"Why would you be paying your rent, put that money in Bitcoin!"
Saw several people advising others that way in the last year. I think it may have been good advice for the individuals involved, but that it was suggests our society has fucked up somewhere.
I knew society was whack when I saw girls with college degrees becoming OnlyFans models and selling foot fetish photos... to make a middle-class living because their college degree doesn't pay their bills.
It's a job like any other, and much less demeaning than working in advertising, but college degree being useless on the job market is a big problem everywhere in the West.
At this point I'm not sure if it's an issue with the degrees, or mismatched expectations. That is, should a degree be a ticket to a middle-class life, or should we just stop telling young people that it is?
>but college degree being useless on the job market is a big problem everywhere in the West.
define "useless". College graduates still have better prospects than non-college graduates, on average. Maybe we shouldn't treat all college degrees the same? ie. computer science degree compared to an art degree
The point is ....the fact that girls are doing this means
.. there aren't many tickets to middle class life available anymore outside of doing extreme shit.
STEM is a ticket, for now, and for people who have the disposition. But as outsourcing and automation become more prevalent that will start to be less of an pathway.
As people south of the border took over the trades, we'll see remote workers taking over the tech industry, AI take over driving, etc. Etc.
And that should be fine but the fact is, the gains of this efficiency aren't shared by society, they're only shared by the rich. The rest of society loses their way to the middle class and has to send foot fetish pics to survive.
>they can’t afford to house people for free or shoulder the country’s massive rental arrears, which could be as high as $70 billion.
I think the eviction moratorium wasn't thought out very well. You can't just stop evictions while not compensating landlords, and not developing clear plans for what happens when the moratorium ends. No one is going to catch up on their rent of their behind. What I suspect will largely happen is many landlords will forgo a formal eviction as long as the tenants decide to leave voluntarily. Then those tenants will effectively swap houses with someone else who's behind, wiping the rental debt clean. You only understand this if you've gone through an eviction, but the vast majority of the time the landlord just want you to leave. If you vacate before you actually get to court you can often avoid having the eviction on your record.
How small? With the federal benefits above and beyond unemployment...there was no reason that such a large portion of people should have been not paying rent. A friend who runs a property management company laid off 60% of his workforce (mostly maintenance guys) because 74% of his tenants stopped paying completely since last April.
Small? A friend who has about 5 houses told me that all 5 were behind or paying only a fraction of the rent. Including the woman who worked for Google as the local rep selling schools on using GSuite. She was making $150k when she filled out the lease paperwork. Google didn't have layoffs but somehow she couldn't write the full check. Go figure. But he still owed money to the bank and the utility company and ...
With that kind of thinking, we can soon make sure the person with 5 houses has much fewer houses, possibly 0? The problem with redistribution is that eventually you run out of other people’s money.
How? By buying a house someone else could have bought and actually lived in, thus increasing the prices for everyone? How does buying and renting a house provide something not already there?
Not everyone is wealthy enough or wants to move into an area and buy a house. Landlords make this possible. They also keep up with all the maintenance that any homeowner is familiar with. Houses are in a constant state of decay.
Except that landlords make a profit. The rent is higher than the mortgage+expenses. The landlord assumes risk of depreciation, but the response to the 2008 financial crisis showed that risk to be minimal.
That extra profit is an incentive for landlords to buy more, which pushes up the price of houses overall, whether being bought to live in, or bought to rent out
> The landlord assumes risk of depreciation, but the response to the 2008 financial crisis showed that risk to be minimal
Then it seems you think risk is overpriced. That fair enough.
But if the whole market of landlords disagrees, the burden is on you to demonstrate otherwise.
> the response to the 2008 financial crisis showed
That's like saying "the fact my house didn't burn down showed that my fire-insurance was worthless". That's not how risk works.
If you disagree, buy a house yourself, and offer it at lower-than-market rental rates. If no one with skin in the game is willing to do that, what can be done? It's not like the lower-end rental market is only affordable to the 1% - There are plenty small-time middle-class landlords.
> By buying a house someone else could have bought
I interpret "others are struggling having roof over their heads" as struggling to make rent, not purchase a house. If you struggle to pay the bills, it might be hard to get a mortgage.
> thus increasing the prices for everyone
The price is higher because someone else is taking on the risk. The alternative is prices are lower, but increasing the risk (and up-front cashflow requirements) for everyone.
> How does buying and renting a house provide something not already there
The house was already there to buy. Now it's there to rent. Again, I'd assume those who struggle the most are looking for rentals.
Depending on when they got the houses and where they are, 5 houses may have cost less than $100k for each of them and may not be taking in that much rent.
That is less than the cost of one house in much of California now.
I sort of sympathize with your viewpoint, but i'm curious why this doesn't extend to other human needs?
- shouldn't we also allow hungry individuals to walk out of grocery stores w/o paying for food and w/o risk of prosecution?
- shouldn't we also allow sick individuals to avoid medical debt collection and medical bankruptcies?
- shouldn't we also allow individuals to not pay tuition?
If i were to take the analogy further, shouldn't struggling businesses also get cloud hosting charges forgiven by government decree? Should public agencies in budget crises stop paying programmers salaries by government decree? Should struggling small startups stop paying software licenses by government decree?
I'm genuinely curious where the one stops and why.
Of course tution should be free, and no one should have medical debt. I'm almost laughing at this being a "gotcha". Same with food and housing, it should be guaranteed by society.
But no, I don't think you should be able to walk out of a grocery with whatever you want. But the difference is a grocery provides a service, it has a function. A landlord is mostly a parasite extracting money but provides little value. if anything landlords just makes it more expensive for everyone to get a roof over their head.
Or that landlords use other indicators as proxy for likeliness to repay, such your race, age, or education level. It's kind of like how "ban the box" initiatives basically made job prospects for people who are stereotyped to be criminals (eg. young black men) worse.
>DOLEAC: So we found that, on average, across the U.S., in places that ban the box, employment fell by 5 percent for young black men who didn’t have a college degree and by 3 percent for young Hispanic men who didn’t have a college degree. And so the next question is, who are they hiring instead? And we found, on average, the people who benefited were older men of color. So if you’re trying to avoid people who are actively involved in crime, older people are a pretty good bet. Criminal activity tends to decline with age.
Sure. The irony is that it won’t really matter because COVID. Landlords are desperate for cash, so they’ll wind up taking anyone with the deposit and first month’s rent - i.e. as the gp described, it will be the great deadbeat shuffle.
That’s like saying you have the right to go after 10x more money than someone can pay off in a year. So you’re going to take 10 years to collect? This is essentially a forced loan.
Really what should have happened is the tenant gets a pause. If there are payments on the building by the landlord, those are paused as well. If it’s a small landlord who say, owns a single house, he gets federal money. This decreases as the size grows, but always enough money must be paid so that the property can be maintained. We don’t want to be creating slums.
If a landlord nulls out the rental debt, that's completely on them. I would be quite wary renting to a person that missed 6-12 months of rent on their previous lease.
These debts are going to be chasing folks for a long time.
Landlords call previous landlords for references. To my knowledge, there is nothing against the law in sharing missed or late rent payment information with a new landlord.
This isn't very common because it's easy for tenants to lie and provide fake references or say they were living with a parent or relative, it's typically a waste of time for the landlord. Most landlords simply rely on official records like credit and background checks, proof of income etc.
The pandemic made the situation a little different than usual. Many people got laid off for no fault of their own last year and couldn't find new work also from no fault of their own, the cities were just shut down for a while.
The US government decided they didn't want these people to just go homeless en masse (at least not in the middle of a pandemic) and thus put the eviction moratorium in place, thus showing that they recognize we were in an extraordinary situation.
Don't know about you, but I can't blame people for choosing not to go homeless when the government explicitly said you don't have to go homeless even if you can't pay your rent. So I wouldn't negatively judge ability to pay rent in this case if I were a landlord.
Granted, I might prefer someone who didn't get behind on payments if I had two otherwise equal applicants, but I wouldn't assume they're just not going to pay rent this time as well.
1. Pause mortgage capital payments, so the landlord only needs to pay the interest - it might help somewhat
2. Or instead of (1), pause mortgage payments altogether (a "payment holiday") so there will be no negative consequences of the landlord not paying the mortgage for this time. For extra points, also freeze the accrual of interest.
3. Pay the landlords some fraction of their lost income, e.g. 50%, so they can afford to pay their mortgage lender, and won't end up getting their property taken by the bank (which would ultimately result in the tenants being evicted)
Only for GSE mortgages, and they just paused payments, didnt eliminate them (unlike rent which is essentially eliminated / uncollectible). Also, property taxes can be substantial and often higher than the mortgage depending on your area, and that wasn't addressed.
Ok but GSE is the government, so it's not like the government isn't helping landlords. And what is actually happening to people with other mortgages? Are landlords failing to meet private loans and getting foreclosed as a result? Or are they getting some relief too?
> and they just paused payments, didnt eliminate them (unlike rent which is essentially eliminated / uncollectible)
I don't buy this complaint (if I understand the situation correctly). The argument was purportedly that you can't make mortgage payments without rental income, but you can't lease your home anymore because it's occupied. But when you get the relief, you don't have to make mortgage payments for that duration at all... not now, not in the future. You only pay for months that you are able to lease your home. i.e. the mortgage payments for those months are eliminated. (Right?) That seems like a much better situation than renters' as far as the mortgage payments go (who legally owe backpay rent and might now end up homeless, landlords's care to follow through notwithstanding), certainly not worse.
> Also, property taxes can be substantial and often higher than the mortgage depending on your area, and that wasn't addressed.
Also not buying this one. The stimulus + unemployment were there for landlords too. For landlords who have half a dozen homes and can't afford all of them together, I'm sure they have plenty of resources at their disposal and wouldn't face eviction or the risk of landing on their streets like many of their tenants.
Schedule shifting means you're NOT paying for these months when you didn't have revenue. You'll be paying for later months... at the same time that you'll have revenue for it. Which is drastically unlike the case for renters, which they'll be obligated to backpay in the near future.
What does this even mean? In the US atleast, mortgages are a fixed set of payments. Usually, it is a total of 360 payments. You dont pay "for specific months" you pay a specific number of payments. Deferment means you still make all 360 payments, just at different times. Without deferment, you make 360 payments. With deferment, you also make 360 payments. In either case, you pay.
Renters backpaying rent is questionable. Once a renter is behind 12 months it is unlikely they will ever catch up. The typical response is the fear of credit blemishes -- except even this fear is gone in places like NYC -- many renters are holding occupancy of the property until all past rent is forgiven, wiping out all past liabilities.
> What does this even mean? In the US atleast, mortgages are a fixed set of payments. Usually, it is a total of 360 payments. You dont pay "for specific months" you pay a specific number of payments. Deferment means you still make all 360 payments, just at different times.
Which is entirely the point, and which is the luxury renters don't have. Say for example you have 1 year of mortgage left ($X), and the pandemic is also going to be over in 1 year. The schedule shift means you will need to pay $0 by a year from now (i.e. when the pandemic & associated reliefs are over). You will simply have to pay $X in 2 years—which you can obtain by evicting your tenant and getting your rental income the second year. By contrast, your tenant will have to pay the entire $X after the moratorium is over in 1 year (not in 2 years). That's terrible in comparison. They don't have the luxury of shifting everything an extra year like a landlord.
> Renters backpaying rent is questionable. Once a renter is behind 12 months it is unlikely they will ever catch up. The typical response is the fear of credit blemishes -- except even this fear is gone in places like NYC -- many renters are holding occupancy of the property until all past rent is forgiven, wiping out all past liabilities.
Well it's up to you as a landlord if you don't want to pursue your tenant for their debts. You could offer a schedule shift if you wanted to, or do whatever else you wanted, if you really wanted to get your money back. If another landlord doesn't want to pursue their tenant, it's up to them. Not up to us to get sad about it.
The value they are providing is mostly that they put in the capital to buy and operate a house, and allow others to use the house with much less hassle, less capital investment and more flexibility
You know what the answer usually is? Property management firms. You know, the ones that have the resources to pursue tenants for back rent in court and efficiently line up evictions.
The government printed $9T to ensure that real estate bets didn't lose money. It worked and now housing is more expensive than ever. Landlords hit the jackpot last year.
This would be equivalent to the government forcing those businesses to stay open and serve customers (renters) who couldn’t pay, while forbidding them from taking other customers who could pay.
> I think the eviction moratorium wasn't thought out very well. You can't just stop evictions while not compensating landlords
Sounds like something that's impossible to administer. How would you prevent widespread fraud - landlord's claiming their tenants aren't paying rent when in fact they are?
The US really doesn't have the bureaucratic infrastructure to handle such matters - or at least couldn't spin one up on short notice.
You're asking them to show proof of a null, which is tricky. For example, a landlord could tell their tenants to make the check out to their spouse, deposit rent checks into their account, then turn around to the government with their usual tenant bank account and say "They're stiffing me on rent!"
The government would still go after the tenant to potentially pay back the money that the gov fronted to the landlord (or a portion of it based on means testing). Then the tenant would have incentive to provide proof to the gov that those checks were written out. And the landlord then gets thrown into federal prison for government fraud.
They could catch you retroactively when you report the rental income. Of course you could simply not report the income and hope you don't get audited but at that point you're now also guilty of tax fraud with the intent to conceal your wire fraud, and tax fraud is the type of thing the IRS can sniff out even years after the fact. There will be no plausible deniability possible since the unreported income will correspond to the defrauded payments, it'll be an open and shut case.
We don't exactly prosecute for fraud very much in this country. Otherwise we would see a lot more business owners going to jail for immigration fraud, tax fraud, and wage theft.
Yes, it's a real hassle to prevent fraud. Just giving everyone the same and without conditions is much simpler, hard to game and fairer. That's why universal basic income is such an attractive solution compared to more traditional safety nets.
How would that relate to landlords? If everyone has UBI, then everyone has more money to compete for the better rental properties. The landlord would have to get their UBI directly, and that might still not be enough.
If everyone has UBI, then people still have some money with which to pay rent (or at least pay a portion of the rent). That makes it much less likely that you need an eviction moratorium, and lessens the impact of having one.
And of course the assumption "if everyone has UBI, then everyone has more money" isn't right, since UBI as "proposed" my comment would replace other safety nets like unemployment benefits. Many people would get basically the same, just with less bureaucratic overhead. And to pay for the rest of UBI you wouldn't just print money but instead raise taxes, so you would expect the money of someone earning median income to not really change at all (depending on the exact tax scheme).
> people still have some money with which to pay rent
And as a result, money will devalue, and rents will go up. So long as UBI recipients are competing with each other over housing, that's how it will work.
> since UBI as "proposed" my comment would replace other safety nets like unemployment benefits.
If UBI is universal, why would unemployment benefits be cut? wouldn't that mean the unemployed get comparatively less?
> to pay for the rest of UBI you wouldn't just print money but instead raise taxes
The problem with this is that tax rates now follow from UBI.
Previously we might say "The tax people pay is X% of income".
Now we pay a fixed sum $Y to everyone and we need to make up for $Y * P ; where P is the size of the population.
that means the average tax payed needs to be $Y per person. This obviously can't be equally distributed (otherwise Y = 0) but now the relative tax rate depends explicitly on population size. You've just moved the goalpost by making income less relevant, and citizenship more relevant; Now every new immigrant making less than average wage, increases the tax rate for everyone making more than average wage. Instead of opposing tax rates, the wealthy will oppose immigration rates.
The benefit of not guaranteeing tax-derived UBI, is that no one has to care who enters the country, b/c it doesn't have any effect on them.
>If everyone has UBI, then everyone has more money to compete for the better rental properties
But people are only competing for rental properties because they need jobs, because cities are where all the jobs are. If getting a job isn't a requirement, they can move to oklahoma or something and get a cheap rental there.
In the short term, UBI—even a proper one that actually provides a bare minimum to live on—isn't likely to make lots of people leave their jobs for long enough to move expecting to live only off UBI. That's more likely to be a long-term process as people gain more bargaining power and the money distribution becomes more equal across the country.
I suppose this depends on whether UBI is supposed to be a form of welfare, adding a buffer against unemployment, and greasing the wheels of the economy; or if it's supposed to be a star-trekkian form of post-scarcity neo-economy.
Assuming the former; I see a big problem in that the desired outcome: "people gain more bargaining power" as unlikely so long as UBI is only a monetary pay-out.
power is relative. Universal anything can't fix that. It's like saying "everyone should be above average". If everyone got more money, money will just become less valuable. The only effect will be to piss off those with mostly monetary assets (who aren't in a position to sell-off before the change), and increase the value of non-monetary investments.
Instead, the focus should first be on the pinch-points, i.e. the scarce assets that money is intended to buy. Government housing projects, for example: leverage the large amounts of capital the government has by buying large lots of land and rapidly developing it. Create a large supply of basic housing w/ amenities, and allow this to apply market pressure naturally.
AFAIK, this is the kind of approach China is taking: large social projects for core infrastructure, high-speed national railways; entire cities built cheaply from scratch in remote areas. The large amount of capital pays off when these cities develop into more desirable locations, and unemployment/poverty is decreased.
Yes, power is relative. But with UBI, people gain power against corporations—because right now, corporations have massive power, and people have very little specifically due to our need to keep working in order to live.
With a genuine will-let-you-survive-indefinitely UBI, corporations lose that leverage over us.
I support a UBI that's paid for by increased taxation on the wealthy. Then it's not actually increasing the money supply, just redistributing it.
I also don't buy the argument that even with a UBI fully funded by printing more money, all the benefit would be eaten up by inflation (though certainly, much more would be than if it were paid for by increased taxation). I don't believe that's how inflation works in practice.
With respect, the original post was only "universal basic income is such an attractive solution compared". You've now added a whole new element: "If getting a job isn't a requirement".
If not needing to live in the big city was the case, then that would indeed change the desirability of various properties across the market. This would be the case, with or without UBI. There's also no guarantee that "Oklahoma or something" would stay cheap if demand went up.
But big cities are desirable in other ways too (lots of common resources), plus UBI isn't necessarily so that people no longer need to work; If people move somewhere with cheap rent, but low business prospects, they'll get stuck in that situation, and a different kind of UBI-dependant poverty class with arise.
To TLDR this: this feels like the "Parable of the broken window" - The mechanics of the economy are too complex (and unintuitive) to be captured in a few speculative anecdotes, especially ones as drastic as "UBI making having a job unnecessary" - this is effectively the economic equivalent of a "toy project" - a toy argument so simple if fails to capture the complicated and significant side-effects that such a proposal with have; Needless to say, the road to hell is paved with good intensions, some of the most drastic socialistic changes have been disastrous.
Some of these landlords also have mortgage on rental property, one of my friend had a rental property, i think he was netting $100 a month. The rest went for mortgage, property tax, maintenance and property management person. He sold it in 2014.
I don't think he could have absorbed 12 month + of non rent payment and pay all those expenses out of his pocket.
They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house. When purchasing a house with the intent of renting it there are rules in place to play by when calculating the risk and return...but when the government completely rewrites the rules on the fly and basically forces you to rent for free for >1 year then its a problem.
Fortunately, the owner also gets to expense the upkeep (that's a 30+% discount on future cashflows) and depreciate the improvements over a 27 year life, meaning that they have a capital loss even if the house appreciates in value.
Oh, and they also got to forego mortgage payments during the pandemic and also potentially write off the less than market rent that they were unable to evict during. (for 30+% off of the missed rent)
No they didn't...they got to put off mortgage payments for a few months, and all of those became due immediately.
Expensing upkeep...writing off rent...you act like thats free money that doesn't come out of their pocket. If you depreciate the improvements, you then have to pay the taxes on it when you sell the place.
Stop acting like it's free money and there is no risk...a significant portion of landlords do not make money month to month and do this for their long term financial health. I think if you had significant money and time tied up in any investment you would be just as pissed as they are if the government changed the rules in the middle of the game.
Then stop acting like the government did this capriciously with no reason. The eviction moratorium was a necessary public health measure.
Now, if you want to say "well, the government should have also enacted a mortgage moratorium, and made the banks the ones who shoulder the financial burden, rather than landlords (whether individual or corporate)," I won't argue with that in the slightest. But given who "the government" was at the time, that would have been an extremely hard sell. (Even now it would be pretty difficult.)
> They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house.
> you then have to pay the taxes on it when you sell the place.
Owners only pay taxes if the gain is greater than the depreciated loss; (and if owner doesn't 1031 exchange it for another property to lose money on) so, the premise that a rented house has lost value shouldn't really intersect with a capital gain.
What's the difference if it's empty? Same loss of revenue. And sure, some maintanence/upkeep for tenants, but given how fast properties rot when vacant, that's probably a wash.
Rent seeking with someone else's money? Yeah, that's risky.
Was it empty though? There is a shortage in housing and it's pretty rare to have an empty rental in this market. You're injecting conditions that don't really exist to make your point.
Oftentimes the landlord covers utilities and lumps that up in to the rent, and I have a place in New England where that is the convention. We pay $500-$600/month for heating oil in the winter. Then we have about $300 in electricity and another $300 for water/sewage.
It sounds like they stretched their own finances to the limit. The government was trying to solve a much larger problem that required indifference to the risks they took, but sometimes that’s what the government has to do. It’s the investors job to cover risk.
“It sounds like they stretched their own finances to the limit. The government was trying to solve a much larger problem that required indifference to the risks they took”
Your second point sort of invalidates the first. You argue that the government isn’t the source of the harm, then justify the government action as a prudent balancing of harms.
I think the point most are making is that they were trying to solve a much larger problem, but didn’t think the problem through particularly well.
> Your second point sort of invalidates the first. You argue that the government isn’t the source of the harm, then justify the government action as a prudent balancing of harms.
No it doesn't. The pandemic caused the harm, the government acted to mitigate the worst effects of it. You seem to be of the opinion that the "worst effects" are the landlords losing out on rent, but the worst effects are millions of people ending up homeless during a pandemic, which is what the government prevented. Even if it was clumsy, I tend to think landlords would have been worse off anyways if there had been mass homelessness and higher body counts. You can't collect rent if your renters are dead or your own head is in a basket.
The government changed the terms of fully executed private contracts. But as risk increases, so follows insurance. So if the government wants to abuse contract law, watch the rent, penalties and security deposits climb to compensate for any future "moratoriums".
The government enacted emergency powers and public health laws they already possessed when those contracts were signed. Where is the abuse?
I'd be personally ok with the government bailing out smaller landlords (just because), but the largest percentage of these defaults are going to affect private equity firms who have bought an outrageous amount of the housing stock. We need to stop socializing risk and privatizing profits, and this would be a good place to start.
The abuse was largely in the duration and indiscriminate scope, regardless of ability to pay or not.
Student loans are cheaper precisely because they cannot be discharged in bankruptcy. Rent is cheaper because of eviction. Now that we've seen the government unilaterally discharge rent through moratorium, you can expect to see that risk profile baked into an increased monthly payment.
The government edict didn't appear in a vacuum, it was a response to a massive crisis affecting the entire country. Ultimately, from a financial perspective, this is no different from any potential crisis that could have caused a downturn in the rental market, and those risk factors are what you take on when you make rental investments.
Seems to me there's a constitutional amendment against that particular unfunded mandate. (Yeah, I know, that was specifically housing soldiers. I'm not sure a court would agree, constitutionally, that the government can force you to house civilians either.)
Considering the current makeup of the Supreme Court, I highly doubt they would fail to make the distinction between soldiers and civilians. Aren't half of them literal constitutionalists?
I don't think you know what the heck you're talking about.
It's not a bad investment to cover the thousands of dollars that are required annually to maintain a house including property tax and insurance for the house simply existing.
And now the government is telling me I can't collect the income they require me to give them.
Then I don't understand. You said you don't make any money from your investment. So it's a bad investment, regardless of COVID, right? What am I missing?
The government is telling you that as a provider of homes to people, you cannot make them homeless during a global pandemic. This seems entirely reasonable and recalibrates the idea that properties are primarily homes, where people live, and not investments.
It would be a really bad business if their rent could only cover interest, taxes, insurance, and maintenance i.e. expected change in equity is 0. If it covers principal as well, then it's merely a risky business as expected change in equity is positive (since the mortgage amortizes), but downside (foreclosure) is huge and likely.
In either case, it might still be a good _investment_ if the value of their equity appreciates - but as the other commenter notes, that's a very risky and inefficient way to get exposure to real estate prices!
It's called risk. You want the outsized returns of being a landlord? Then you take the risk that your tenants won't pay and you will be on the hook. You don't get a free lunch sorry.
The issue with your argument is the government chanced the eviction rules ex post facto.
Yes, the poster is taking the risk that they tenants cannot pay, but they also took that risk with the assumption they could evict them and replace them with a paying tenant.
Then you failed to properly understand the risk associated with being a landlord. State and Federal laws can always change and can affect your landlording accordingly, your failure to account for that doesn't absolve you. I will never shed a tear for landlords and the bootlickers in this thread are really pathetic.
Outsized returns...any idea what returns are for landlords? It only takes a single bad tenant to wipe out years of profit (speaking from experience). There is a difference between having tenants not pay and evicting them in 90 days (actual law)...and having tenants you can't evict and are told they don't need to pay for over a year (government changing law on the fly).
Risk that you know you're getting in to is fair. Risk created by a sudden, unpredictable and unevenly applied (why are landlords the only investors getting the short end of the stick?) act of the government isn't fair.
I'm not saying risk is not present but when the government can destroy a small businesses ability to make money with the snap of a finger like that but the big mortgage companies are still allowed to operate as business as usual and the government is allowed to continue to collect property tax as usual...
You're literally supporting the transfer of wealth to the big corporations from small businesses.
If you don't see something wrong with that then there's not really hope in talking to you.
How was it fair before that someone else paid your mortgage?
Of course, investing in real estate can be considered thrifty, but the gap between those owning and those not is growing bigger every year. It's not sustainable.
You getting down voted for this comment is a perfect encapsulation of what happened: the elites used the pandemic it concentrate wealth and destroy the small and independent business and capital owners, and then turned the lower and non-owner middle classes against these same people.
Gotta give it to the elites: they know how to manipulate things.
It blows my mind how people cannot see this is what has happened. No conspiracy theory needed - the rich and powerful just got a whole lot more rich and powerful by continuing to act like they do while everyone else was placed under effective house arrest.
Your mortgage includes a principal component that is your money. So you’re making money, just not liquid cash. House prices have gone up in the meanwhile. So you might even be ahead, no rents not withstanding.
All prices went up. Imagine a hypothetical where the op sells his property for an increased price, but the purchasing power is the same. Did he really gain? Also consider capital gains taxes in this scenario.
False, there's a certain cost just for a house existing.
Property taxes and insurance.
It's literally thousands of dollars yearly yet adds zero dollars to a properties worth and increases as fast as property values go up as they're indexed to property values.
California population is declining. More people are moving out than moving in. Check the pricing and availability for a one-way U-Haul rental from California to Texas.
On the one hand I see news stories about how jobs are having trouble finding employees. On the other I see people in danger of being evicted. Something doesn't add up here. If there are jobs, why are people avoiding those jobs?
From the article: "Around 15% of adult renters are not current on their housing payments"
I take this as a sign that something is very, very wrong with the economy.
Anytime there are literally millions of people in a country at danger of immediate eviction at the same time, there are probably a lot more problems in the economy than just that.
A moratorium on evictions is a band-aid on a gunshot wound. It simply masks the real problem until the patient collapses.
There are signs of financial bubbles, large unemployment, small businesses closing, even entire industries struggling. This isn't just another boom-bust cycle, but there is something larger at play.
Likely because those jobs don't pay enough to cover life's expenses, which makes them not worth taking. It does cost money to get to a job, particularly in areas where public transportation doesn't exist or isn't adequate (cost of car, insurance, maintenance, fuel, property taxes on car, etc).
>Likely because those jobs don't pay enough to cover life's expenses, which makes them not worth taking.
Suppose you have $2000 of fixed expenses (rent, utilities, bare minimum for food), and $6000 in savings. A job offers you $1500/month, which isn't enough to cover those expenses. Should you not take that job on that basis, even though it would allow you to extend your "runway" from 3 months to 12 months?
That depends on what it costs you—not just in money, but in up-front and daily effort—to take the job. If it would leave you slightly better off financially, but physically and emotionally exhausted and beaten down, that may be worth it to some people but not to others.
>> If there are jobs, why are people avoiding those jobs?
Because a large number of jobs are part-time, dont pay benefits, dont offer healthcare, and the cost of healthcare is greater than the entirety of wages earned -- effectively meaning the job pays negative compared to being on public benefits
> the $45 billion in rental assistance allocated by Congress to address the crisis. That funding is unprecedented: Renters were given just $1.5 billion during the Great Recession
That $1.5 Billion is over a trillion in 2021 dollars. $45 Billion seems like very little in comparison.
Personal anecdote so take this as you will. I've recently been apartment hunting in Minnesota trying to move closer to work. Almost every property owner I've talked to has mentioned evictions and how they'll have apartments free to rent in just over a month. I had never encountered a property owner who openly talked about evicting tenants but in the past week I've encountered three.
That to say I fully believe we are about to see lots of messy evictions in the US.
Mortgage forbearance expiry dates will follow. While tenants might be able to move on after this debacle, I wonder how banks will handle unpaid back mortgage?
Will they simply move the due dates into the future?
A lot of people here are talking about the merits of the eviction moratorium but the most surprising thing to me is that it was created by the CDC. How on earth does the CDC have such power? If any government agency is going to do something like this it seems like it should be the Department of Housing and Urban Development or a similar agency.
IMHO it’s like with any government agency, department, or proclamation: the authority is in the acquiescence of the people. If someone sued and challenged in court, it would be interesting to see who would come out on top. Ultimately a lot of what government has pushed and forced and cajoled everyone through these past 6-12 months is mostly untested overreaches of power. The scary part for me is that once government pushes a boundary, it rarely returns to before. By not fighting back on the mandates and such, the government essentially pushed until the citizenry gave up. Now that claimed land, if you will, is the new normal for government power.
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[ 4.9 ms ] story [ 207 ms ] threadSaw several people advising others that way in the last year. I think it may have been good advice for the individuals involved, but that it was suggests our society has fucked up somewhere.
Where did society go wrong
At this point I'm not sure if it's an issue with the degrees, or mismatched expectations. That is, should a degree be a ticket to a middle-class life, or should we just stop telling young people that it is?
define "useless". College graduates still have better prospects than non-college graduates, on average. Maybe we shouldn't treat all college degrees the same? ie. computer science degree compared to an art degree
STEM is a ticket, for now, and for people who have the disposition. But as outsourcing and automation become more prevalent that will start to be less of an pathway.
As people south of the border took over the trades, we'll see remote workers taking over the tech industry, AI take over driving, etc. Etc.
And that should be fine but the fact is, the gains of this efficiency aren't shared by society, they're only shared by the rich. The rest of society loses their way to the middle class and has to send foot fetish pics to survive.
I think the eviction moratorium wasn't thought out very well. You can't just stop evictions while not compensating landlords, and not developing clear plans for what happens when the moratorium ends. No one is going to catch up on their rent of their behind. What I suspect will largely happen is many landlords will forgo a formal eviction as long as the tenants decide to leave voluntarily. Then those tenants will effectively swap houses with someone else who's behind, wiping the rental debt clean. You only understand this if you've gone through an eviction, but the vast majority of the time the landlord just want you to leave. If you vacate before you actually get to court you can often avoid having the eviction on your record.
That extra profit is an incentive for landlords to buy more, which pushes up the price of houses overall, whether being bought to live in, or bought to rent out
Then it seems you think risk is overpriced. That fair enough.
But if the whole market of landlords disagrees, the burden is on you to demonstrate otherwise.
> the response to the 2008 financial crisis showed
That's like saying "the fact my house didn't burn down showed that my fire-insurance was worthless". That's not how risk works.
If you disagree, buy a house yourself, and offer it at lower-than-market rental rates. If no one with skin in the game is willing to do that, what can be done? It's not like the lower-end rental market is only affordable to the 1% - There are plenty small-time middle-class landlords.
I interpret "others are struggling having roof over their heads" as struggling to make rent, not purchase a house. If you struggle to pay the bills, it might be hard to get a mortgage.
> thus increasing the prices for everyone
The price is higher because someone else is taking on the risk. The alternative is prices are lower, but increasing the risk (and up-front cashflow requirements) for everyone.
> How does buying and renting a house provide something not already there
The house was already there to buy. Now it's there to rent. Again, I'd assume those who struggle the most are looking for rentals.
That is less than the cost of one house in much of California now.
- shouldn't we also allow hungry individuals to walk out of grocery stores w/o paying for food and w/o risk of prosecution?
- shouldn't we also allow sick individuals to avoid medical debt collection and medical bankruptcies?
- shouldn't we also allow individuals to not pay tuition?
If i were to take the analogy further, shouldn't struggling businesses also get cloud hosting charges forgiven by government decree? Should public agencies in budget crises stop paying programmers salaries by government decree? Should struggling small startups stop paying software licenses by government decree?
I'm genuinely curious where the one stops and why.
But no, I don't think you should be able to walk out of a grocery with whatever you want. But the difference is a grocery provides a service, it has a function. A landlord is mostly a parasite extracting money but provides little value. if anything landlords just makes it more expensive for everyone to get a roof over their head.
Won't evictions surface in credit history or background checks?
https://portlandrentalhomes.com/portlands-rental-screening-c...
The ways risk is being distributed in society is a fascinating topic.
https://freakonomics.com/podcast/reemployment-part-1/
>DOLEAC: So we found that, on average, across the U.S., in places that ban the box, employment fell by 5 percent for young black men who didn’t have a college degree and by 3 percent for young Hispanic men who didn’t have a college degree. And so the next question is, who are they hiring instead? And we found, on average, the people who benefited were older men of color. So if you’re trying to avoid people who are actively involved in crime, older people are a pretty good bet. Criminal activity tends to decline with age.
That’s like saying you have the right to go after 10x more money than someone can pay off in a year. So you’re going to take 10 years to collect? This is essentially a forced loan.
Really what should have happened is the tenant gets a pause. If there are payments on the building by the landlord, those are paused as well. If it’s a small landlord who say, owns a single house, he gets federal money. This decreases as the size grows, but always enough money must be paid so that the property can be maintained. We don’t want to be creating slums.
These debts are going to be chasing folks for a long time.
The US government decided they didn't want these people to just go homeless en masse (at least not in the middle of a pandemic) and thus put the eviction moratorium in place, thus showing that they recognize we were in an extraordinary situation.
Don't know about you, but I can't blame people for choosing not to go homeless when the government explicitly said you don't have to go homeless even if you can't pay your rent. So I wouldn't negatively judge ability to pay rent in this case if I were a landlord.
Granted, I might prefer someone who didn't get behind on payments if I had two otherwise equal applicants, but I wouldn't assume they're just not going to pay rent this time as well.
1. Pause mortgage capital payments, so the landlord only needs to pay the interest - it might help somewhat
2. Or instead of (1), pause mortgage payments altogether (a "payment holiday") so there will be no negative consequences of the landlord not paying the mortgage for this time. For extra points, also freeze the accrual of interest.
3. Pay the landlords some fraction of their lost income, e.g. 50%, so they can afford to pay their mortgage lender, and won't end up getting their property taken by the bank (which would ultimately result in the tenants being evicted)
Ok but GSE is the government, so it's not like the government isn't helping landlords. And what is actually happening to people with other mortgages? Are landlords failing to meet private loans and getting foreclosed as a result? Or are they getting some relief too?
> and they just paused payments, didnt eliminate them (unlike rent which is essentially eliminated / uncollectible)
I don't buy this complaint (if I understand the situation correctly). The argument was purportedly that you can't make mortgage payments without rental income, but you can't lease your home anymore because it's occupied. But when you get the relief, you don't have to make mortgage payments for that duration at all... not now, not in the future. You only pay for months that you are able to lease your home. i.e. the mortgage payments for those months are eliminated. (Right?) That seems like a much better situation than renters' as far as the mortgage payments go (who legally owe backpay rent and might now end up homeless, landlords's care to follow through notwithstanding), certainly not worse.
> Also, property taxes can be substantial and often higher than the mortgage depending on your area, and that wasn't addressed.
Also not buying this one. The stimulus + unemployment were there for landlords too. For landlords who have half a dozen homes and can't afford all of them together, I'm sure they have plenty of resources at their disposal and wouldn't face eviction or the risk of landing on their streets like many of their tenants.
Not now, true. But YES in the future. Deferred payments means you still make your payments, but the whole schedule is right-shifted by 12 months.
What does this even mean? In the US atleast, mortgages are a fixed set of payments. Usually, it is a total of 360 payments. You dont pay "for specific months" you pay a specific number of payments. Deferment means you still make all 360 payments, just at different times. Without deferment, you make 360 payments. With deferment, you also make 360 payments. In either case, you pay.
Renters backpaying rent is questionable. Once a renter is behind 12 months it is unlikely they will ever catch up. The typical response is the fear of credit blemishes -- except even this fear is gone in places like NYC -- many renters are holding occupancy of the property until all past rent is forgiven, wiping out all past liabilities.
Which is entirely the point, and which is the luxury renters don't have. Say for example you have 1 year of mortgage left ($X), and the pandemic is also going to be over in 1 year. The schedule shift means you will need to pay $0 by a year from now (i.e. when the pandemic & associated reliefs are over). You will simply have to pay $X in 2 years—which you can obtain by evicting your tenant and getting your rental income the second year. By contrast, your tenant will have to pay the entire $X after the moratorium is over in 1 year (not in 2 years). That's terrible in comparison. They don't have the luxury of shifting everything an extra year like a landlord.
> Renters backpaying rent is questionable. Once a renter is behind 12 months it is unlikely they will ever catch up. The typical response is the fear of credit blemishes -- except even this fear is gone in places like NYC -- many renters are holding occupancy of the property until all past rent is forgiven, wiping out all past liabilities.
Well it's up to you as a landlord if you don't want to pursue your tenant for their debts. You could offer a schedule shift if you wanted to, or do whatever else you wanted, if you really wanted to get your money back. If another landlord doesn't want to pursue their tenant, it's up to them. Not up to us to get sad about it.
Plenty of businesses were forced to close.
To whom?
You know what the answer usually is? Property management firms. You know, the ones that have the resources to pursue tenants for back rent in court and efficiently line up evictions.
Source
Self evident reality.
The government printed $9T to ensure that real estate bets didn't lose money. It worked and now housing is more expensive than ever. Landlords hit the jackpot last year.
Sounds like something that's impossible to administer. How would you prevent widespread fraud - landlord's claiming their tenants aren't paying rent when in fact they are?
The US really doesn't have the bureaucratic infrastructure to handle such matters - or at least couldn't spin one up on short notice.
The government doesn't have perfect information.
And of course the assumption "if everyone has UBI, then everyone has more money" isn't right, since UBI as "proposed" my comment would replace other safety nets like unemployment benefits. Many people would get basically the same, just with less bureaucratic overhead. And to pay for the rest of UBI you wouldn't just print money but instead raise taxes, so you would expect the money of someone earning median income to not really change at all (depending on the exact tax scheme).
And as a result, money will devalue, and rents will go up. So long as UBI recipients are competing with each other over housing, that's how it will work.
> since UBI as "proposed" my comment would replace other safety nets like unemployment benefits.
If UBI is universal, why would unemployment benefits be cut? wouldn't that mean the unemployed get comparatively less?
> to pay for the rest of UBI you wouldn't just print money but instead raise taxes
The problem with this is that tax rates now follow from UBI.
Previously we might say "The tax people pay is X% of income".
Now we pay a fixed sum $Y to everyone and we need to make up for $Y * P ; where P is the size of the population.
that means the average tax payed needs to be $Y per person. This obviously can't be equally distributed (otherwise Y = 0) but now the relative tax rate depends explicitly on population size. You've just moved the goalpost by making income less relevant, and citizenship more relevant; Now every new immigrant making less than average wage, increases the tax rate for everyone making more than average wage. Instead of opposing tax rates, the wealthy will oppose immigration rates.
The benefit of not guaranteeing tax-derived UBI, is that no one has to care who enters the country, b/c it doesn't have any effect on them.
But people are only competing for rental properties because they need jobs, because cities are where all the jobs are. If getting a job isn't a requirement, they can move to oklahoma or something and get a cheap rental there.
Assuming the former; I see a big problem in that the desired outcome: "people gain more bargaining power" as unlikely so long as UBI is only a monetary pay-out.
power is relative. Universal anything can't fix that. It's like saying "everyone should be above average". If everyone got more money, money will just become less valuable. The only effect will be to piss off those with mostly monetary assets (who aren't in a position to sell-off before the change), and increase the value of non-monetary investments.
Instead, the focus should first be on the pinch-points, i.e. the scarce assets that money is intended to buy. Government housing projects, for example: leverage the large amounts of capital the government has by buying large lots of land and rapidly developing it. Create a large supply of basic housing w/ amenities, and allow this to apply market pressure naturally.
AFAIK, this is the kind of approach China is taking: large social projects for core infrastructure, high-speed national railways; entire cities built cheaply from scratch in remote areas. The large amount of capital pays off when these cities develop into more desirable locations, and unemployment/poverty is decreased.
With a genuine will-let-you-survive-indefinitely UBI, corporations lose that leverage over us.
> With a genuine will-let-you-survive-indefinitely
I doubt that, for reasons outlined. Unless you address that, it is your unsubstantiated claim that this is the effect that UBI will have.
I support a UBI that's paid for by increased taxation on the wealthy. Then it's not actually increasing the money supply, just redistributing it.
I also don't buy the argument that even with a UBI fully funded by printing more money, all the benefit would be eaten up by inflation (though certainly, much more would be than if it were paid for by increased taxation). I don't believe that's how inflation works in practice.
If not needing to live in the big city was the case, then that would indeed change the desirability of various properties across the market. This would be the case, with or without UBI. There's also no guarantee that "Oklahoma or something" would stay cheap if demand went up.
But big cities are desirable in other ways too (lots of common resources), plus UBI isn't necessarily so that people no longer need to work; If people move somewhere with cheap rent, but low business prospects, they'll get stuck in that situation, and a different kind of UBI-dependant poverty class with arise.
To TLDR this: this feels like the "Parable of the broken window" - The mechanics of the economy are too complex (and unintuitive) to be captured in a few speculative anecdotes, especially ones as drastic as "UBI making having a job unnecessary" - this is effectively the economic equivalent of a "toy project" - a toy argument so simple if fails to capture the complicated and significant side-effects that such a proposal with have; Needless to say, the road to hell is paved with good intensions, some of the most drastic socialistic changes have been disastrous.
I don't think he could have absorbed 12 month + of non rent payment and pay all those expenses out of his pocket.
If they can't pay the mortgage without a renter paying, they may have the property repossessed by the bank.
Oh, and they also got to forego mortgage payments during the pandemic and also potentially write off the less than market rent that they were unable to evict during. (for 30+% off of the missed rent)
Expensing upkeep...writing off rent...you act like thats free money that doesn't come out of their pocket. If you depreciate the improvements, you then have to pay the taxes on it when you sell the place.
Stop acting like it's free money and there is no risk...a significant portion of landlords do not make money month to month and do this for their long term financial health. I think if you had significant money and time tied up in any investment you would be just as pissed as they are if the government changed the rules in the middle of the game.
Now, if you want to say "well, the government should have also enacted a mortgage moratorium, and made the banks the ones who shoulder the financial burden, rather than landlords (whether individual or corporate)," I won't argue with that in the slightest. But given who "the government" was at the time, that would have been an extremely hard sell. (Even now it would be pretty difficult.)
> They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house.
> you then have to pay the taxes on it when you sell the place.
Owners only pay taxes if the gain is greater than the depreciated loss; (and if owner doesn't 1031 exchange it for another property to lose money on) so, the premise that a rented house has lost value shouldn't really intersect with a capital gain.
Expensing missed rent and eviction costs isn't free money; it does require reserves, but it does help a 1 year impact spread out over many years.
Rent seeking with someone else's money? Yeah, that's risky.
Was it empty though? There is a shortage in housing and it's pretty rare to have an empty rental in this market. You're injecting conditions that don't really exist to make your point.
This point is enough.
If it is empty then someone who is willing to pay can rent it.
These numbers might be off but you get the idea.
That's the difference.
Your second point sort of invalidates the first. You argue that the government isn’t the source of the harm, then justify the government action as a prudent balancing of harms.
I think the point most are making is that they were trying to solve a much larger problem, but didn’t think the problem through particularly well.
No it doesn't. The pandemic caused the harm, the government acted to mitigate the worst effects of it. You seem to be of the opinion that the "worst effects" are the landlords losing out on rent, but the worst effects are millions of people ending up homeless during a pandemic, which is what the government prevented. Even if it was clumsy, I tend to think landlords would have been worse off anyways if there had been mass homelessness and higher body counts. You can't collect rent if your renters are dead or your own head is in a basket.
I'd be personally ok with the government bailing out smaller landlords (just because), but the largest percentage of these defaults are going to affect private equity firms who have bought an outrageous amount of the housing stock. We need to stop socializing risk and privatizing profits, and this would be a good place to start.
Student loans are cheaper precisely because they cannot be discharged in bankruptcy. Rent is cheaper because of eviction. Now that we've seen the government unilaterally discharge rent through moratorium, you can expect to see that risk profile baked into an increased monthly payment.
But the big mortgage companies were allowed to continue to collect mortgages!
And the governments are still allowed to collect property taxes!
I don't make any money from my rental unit it just helps cover property tax insurance and my mortgage.
But I've been shouldering all of that and my tenant has been living for free for over eight months.
How is that remotely fair?
It may not be fair, but it's the definition of a bad investment.
Unless you're housing someone at cost out of the kindness of your own heart, in which case, that's awesome.
It's not a bad investment to cover the thousands of dollars that are required annually to maintain a house including property tax and insurance for the house simply existing.
And now the government is telling me I can't collect the income they require me to give them.
The government is telling you that as a provider of homes to people, you cannot make them homeless during a global pandemic. This seems entirely reasonable and recalibrates the idea that properties are primarily homes, where people live, and not investments.
The government didn't tell the mortgage companies that.
And the govt didn't stop collecting taxes.
Call me crazy but expecting the landlord to care while the govt and mortgage companies don't have to care... thats not fair.
In either case, it might still be a good _investment_ if the value of their equity appreciates - but as the other commenter notes, that's a very risky and inefficient way to get exposure to real estate prices!
The government changed the rules of the game and left landlords with the bill. That’s the problem.
Yes, the poster is taking the risk that they tenants cannot pay, but they also took that risk with the assumption they could evict them and replace them with a paying tenant.
If the government has the power to ban dining there is no longer a free market or a free country.
It's why so many people are moving to Texas. They understand the wisdom of small government.
Lol. Yeah small government like banning abortions for millions of women or removing voting rights from more millions. "Small Government"
>If the government has the power to ban dining there is no longer a free market or a free country.
This is HN, not Parler. Get real.
I'm not saying risk is not present but when the government can destroy a small businesses ability to make money with the snap of a finger like that but the big mortgage companies are still allowed to operate as business as usual and the government is allowed to continue to collect property tax as usual...
You're literally supporting the transfer of wealth to the big corporations from small businesses.
If you don't see something wrong with that then there's not really hope in talking to you.
Of course, investing in real estate can be considered thrifty, but the gap between those owning and those not is growing bigger every year. It's not sustainable.
They forbade evictions - not collecting rent. I don't think most people stopped paying their rent if they were able to.
Gotta give it to the elites: they know how to manipulate things.
That doesn't hurt the rich who have all their funds parked in assets and investments.
That hurts people who deal in cash which is....the non-rich.
The inequality will continue to grow and the ignorant will continue to believe the news media like religion.
Property taxes and insurance.
It's literally thousands of dollars yearly yet adds zero dollars to a properties worth and increases as fast as property values go up as they're indexed to property values.
I take this as a sign that something is very, very wrong with the economy.
Anytime there are literally millions of people in a country at danger of immediate eviction at the same time, there are probably a lot more problems in the economy than just that.
A moratorium on evictions is a band-aid on a gunshot wound. It simply masks the real problem until the patient collapses.
There are signs of financial bubbles, large unemployment, small businesses closing, even entire industries struggling. This isn't just another boom-bust cycle, but there is something larger at play.
Suppose you have $2000 of fixed expenses (rent, utilities, bare minimum for food), and $6000 in savings. A job offers you $1500/month, which isn't enough to cover those expenses. Should you not take that job on that basis, even though it would allow you to extend your "runway" from 3 months to 12 months?
There's more to living than just surviving.
Because a large number of jobs are part-time, dont pay benefits, dont offer healthcare, and the cost of healthcare is greater than the entirety of wages earned -- effectively meaning the job pays negative compared to being on public benefits
That $1.5 Billion is over a trillion in 2021 dollars. $45 Billion seems like very little in comparison.
That to say I fully believe we are about to see lots of messy evictions in the US.
Will they simply move the due dates into the future?