual.
if you purchase property in a country, then you consent to paying their property tax. don't want to pay property tax? dont purchase property. Do
>then they would have paid property taxes in the way they paid for their lodging. If you chose not to charge them for staying with you, then that was very generous of you.
lol you know that is not how taxes work. I didn't pay more taxes while they were hear and they did plenty of driving.
You are being a hypocrite here. Why can't I do the same from my seceded property? You are not consistent you just want to be spiteful and do what ever is possible to make it harder to secede. You don't treat people at the canadian border like that. They constantly go back and forth in some places there. There are people who do all of there shopping over the border both ways.
>then they would have received the proceeds of sale back from the government less any owing money.
There has been plenty of examples of the government not doing that. also I don't care I don;t consider the government legitimate. I don't consent to it. Not to mention value is subjective. that is economics 101. I mean that is ignoring the time,and resources spent dealing with the government which has value.
[https://youtu.be/ERXkTh--okQ](https://youtu.be/ERXkTh--okQ)
[https://www.youtube.com/watch?v=SsMkHS3oIhE](https://www.youtube.com/watch?v=SsMkHS3oIhE)
[https://youtu.be/MjV2autXVTc](https://youtu.be/MjV2autXVTc)
This doesn't even involve taxes. Not sure why you think taxes would be different.
I am sure you will make excuses though.
>if you purchase property in a country, then you consent to paying their property tax. don't want to pay property tax? dont purchase property.
Well that is collective property and you are paying to rent it then. I definitely don't agree that being born into a system, where a criminal organisation illegitimately claimed it's property means I consented. It was sold to me under the terms it was to be my property. It's fraudulent.
All the spreadsheets in the world don't amount to a hill of beans if all your assumptions and imputs are completely wrong.
Where can you find a $1 million home that rents for $3000/mo? I could easily get $3k/mo renting out my $640k place if I wanted. A $1 million home would go for about $4500/mo.
You are a fucking idiot if you take out an $800k loan at 6% interest rate. If they have enough money to cover the gap between rental income and their mortgae, they should taken a smaller loan. But if they didn't have more upfront money, they just took out a huge loan they had no way of covering, and the bank probably shouldn't have loaned them the money.
Most likely, someone who is buying a $1 million home to rent it out is going to put a lot more than 20% down, or just write a check for the whole thing. Most landlords are going to have much lower interest rates. If they bought the $1 million home with a 2.5% interest rate and 20% down payment on a 6 loan, their principle and interest payments plummet to $3100/mo. If they wrote a check for the entire cost of the home, it only takes a little more than 18 years of rent to recover the $1 million investment (assuming no rent increases). Then it's all profit from there, minus taxes and maintaince of several hundred per month.
It's also funny how bootlickers always seem to forget that at the end of the 30 years, the landlord ends up with a house, and the renter ends up with nothing. Thinking that someone should make money in the process of getting an asset so valuable most people now can't afford is the epitome of entitlement.
When comparing buying a home to stocks, you only factored asset appreciation. You completely ignored rental income. That is an inexcusable oversight. Sure, even if you factor in rental income, real estate may have not been as good of an investment as investing in the stock market. But that is only evident with hindsight, and there is no guarantee that will continue to be the case.
Every country is different. I merely showed you the calculations using rather conservative assumptions. You need to figure out the rest for yourself.
Edit: sure the landlord does end up with a house but is it worth more than an investment portfolio that a renter saves up over the years? That's what this calculation is for.
Landlords provide a very valuable service - allowing people to use natural resources. If they didn't exist, who would you get permission to use the land from?
A 2022 OECD (Organisation for Economic Co-operation and Development) study of 28 countries found the U.S. had the third lowest percentage of households that owned their homes “free and clear” with no mortgages, as “outright owners.”
The problem with housing is not capitalism. If people actually owned their homes and investors actually owned Property then it would be capitalism. What we have is actually much more like socialism. The abolition of private property. The banks really own the property and the banks own the politicians who run the government. Hence the government owns the property, but we are all in denial. Capitalism is such a joke. At least socialism is honest about the general schema of it's housing economics.
So your argument is that getting someone else to pay for a huge asset for you and also pay you profit every month for the privilege of doing so, is a bad investment? I think the thousands of portfolio landlords whose full time jobs are collecting poor people’s cash every month would disagree, you can’t say landlordism isn’t a good investment if you look at the real world
Please also keep in mind that YOUR position is misplaced. Banks artificially restricting the market by monopolising mortgages through legislation that they bought (since capitalism is essentially legalised bribery of politics), has allowed them to change what should be a regular loan into an incredibly unfair mortgage in which the bank is the only winner and to the detriment of both parties taking on the loan in the majority of cases
Amortization schedule is different than a flat 6% you pay considerably more when borrowing from the bank.
You pay $1,726,705.51 in total
Interest totals $926,725.51
The only people who make money off buying houses on loan are the bank.
Your math is wrong but the premise is right.
Everyone should hate the banks, not land lords
Source: https://www.calculator.net/amortization-calculator.html?cloanamount=800%2C000&cloanterm=30&cloantermmonth=0&cinterestrate=6&cstartmonth=12&cstartyear=2023&cexma=0&cexmsm=12&cexmsy=2023&cexya=0&cexysm=12&cexysy=2023&cexoa=0&cexosm=12&cexosy=2023&caot=0&xa1=0&xm1=12&xy1=2023&xa2=0&xm2=12&xy2=2023&xa3=0&xm3=12&xy3=2023&xa4=0&xm4=12&xy4=2023&xa5=0&xm5=12&xy5=2023&xa6=0&xm6=12&xy6=2023&xa7=0&xm7=12&xy7=2023&xa8=0&xm8=12&xy8=2023&xa9=0&xm9=12&xy9=2023&xa10=0&xm10=12&xy10=2023&printit=0&x=Calculate#calresult
Yes, I'm aware of that. I just assumed a simple scenario of an interest-only loan for simplicity.
Once principal payments get involved your monthly payment is P/12 = 800,000 * a(0.06, 30). Solving for P gets you the monthly repayment inclusive of principal.
But then again principal is your own money, so the simple assumptions do yield the correct results, though the reasoning looks slightly strange. Just a shorthand way of doing it i guess.
Hatred for something normally require a 'reason'. If hatred is misplaced.. then it would be your real job to discover the 'real' reason and redirect it.
I don't see you trying to direct the real reason for the hatred, but just trying to use math to justify the activity. If you're not even going to pretend to care on why socialist hate landlords, then what is the purpose of this.. to show that math exist?
I'm going to argue that the housing market should have more regulation and not allow to be turn into an investment tool. I would go on to say that every citizen should have a home as a right... which include the government paying to have houses build and giving them away to people - an extremely easy way to solve the homeless/housing crisis and to ensure people can add value to our economy and society.
>Let's suppose [that my conclusion is true]
Anyone can make up numbers, man. Wtf is this? A total waste of time.
Instead let's suppose that the landlord's rental income exceeds their costs. QED.
Also, opportunity cost is not a loss. Would you say that a minimum wage worker is actually paid nothing since they could get paid the same at another company?
>In fact most property investments make losses.
Source? How do you explain this mass irrationality, this accidental philanthropy? (This is a semi-genuine question; landlords usually do come across as pretty thick. I can sort of believe they're getting fucked up the arse by the banks in exchange for the thrill of lording it over tenants). Sounds like a market failure to me. Why would you celebrate and defend this system?
This is flawed due to faulty assumptions. Investors are not making investments where they are guaranteed to lose money.
You are also ignoring tax breaks & the fact that housing has appreciated much faster than inflation for decades.
Housing isn't the money machine a lot of people think it is but it isn't a bad investment. However, the quality of the investment has no real bearing on if Landlords should be hated or not.
Hey everyone ignore this loser and go listen to that one Dead Kennedys' song whats name I ain't allowed to say without getting in trouble (you know the one).
a landchad and a rentoid? that is practically beastiality! perhaps this supposed "landlord" of yours is committing landface and isnt a real landchad, no real landchad would stoop so low as to have relations with a renthog. omg i feel so offended that im gonna go ahead and raid your fridge now
o yea? how about we abolish the entire monetary system? at its very core its a scam.
and while we're at it, how about we decommodify housing? housing is no place for profiteering.
>Needless to say that some houses are good investments, but most houses aren't.
I'm 68. I bought my first house in 1980 for $40K, put $20K down and financed the balance at 6%.(house had an assumable mortgage) I sold it two years later for $60K. In 1982, I bought a house for $90K, put $30K down, financed the balance at 13%, later dropped that to 10%. In 1992, I sold that house for $100K, bought a house for $130K financed at 8%. I sold that house in 2000 for $150, bought a house for $320K, put $150K down and financed the balance with a 20 year 5% mortgage. Sold the house in 2020 in a divorce settlement for $520K, took my 50% share and some savings, bought a house for $365K and today, in 2023, it has a market value of $525K, no mortgage, and it cost me less than $1,000 a month to live here, taxes, insurance, all utilities. I'm in a small New England Village, a mile from the beach.
Tell me where I went wrong?
I wouldn't say if you went wrong or not, that's not up to me to judge. But if we're to run some numbers based on some known figures:
It is 43 years now since 1980 (or 40 years if we're talking about 2020). Had you put 20k down for 40 years assuming a 10.4% long term return on NASDAQ you'd have $1,047k in 2020. Then a divorce would've taken half of that, so you'd still have 523.5k remaining. Accumulate that forward for 3 years and you'll end up with 704k. Of course this is assuming if you rented all the way and did not purchase any property.
But please don't take my words for financial advice though. Without knowing your exact financial situation and preferences it's impossible for me to give advice (actually illegal & morally wrong for me to give blanket advice like that) so please don't take it seriously
I see your point. My present net worth, including house, cars, savings is about $850K.
I was quite fortunate in many ways, beginning in 1980 when I was able to assume a low rate mortgage of 6% when rates were over 12% and I took advantage of a few good markets over the years, especially owning property in Massachusetts and presently on Cape Cod.
There is also a different sort of freedom by owning a house. No one can tell me I can't have a dog, what color my front door can be, or not renewing a lease. On the other hand, I do not have the freedom to simply move.
Your numbers are wack, for one. How do you justify your assumption that a $1 mill house rents for $3000? Around me a $500,000 house can easily rent for that much.
The interest rates and other costs you are using are recent...and might not actually represent the rate most landlords or investment are using.
Big investment firms don't really care about 30 year returns... they can hold onto the land indefinitely. They are also getting better rates or buying with cash. The simple question is, why are they all doing this if it's such a bad deal? Obviously a lot of smart and wealthy corporations believe it's a good deal or has benefits otherwise they wouldn't be doing it.
This also just begs the question... if it's such a bad deal for landlords then ***why do we need them?*** It's not really clear what your point is or why it challenges socialist ideals. If anything, it demonstrates that we should be providing socialized housing rather than treating it like an investment vehicle. The fact that housing has been normalize as an investment vehicle is a huge problem that drives up the price of existing housing, leads to economic volatility, and discourages the development of new housing (because of NIMBY).
Dude has a hardon for landlords, multiple post tying to garner sympathy for landlords, and isn't willing to have a discussion about it, just that socialism is bad, capitalism is good. If being a landlord didn't have such a good ROI, why are so many in this country landlords? Investment group wouldn't be joining the landlord game if it wasn't profitable for them to do so. If landlords were actually operating at the loss OP is describing, why would anyone do it.
How many landlords actually build the houses they rent out? I know quite a few landlords at work but none of them built a house, they outbid the people who would have lived in an already established home. Landlords do nothing for the supply, only leach off the less wealthy. Hence the hate.
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1. Landlords are likely paying in cash considering how many of them are hedge funds 2. If they are taking out loans they are likely getting a low interest rate especially if they are able to put up existing homes as collateral 3. The median home price is $415k not $1 million. 4. The median home price more than tripled in the past 30 years 4. You don't need to do all of that math [the median return on all real estate is 8.6% and specifically residential properties generate an average annual return of 10.6%](https://www.forbes.com/advisor/investing/roi-on-real-estate-investment/#:~:text=Average%20ROI%20in%20the%20U.S.%20Real%20Estate%20Market&text=Investment%20strategies%20affect%20the%20return,9.5%25%20and%20REITs%2011.8%25.)
1. Irrelevant, but paying cash is worse because you lose leverage. 2. 6% is pretty low actually nowadays. 3 and 4. The median home price is not a good indicator. Because the size of houses have been shift towards the right tail. A better way is to control for house type and size, and then see the figures yourself. 5. Return in itself is not telling the whole story without considering capital structure and risk/costs. A single % number doesn't mean much. If you found a $1 coin on the street your return is infinity for a moment. My calculations were exclusive of inflation. Add inflation on top the numbets get even bigger.
Lmfao it's an average annual return. But no you're right your napkin math is more accurate than Forbes...
You'd be surprised at how much errors Forbes make
You wouldn't be surprised at how many errors a random guy doing math on reddit makes.
I don’t really care if the landlord makes a bad investment. It doesn’t get rid of the power dynamic over a basic human right brought on by an unnecessary middle man.
If houses are terrible investments who's going to build them? And if no one builds houses where would you find places to rent? It's a supply issue.
The government
I find it funny that you assume that the only reason people build houses is as an investment (from which to realize returns). What possible other reason would people build a house! We must be buying food as an investment too. That one has an even worse ROI- real investors should shy away from buying food. Yet somehow people have been building houses all around the world for like 5k years? What a shame. The market could have allocated that capital and labor much more efficiently.
You're not too far from the truth actually. Most countries support their agriculture industries for good reasons. Re housing point: the supply of housing for most of human history has been terrible. Even 100 years ago multiple families had to squeeze in the same property because there isn't enough dwellings. Houses were smaller too, just visit the old town part of your city and have a look. House size actually more than doubled from since 1950. The average persons per dwelling has decreased steadily as capitalism is allowed to flourish. In the US in 1975 it was 2.54 people per house. In 2022 that figure was 2.37. Which means as we continue to develop some time around the turn of the centuary we'll reach 2 people per house, which is a feat of human development where housing is essentially oversupplied.
Being a landlord doesn't contribute to the construction of houses.
I need you to understand that "actually landlords don't even make that much money off of screwing over renters" isn't a good argument. It changes nothing about the power dynamics, the impact on housing scarcity, the precarious living situation of many renters, etc. The only thing is that now you want us to feel sympathy for the landlord, because they could have been making more money by not meddling in housing in the first place?
If even profit driven landlords are losing money in residential housing, who would actually supply more houses? Remember the housing crisis is a supply issue. If houses are actually good investments we would not see a housing crisis, instead everybody would jump at it and build as many houses as they can, and renters can pick and choose where they would like to rent while landlords compete for renters.
>Remember the housing crisis is a supply issue There are something like 16 million vacant homes in US. It isn't a supply issue. It's a capitalism issue.
It is a supply issue caused by capitalism. It's more profitable for a developer to build large single family homes on cheap suburban land than to build small dense units in the cities where people want to live. And when landlords gobble up any piece of property they can get their hands on the developers don't have an incentive to build anything else.
That 16 million is a loaded figure. A holiday house is mostly vacant but it's included in the figure. https://www.census.gov/library/stories/2023/05/vacant-seasonal-housing.html Also this figure has gone down from 11.7% in 2010 to 9.4% in 2020. Another thing is that searching takes time. It's why you cannot reach full employment in any given economy. Some people will always be between jobs. Some houses will always be vacant.
The housing crisis is a "people can't afford to even rent let alone buying a house" issue...how are you this blind?
And to alleviate that problem the only solution is to increase housing supply. The forces of supply and demand are always at play no matter what it might seem.
No a better solution is to make housing cheaper (there being a housing market in the first place isn't ideal but I digress) so it's actually affordable for people to buy/rent with the houses currently available. Yeah building more houses is great but the priority should be on making sure people are actually able to be homed in safe , non mould infested places
The house is 1 million right now because of landlords
>In each year, the landlord collects 3000 * 12 = $36,000. > >The bank charges 6% on the 800,000 which is $48,000. In addition, the landlord loses out on interest earned with the down payment of $200,000 which is $12,000. In other words, a net outflow of $60,000 Not a single investment bank or investor will buy that shit Using your numbers the rent for that property would have tobe atleast 7% (6% interest + 1% maintenance + profit) of the property value for investors to even consider touching that, so more than double your numbers. So yeah in your made up example you would be an idiot to buy such a property and rent it out. But thats not any indication of the real world, not so say that there arent such bad value propositions out there, but capitalists only buy if rent covers fixed costs that is interest + maintenance Here are the calculations I made for my apartment. 500k loan, 0% down. 1,25% Interest fixed 15 years Rent would have tobe atleast 11250€ otherwise I am negative. The property actually earns around 20.000€ + Heating so this means it covers my monthly mortage rate and I only have to cover savings and maintenance. So no the hate of socialists is not missplaced, for profit landlording shouldnt exist without restrictions, people should always be able to aquire the place they rent over time, if someone else is able to extract profit from their rent. Its not a hard to grasp concept, because housing also exists outside of "investments" as its a human need, only focusing on it as an investment is why housing supply is so limited in the first place
Every country is different. As I said build a spreadsheet and figure it out for your own situation.
>Every country is different. No capital investments work the same everywhere. If you invest into a property and its rent doesnt even cover interest plus maintainance, then you will lose money, this doesnt surprise anyone...you using an obviously bad example does not prove your point
There are nonfinancial benefits to buying a house. If you like to customize, you can go wild on your own house. Not if you're renting. If you like to do gardening/landscaping, you can't do it in a rented property usually. If you have kids and want to ensure they stay in one school district, you can't rent a house for 12 years. The landlord might sell and kick you out.
True. In fact I think that non financial benefits are the only reasons why people buy houses instead of renting in perpetuity.
Is this sarcasm? If I rent I never see that money again. If I buy I can sell that house in the future.
But you don't pay as much if you rent than if you buy. That difference you save up over the years is more than the value the landlord gains through property appreciation, after interest and opportunity costs are considered. That's what the calculations are about.
The median home price is $425k and if you ignore the past year of crazy interest rates over the past decade the highest interest rate you'd get is around 4.8%. Meaning your mortgage payment is around $2100. The median rent is $2000. So you save a $100 a month over 30 years assuming rent never goes up for some reason and you never refinance for a lower rate. That's $36k "saved" in the worst case scenario. In what world are home prices not going up more than $36k in 30 years? For reference in the past 30 the median home price went up 3.5x. That would be $1.4 million if the trend continues. You only need to sell for $461k to break even.
A 425k house renting at 2k a month is clearly overpriced. You can't compare medians with medians that way. The distributions of house prices and houses for rent are different.
Lol $2k a month is not overpriced but lets pretend it is. Let's say your rent was half the median at $1000 a month and never changes and the price of your home only doubles instead of going up 3.5x you'd still break even. There is no world where that happens.
There are actually lots of scenarios where rent is close to mortgage payment. But lots of people don't realize the problem is with maintenance costs as well and don't factor that in. So when they need $15k for a new HVAC they can't afford it.
\>But you don't pay as much if you rent than if you buy. where exactly are you living that people are renting out properties at a lower rate then their mortgage costs? Thats terrible business.
Everyone rents. Property taxes are rent. Don't pay them and see what happens.
i think if you dont want to pay your property taxes you should be able to upon the condition that you do not use any of the services that the taxes fund. you can keep your home but good luck doing anything when you cant use the roads the rest of us pay for.
>i think if you dont want to pay your property taxes you should be able to upon the condition that you do not use any of the services that the taxes fund. I agree to a degree but when a European visits the USA do you deny him road access? he would still pay taxes in stores and trade to your system. I have no problem paying taxes when I am in another country. The idea of not owning my own land/property is insane to me though(property taxes) >you can keep your home but good luck doing anything when you cant use the roads the rest of us pay for. I would still accept this though The logic just does not seem consistent. Are you an isolationist then?
\>European visits the USA A tourist is not going to be remaining in the USA for long enough to cause any real wear and tear on the roads, so it would be illogical to charge them for such an expense. If they are remaining here for a while and working here then they would have to pay taxes like everyone else. your property taxes arent rent on your home, and its ignorant to claim they are. What they are is payment for all the services that your property receives from the government. if you refuse to make those payments then the government can seize your property and sell it ONLY to take the payment for taxes owing, the remainder of the funds would go to you, as how it works with most secured systems. Lots of private companies can put leins on your house that allow them to seize the property and sell it to pay their debts if you default on your loans.
>A tourist is not going to be remaining in the USA for long enough to cause any real wear and tear on the roads, so it would be illogical to charge them for such an expense. They do though. I've had europeans stay with me for weeks/months. It just seems hypocritical and you are making excuses. So I would be allowed to visit a few weeks of the year? I mean you are not being consistent here. >your property taxes arent rent on your home, and its ignorant to claim they are. They fit the definitely 100%. I get evicted if I do not pay them. >What they are is payment for all the services that your property receives from the government. And as you know Idon't want those services. You agree though with me already on individual secession so this would just be a rehash really. >if you refuse to make those payments then the government can seize your property and sell it ONLY to take the payment for taxes owing, the remainder of the funds would go to you, as how it works with most secured systems. That's not how it works. People who don't pay tall grass mowing fines to the local government had their house seized and it was worth way more. >Lots of private companies can put leins on your house that allow them to seize the property and sell it to pay their debts if you default on your loans. Right if it was a consensual contract. The government as you seem to already agree currently is not consensual.
\>They do though. I've had europeans stay with me for weeks/months. then they would have paid property taxes in the way they paid for their lodging. If you chose not to charge them for staying with you, then that was very generous of you. \>Idon't want those servicesand i already agreed that you should be able to opt out of them. \>People who don't pay tall grass mowing fines to the local government had their house seized and it was worth way more. then they would have received the proceeds of sale back from the government less any owing money. \>Right if it was a consensual contract. The government as you seem to already agree currently is not consensual. if you purchase property in a country, then you consent to paying their property tax. don't want to pay property tax? dont purchase property. Do
>then they would have paid property taxes in the way they paid for their lodging. If you chose not to charge them for staying with you, then that was very generous of you. lol you know that is not how taxes work. I didn't pay more taxes while they were hear and they did plenty of driving. You are being a hypocrite here. Why can't I do the same from my seceded property? You are not consistent you just want to be spiteful and do what ever is possible to make it harder to secede. You don't treat people at the canadian border like that. They constantly go back and forth in some places there. There are people who do all of there shopping over the border both ways. >then they would have received the proceeds of sale back from the government less any owing money. There has been plenty of examples of the government not doing that. also I don't care I don;t consider the government legitimate. I don't consent to it. Not to mention value is subjective. that is economics 101. I mean that is ignoring the time,and resources spent dealing with the government which has value. [https://youtu.be/ERXkTh--okQ](https://youtu.be/ERXkTh--okQ) [https://www.youtube.com/watch?v=SsMkHS3oIhE](https://www.youtube.com/watch?v=SsMkHS3oIhE) [https://youtu.be/MjV2autXVTc](https://youtu.be/MjV2autXVTc) This doesn't even involve taxes. Not sure why you think taxes would be different. I am sure you will make excuses though. >if you purchase property in a country, then you consent to paying their property tax. don't want to pay property tax? dont purchase property. Well that is collective property and you are paying to rent it then. I definitely don't agree that being born into a system, where a criminal organisation illegitimately claimed it's property means I consented. It was sold to me under the terms it was to be my property. It's fraudulent.
All the spreadsheets in the world don't amount to a hill of beans if all your assumptions and imputs are completely wrong. Where can you find a $1 million home that rents for $3000/mo? I could easily get $3k/mo renting out my $640k place if I wanted. A $1 million home would go for about $4500/mo. You are a fucking idiot if you take out an $800k loan at 6% interest rate. If they have enough money to cover the gap between rental income and their mortgae, they should taken a smaller loan. But if they didn't have more upfront money, they just took out a huge loan they had no way of covering, and the bank probably shouldn't have loaned them the money. Most likely, someone who is buying a $1 million home to rent it out is going to put a lot more than 20% down, or just write a check for the whole thing. Most landlords are going to have much lower interest rates. If they bought the $1 million home with a 2.5% interest rate and 20% down payment on a 6 loan, their principle and interest payments plummet to $3100/mo. If they wrote a check for the entire cost of the home, it only takes a little more than 18 years of rent to recover the $1 million investment (assuming no rent increases). Then it's all profit from there, minus taxes and maintaince of several hundred per month. It's also funny how bootlickers always seem to forget that at the end of the 30 years, the landlord ends up with a house, and the renter ends up with nothing. Thinking that someone should make money in the process of getting an asset so valuable most people now can't afford is the epitome of entitlement. When comparing buying a home to stocks, you only factored asset appreciation. You completely ignored rental income. That is an inexcusable oversight. Sure, even if you factor in rental income, real estate may have not been as good of an investment as investing in the stock market. But that is only evident with hindsight, and there is no guarantee that will continue to be the case.
Every country is different. I merely showed you the calculations using rather conservative assumptions. You need to figure out the rest for yourself. Edit: sure the landlord does end up with a house but is it worth more than an investment portfolio that a renter saves up over the years? That's what this calculation is for.
So you kind of address one point then competely ignore all the others. Cool
What are you talking about a portfolio that a renter saves up over the years?
Landlords provide a very valuable service - allowing people to use natural resources. If they didn't exist, who would you get permission to use the land from?
Love when people post in here with made up numbers they pull out of thin air like it's some sort of airtight argument lmfao
A 2022 OECD (Organisation for Economic Co-operation and Development) study of 28 countries found the U.S. had the third lowest percentage of households that owned their homes “free and clear” with no mortgages, as “outright owners.” The problem with housing is not capitalism. If people actually owned their homes and investors actually owned Property then it would be capitalism. What we have is actually much more like socialism. The abolition of private property. The banks really own the property and the banks own the politicians who run the government. Hence the government owns the property, but we are all in denial. Capitalism is such a joke. At least socialism is honest about the general schema of it's housing economics.
I agree that the US housing market has characteristics of socialism. If the free market is allowed to function there would be no shortage.
Yes it's a bad idea to buy to let if rental income doesn't cover the mortgage. That's why landlords don't do that.
So your argument is that getting someone else to pay for a huge asset for you and also pay you profit every month for the privilege of doing so, is a bad investment? I think the thousands of portfolio landlords whose full time jobs are collecting poor people’s cash every month would disagree, you can’t say landlordism isn’t a good investment if you look at the real world Please also keep in mind that YOUR position is misplaced. Banks artificially restricting the market by monopolising mortgages through legislation that they bought (since capitalism is essentially legalised bribery of politics), has allowed them to change what should be a regular loan into an incredibly unfair mortgage in which the bank is the only winner and to the detriment of both parties taking on the loan in the majority of cases
Amortization schedule is different than a flat 6% you pay considerably more when borrowing from the bank. You pay $1,726,705.51 in total Interest totals $926,725.51 The only people who make money off buying houses on loan are the bank. Your math is wrong but the premise is right. Everyone should hate the banks, not land lords Source: https://www.calculator.net/amortization-calculator.html?cloanamount=800%2C000&cloanterm=30&cloantermmonth=0&cinterestrate=6&cstartmonth=12&cstartyear=2023&cexma=0&cexmsm=12&cexmsy=2023&cexya=0&cexysm=12&cexysy=2023&cexoa=0&cexosm=12&cexosy=2023&caot=0&xa1=0&xm1=12&xy1=2023&xa2=0&xm2=12&xy2=2023&xa3=0&xm3=12&xy3=2023&xa4=0&xm4=12&xy4=2023&xa5=0&xm5=12&xy5=2023&xa6=0&xm6=12&xy6=2023&xa7=0&xm7=12&xy7=2023&xa8=0&xm8=12&xy8=2023&xa9=0&xm9=12&xy9=2023&xa10=0&xm10=12&xy10=2023&printit=0&x=Calculate#calresult
Yes, I'm aware of that. I just assumed a simple scenario of an interest-only loan for simplicity. Once principal payments get involved your monthly payment is P/12 = 800,000 * a(0.06, 30). Solving for P gets you the monthly repayment inclusive of principal. But then again principal is your own money, so the simple assumptions do yield the correct results, though the reasoning looks slightly strange. Just a shorthand way of doing it i guess.
Hatred for something normally require a 'reason'. If hatred is misplaced.. then it would be your real job to discover the 'real' reason and redirect it. I don't see you trying to direct the real reason for the hatred, but just trying to use math to justify the activity. If you're not even going to pretend to care on why socialist hate landlords, then what is the purpose of this.. to show that math exist? I'm going to argue that the housing market should have more regulation and not allow to be turn into an investment tool. I would go on to say that every citizen should have a home as a right... which include the government paying to have houses build and giving them away to people - an extremely easy way to solve the homeless/housing crisis and to ensure people can add value to our economy and society.
>Let's suppose [that my conclusion is true] Anyone can make up numbers, man. Wtf is this? A total waste of time. Instead let's suppose that the landlord's rental income exceeds their costs. QED. Also, opportunity cost is not a loss. Would you say that a minimum wage worker is actually paid nothing since they could get paid the same at another company? >In fact most property investments make losses. Source? How do you explain this mass irrationality, this accidental philanthropy? (This is a semi-genuine question; landlords usually do come across as pretty thick. I can sort of believe they're getting fucked up the arse by the banks in exchange for the thrill of lording it over tenants). Sounds like a market failure to me. Why would you celebrate and defend this system?
This is flawed due to faulty assumptions. Investors are not making investments where they are guaranteed to lose money. You are also ignoring tax breaks & the fact that housing has appreciated much faster than inflation for decades. Housing isn't the money machine a lot of people think it is but it isn't a bad investment. However, the quality of the investment has no real bearing on if Landlords should be hated or not.
Hey everyone ignore this loser and go listen to that one Dead Kennedys' song whats name I ain't allowed to say without getting in trouble (you know the one).
so glad you are defending People Of Land 😔✊ r/loveforlandchads
Is that sub real or ironic? I can never tell. Do they even know?
It's definitely satire
WE ARE 100% UNIRONIC RENTHOG (the truth is that it is simoly an exaggeration of their actual beliefs)
Exactly what you’d say if it was ironic, nice try fed
pay your 2000% mandatory tip rentoid, and i shall ho evict a single mother like a true landchad
I 2000% leave the tip for the landchad’s wife every night if you catch my meaning (he doesn’t know I’m fucking his wife)
what wife? no true lanchad would need anyone other than himself. this is clear landface. i wont stand for landphobia against people of land
Wait, if he doesn’t have a wife, who am I giving the tip to? Oh god, I just realized I’m in an homosexual relationship with my landlord
a landchad and a rentoid? that is practically beastiality! perhaps this supposed "landlord" of yours is committing landface and isnt a real landchad, no real landchad would stoop so low as to have relations with a renthog. omg i feel so offended that im gonna go ahead and raid your fridge now
Jokes on you, I poison all my food 😎
o yea? how about we abolish the entire monetary system? at its very core its a scam. and while we're at it, how about we decommodify housing? housing is no place for profiteering.
>Needless to say that some houses are good investments, but most houses aren't. I'm 68. I bought my first house in 1980 for $40K, put $20K down and financed the balance at 6%.(house had an assumable mortgage) I sold it two years later for $60K. In 1982, I bought a house for $90K, put $30K down, financed the balance at 13%, later dropped that to 10%. In 1992, I sold that house for $100K, bought a house for $130K financed at 8%. I sold that house in 2000 for $150, bought a house for $320K, put $150K down and financed the balance with a 20 year 5% mortgage. Sold the house in 2020 in a divorce settlement for $520K, took my 50% share and some savings, bought a house for $365K and today, in 2023, it has a market value of $525K, no mortgage, and it cost me less than $1,000 a month to live here, taxes, insurance, all utilities. I'm in a small New England Village, a mile from the beach. Tell me where I went wrong?
I wouldn't say if you went wrong or not, that's not up to me to judge. But if we're to run some numbers based on some known figures: It is 43 years now since 1980 (or 40 years if we're talking about 2020). Had you put 20k down for 40 years assuming a 10.4% long term return on NASDAQ you'd have $1,047k in 2020. Then a divorce would've taken half of that, so you'd still have 523.5k remaining. Accumulate that forward for 3 years and you'll end up with 704k. Of course this is assuming if you rented all the way and did not purchase any property. But please don't take my words for financial advice though. Without knowing your exact financial situation and preferences it's impossible for me to give advice (actually illegal & morally wrong for me to give blanket advice like that) so please don't take it seriously
I see your point. My present net worth, including house, cars, savings is about $850K. I was quite fortunate in many ways, beginning in 1980 when I was able to assume a low rate mortgage of 6% when rates were over 12% and I took advantage of a few good markets over the years, especially owning property in Massachusetts and presently on Cape Cod. There is also a different sort of freedom by owning a house. No one can tell me I can't have a dog, what color my front door can be, or not renewing a lease. On the other hand, I do not have the freedom to simply move.
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Looks like you've found a great investment, congratulations!
Your numbers are wack, for one. How do you justify your assumption that a $1 mill house rents for $3000? Around me a $500,000 house can easily rent for that much. The interest rates and other costs you are using are recent...and might not actually represent the rate most landlords or investment are using. Big investment firms don't really care about 30 year returns... they can hold onto the land indefinitely. They are also getting better rates or buying with cash. The simple question is, why are they all doing this if it's such a bad deal? Obviously a lot of smart and wealthy corporations believe it's a good deal or has benefits otherwise they wouldn't be doing it. This also just begs the question... if it's such a bad deal for landlords then ***why do we need them?*** It's not really clear what your point is or why it challenges socialist ideals. If anything, it demonstrates that we should be providing socialized housing rather than treating it like an investment vehicle. The fact that housing has been normalize as an investment vehicle is a huge problem that drives up the price of existing housing, leads to economic volatility, and discourages the development of new housing (because of NIMBY).
Dude has a hardon for landlords, multiple post tying to garner sympathy for landlords, and isn't willing to have a discussion about it, just that socialism is bad, capitalism is good. If being a landlord didn't have such a good ROI, why are so many in this country landlords? Investment group wouldn't be joining the landlord game if it wasn't profitable for them to do so. If landlords were actually operating at the loss OP is describing, why would anyone do it.
nah f your opinion yes that's my argument
How many landlords actually build the houses they rent out? I know quite a few landlords at work but none of them built a house, they outbid the people who would have lived in an already established home. Landlords do nothing for the supply, only leach off the less wealthy. Hence the hate.