My initial reaction was the same, to call OP a baby, etc. The problem isn’t rent. It’s landlord leeches.
I have an apartment in one country but moved to a different country, where I’m renting myself. I had two choices - either rent my first apartment to someone, or sell it. If I sold it, it would go not to a family in need, but to a BnB company or an “investor” (that’s the reality in my home country).
Instead I’m renting it to a family of Ukrainian refugees. They basically pay off my mortgage so that I’m not actively losing money on the whole thing.
They also pay rent to the housing association. This money goes to things like trash removal, hot/cold water, taking care of the green areas in the neighbourhood, cleaning the staircases, etc., etc.
Instead I’m renting it to a family of Ukrainian refugees.
You are actively exploiting refugees.
You are no different than the BnB or the investors. You are on the supply side of the problem. Rent is, indeed, the problem.
You could offer to sell your property to those tenants. You could act as a private lender, allowing them to pay you instead of a commercial bank. You could offer them a “land contract”, which is a rent-to-own arrangement. If they choose to leave your property in the next three years, it was no different than a rental. If they choose to stay beyond three years, it automatically converts to a private mortgage, and they begin earning equity.
They basically pay off my mortgage so that I’m not actively losing money on the whole thing.
Leaving it vacant and just paying the mortgage yourself, you are gaining equity in exchange for your money. You are not losing anything. Renting, you are gaining that equity without paying for it.
The only way renting isn’t a problem is if the rent is far less than a mortgage payment on the same property.
indeed. i frequently see people confusing cash flow and equity in these conversations. landlords claim if they are cash flow negative they’re ‘losing’ money, completely ignoring the equity they’re gaining.
I also wondered about doing that when I ever get rich. Like buy houses in a coveted neighborhood, rent it out to low and middle income people at social housing rates and then convert the lease to a mortgage after a few years and sell the home below market value to the tenants. But how do you prevent them from selling it to an investor above market rates for profit within a few years. Like sure they have equity now but the home is also lost to an investor who will rent it out at a premium to an expat or tourist.
I actually know a landlord who owns a farm and rents it out, and does so precisely for the reasons you state. They don’t want the land to go to some soulless big company
They charge a pittance in rent, enough to cover insurance and taxes. The farmer would pay about the same if they owned the property.
They got contacted by a company wanting to build a datacenter, and got to say “hell no”.
Yes, absolutely. Easy to turn viable farmland to bullshit data center, almost impossible to do the former. The datacenter boom causes us to act against our collective interests.
Cities would rather pollute a new parcel of land than fix the contamined ones.
There is a city nearby that has an abandoned industrial district and they plan on building a new industrial district instead of razing the old one and decontaminate it.
And shocker, they want to make the new district on farm land.
Many options available. At the “ownership” level, you can establish deed restrictions and covenants requiring owner-occupancy. At the local level, you can establish zoning requirements. At the tax assessment level, you can enact punitively-high tax rates that are exempted for owner-occupants. If anyone tries renting these properties, they will face the full tax rate; these properties can only be feasibly owned by people who will occupy them.
What about cases where the move is only temporary? Should people sell every time and hope there is a place to live when they return?
In the private lender case, do you see that as different from someone who starts their own company and manages the property themselves while the renter pays them directly?
The earning equity piece isn’t necessarily incorrect, what the owner is losing is potentially the opportunity to move at all. This assumes they can afford a mortgage + whatever it costs to live somewhere else.
What about cases where the move is only temporary?
In their initial phase, land contracts are, effectively, a rental agreement, including for short-term. (With one difference: the payment is fixed for the life of the agreement; it doesn’t increase year over year) When “temporary” turns into “long term”, (as it so often does) a land contract already has you covered, by locking rent through the initial phase, then gaining you equity through the final phase.
In the private lender case, do you see that as different from someone who starts their own company and manages the property themselves while the renter pays them directly?
Vastly. One includes conveyance of equity; the other does not.
The landlord/property manager retains 100% equity throughout the life of the rental agreement. The private lender retains only the value of the loan. With a land contract, the seller/lender retains 100% of the equity for a couple years, before the agreement automatically converts to a private mortgage.
The earning equity piece isn’t necessarily incorrect, what the owner is losing is potentially the opportunity to move at all.
Completely false. Absolute worse case scenario, they abandon their equity and return title to the lender/seller. Terminating the loan/purchase agreement in this absolute worse case scenario is functionally identical to renting. At its best, renting gives you this outcome, and creates new, worst-case possibilities: where the landlord absconds with security deposits and charges additional fees.
Good on you for not knowing shit but still making assumptions.
Right, because if not for the horrible me, they’d be able to rent for significantly more in the area.
Like, they’re not “we have nothing but the clothes on our backs” refugees, they’re a family that got a kid coming and needed something relatively good-standard, and pay for it thanks to the husband’s IT job.
You are on the supply side of the problem. Rent is, indeed, the problem.
“I’m 12 and this is deep”.
You could offer to sell your property to those tenants
Why would they buy a property in my country? They want to go back to their own country. WTF are you talking about?
You could offer them a “land contract”, which is a rent-to-own arrangement
Again, they don’t want to own an apartment in a foreign country.
[all the mortgage stuff]
Sure. I could bear the costs for the high and mighty idea.
Sadly, I can’t afford that.
The only options for me would be to:
Sell the apartment to someone who would start charging twice than what I am.
Completely upend my life and go back to my home country to live in that apartment, I guess.
A house gets inherited. The person receiving the house has a child who wants to live there, but the child is about 5 years away from moving out. So they want to rent the house out rather than trying to leave it unoccupied. The tenant knows up front it is a limited time arrangement.
Note this is an unusual circumstance, but there are folks who find themselves in need of temporary housing and people who have an upcoming need, but not current need for a property.
In his case, if he had said he was renting for an overseas assignment but was going to move back, then I would have thought it was a slam dunk. I suppose if the refugees had explicitly stated they wanted to move back home in a couple of years, similar situation.
Let’s start from the beginning: a mortgage is a neutral agreement. Effectively, the lender conveys equity to the borrower over time. Equity is the right to permanent, unlimited use of the property.
A rental agreement conveys no equity. What the tenant gains is a short-term, limited use of the property. “Temporary” is considerably less valuable than “permanent”, so a fair value for “rent” is considerably less than a fair value for a mortgage.
Rent prices don’t reflect this. Even after including a maintenance expense, (that the owner would have to pay regardless of who is living in the property), fair rent for that temporary privilege is still far less than the mortgage for the permanent right.
And yet, the market has been manipulated to the point that rent prices are well above mortgages. In a fair market, people seeking housing would generally choose the better option. If a mortgage is cheaper than rent, they would choose a mortgage. The laws of supply and demand would react to this choice by increasing the price of a mortgage, and decreasing the price of rent.
Since this isn’t happening, we know that the market is being manipulated, and tenants are being exploited. “Fair rent” does not exist: tenants are paying far more than the cost of a mortgage, yet they are not receiving the value of a mortgage.
That is even less helpful than renting it out.
You would have a point if “fair rent” existed, but it does not. In the absence of “fair rent”, we are left with the perverse position that a vacant home does, indeed, cause less harm than a rented home.
A house gets inherited.
The full context of that scenario includes the manipulated market. The scenario you present is only reasonable in a fair market.
In his case, if he had said he was renting for an overseas assignment but was going to move back
Same thing: the scenario for renting is only reasonable in a fair market, but the underlying context of your scenario is the manipulated market where the value of a temporary privilege is modeled greater than the value of a permanent right.
So this is even in the USA over here not seemingly universal. Hitting up some detached housing in Zillow in my area, even with 20% upfront, mortgaging 80% over 30 years, the minimum property tax+mortgage+insurance on a house that might be $3,000 based on the sales price of other houses in the neighborhood in the past year, the typical rent is about $2300… So absolutely someone renting out a mortgaged property in this area is paying for that equity while the renter can come in with a modest deposit and get maintenance taken care of at a much lower rate than even a 30 year mortgage. At least the rental market here seems to be aggressively competing with 30 year mortgage payments with 20% down sort of picture…
(that the owner would have to pay regardless of who is living in the property)
Property doesn’t get damaged through use if nobody lives there, what are you talking about?
yet they are not receiving the value of a mortgage.
You’re looking at this from the perspective of someone just looking at a spreadsheet.
Sure, you’re technically correct - money-wise, they are not getting anything in exchange for them renting the apartment.
What you’re seemingly blind to is the utility. They don’t have the money for a purchase, they don’t have the ability take mortgage themselves, most importantly - they don’t want to own property in a foreign country, but due to the geopolitical situation and due to the employment status of the husband, the family wants to temporarily live in my home country.
Sure, there should be cheap rental opportunities, but both the rental market and the mortgages are fucked where I come from. I’ll be 80 by the time I’m done paying off the apartment, and thank god I was able to purchase it before getting married, because that has lowered my credit score to the point where I wouldn’t be able to purchase at all.
So, I have two options here - sell (to an investment company or a hoarder, because practically nobody else can afford apartments in that area of that city at this moment), or rent way below the average for the area, but still above my mortgage - because I can’t afford to pay that on top of being the breadwinner for my family.
I’m renting it to a family of Ukrainian refugees. They basically pay off my mortgage
Holy fuck, my sides. How can you be this BLIND to reality? You fucking said yourself that you have A FAMILY OF WAR REFUGEES PAYING OFF YOUR MORTGAGE. In 30 years time, you’ll own a house and those refugees will own what exactly?
For reference, when the war broke out I was a tenant in Germany. You know what I did? I HOUSED a Ukrainian refugee in MY OWN DAMN HOME for NO COST, because I’m not a piece of shit
In 30 years time, you’ll own a house and those refugees will own what exactly?
Hopefully a home in Ukraine, where they want to go back to?
Like, what do you expect them to do? Run away from their home and BUY a house in a foreign country? What exactly was your point?
You know what I did? I HOUSED a Ukrainian refugee in MY OWN DAMN HOME for NO COST, because I’m not a piece of shit
Good for you! I did the same. 9 people in total lived in my apartment made for 3-4. I slept on 90cm cot with my wife, so that they could use the bedroom bed to sleep with their little children.
if I sold it, it would go not to a family in need, but to a BnB company or an “investor”
You know you can choose who to sell it to, you can reject offers from investors. The family in need may not get you the highest price but reducing the price makes housing more affordable, at the expense of your bottom line though.
Sure the family could’ve tricked you and sold it right back to an investor but with closing costs, fees etc. it would make it hard to make a profit by doing that.
You know you can choose who to sell it to, you can reject offers from investors
Not how it works in my home country. There were even cases of people selling to families, and then those families immediately selling to investment firms, because they were just plants.
That’s one issue. The second issue is that most actual families can’t afford apartments at all. Sure, I could sell way below market value, but I’m not well off enough to do it for the cause, I wouldn’t be able to afford the leftover mortgage.
The economists’ answer is that renting exists for the people in this situation. You may be moving to another country for a year or two. Are you going to buy a new house every time you move? Renting gives flexibility in that regard.
Likewise for refugees, putting them up in a rental is a more efficient solution than building new housing for each family.
That said, the model provides an inherently exploitative market and needs some kind of overlay to function efficiently, which in most US cities it doesn’t at all.
While you are undoubtedly better than what I’m about to say… I still wouldn’t say you’re a good guy in this instance.
But, the real massive issue I see here is that big companies and rich douchebags use owning land and housing solely for profit.
THAT should be illegal.
Renting out property between individuals should pe perfectly legal though, as long as some now-inexistent laws are followed, like not being able to hoard housing for rent money.
Renting solely for profit should be illegal.
Renting just to be able to keep a property that you may need in the future should be legal.
Renting out property between individuals should pe perfectly legal though, as long as some now-inexistent laws are followed, like not being able to hoard housing for rent money.
I still wouldn’t say you’re a good guy in this instance.
I have two options: either sell (to an investor/hoarder) or rent. In the latter case, I can’t afford being both the breadwinner for my family and the mortgage for the prior apartment.
What would you suggest I should do in this situation to “be the good guy”?
But, the real massive issue I see here is that big companies and rich douchebags use owning land and housing solely for profit. THAT should be illegal (…)
Well, selling to someone who needs it would be best in my book but yea… You staying the owner is a billion times better than some company or land developer buying it… You’re right, no hard feelings
I said him owning it is better than a laege company owning it
I mean isn’t that better??? You can reason with a guy, given that he’s reasonable, but you have no chance with a company. And his price is probably lower than that of a company looking to maximise profits with constant market data available to them
I said him owning it is better than a laege company owning it
And I asked you why, at which point you claimed you didn’t say that.
You can reason with a guy, given that he’s reasonable, but you have no chance with a company.
I see no reason to think you have any better chance reasoning with this guy.
And his price is probably lower than that of a company
I see zero reason to believe he’s renting for below market rate. Individual owners don’t general charge lower rent than companies, so your assertion that he “probably” does is completely baseless.
My initial reaction was the same, to call OP a baby, etc. The problem isn’t rent. It’s landlord leeches.
I have an apartment in one country but moved to a different country, where I’m renting myself. I had two choices - either rent my first apartment to someone, or sell it. If I sold it, it would go not to a family in need, but to a BnB company or an “investor” (that’s the reality in my home country).
Instead I’m renting it to a family of Ukrainian refugees. They basically pay off my mortgage so that I’m not actively losing money on the whole thing.
They also pay rent to the housing association. This money goes to things like trash removal, hot/cold water, taking care of the green areas in the neighbourhood, cleaning the staircases, etc., etc.
Is this so bad and horrible?
Yes.
You are actively exploiting refugees.
You are no different than the BnB or the investors. You are on the supply side of the problem. Rent is, indeed, the problem.
You could offer to sell your property to those tenants. You could act as a private lender, allowing them to pay you instead of a commercial bank. You could offer them a “land contract”, which is a rent-to-own arrangement. If they choose to leave your property in the next three years, it was no different than a rental. If they choose to stay beyond three years, it automatically converts to a private mortgage, and they begin earning equity.
Leaving it vacant and just paying the mortgage yourself, you are gaining equity in exchange for your money. You are not losing anything. Renting, you are gaining that equity without paying for it.
The only way renting isn’t a problem is if the rent is far less than a mortgage payment on the same property.
indeed. i frequently see people confusing cash flow and equity in these conversations. landlords claim if they are cash flow negative they’re ‘losing’ money, completely ignoring the equity they’re gaining.
What do you call the thing where you can’t afford to support your family abroad because you need to pay the mortgage?
I also wondered about doing that when I ever get rich. Like buy houses in a coveted neighborhood, rent it out to low and middle income people at social housing rates and then convert the lease to a mortgage after a few years and sell the home below market value to the tenants. But how do you prevent them from selling it to an investor above market rates for profit within a few years. Like sure they have equity now but the home is also lost to an investor who will rent it out at a premium to an expat or tourist.
I actually know a landlord who owns a farm and rents it out, and does so precisely for the reasons you state. They don’t want the land to go to some soulless big company
They charge a pittance in rent, enough to cover insurance and taxes. The farmer would pay about the same if they owned the property.
They got contacted by a company wanting to build a datacenter, and got to say “hell no”.
This is mental that we sell arable land to build expensive, low quality condos or big buildings like a data center.
Yes, absolutely. Easy to turn viable farmland to bullshit data center, almost impossible to do the former. The datacenter boom causes us to act against our collective interests.
Cities would rather pollute a new parcel of land than fix the contamined ones.
There is a city nearby that has an abandoned industrial district and they plan on building a new industrial district instead of razing the old one and decontaminate it.
And shocker, they want to make the new district on farm land.
Many options available. At the “ownership” level, you can establish deed restrictions and covenants requiring owner-occupancy. At the local level, you can establish zoning requirements. At the tax assessment level, you can enact punitively-high tax rates that are exempted for owner-occupants. If anyone tries renting these properties, they will face the full tax rate; these properties can only be feasibly owned by people who will occupy them.
What about cases where the move is only temporary? Should people sell every time and hope there is a place to live when they return?
In the private lender case, do you see that as different from someone who starts their own company and manages the property themselves while the renter pays them directly?
The earning equity piece isn’t necessarily incorrect, what the owner is losing is potentially the opportunity to move at all. This assumes they can afford a mortgage + whatever it costs to live somewhere else.
In their initial phase, land contracts are, effectively, a rental agreement, including for short-term. (With one difference: the payment is fixed for the life of the agreement; it doesn’t increase year over year) When “temporary” turns into “long term”, (as it so often does) a land contract already has you covered, by locking rent through the initial phase, then gaining you equity through the final phase.
Vastly. One includes conveyance of equity; the other does not.
The landlord/property manager retains 100% equity throughout the life of the rental agreement. The private lender retains only the value of the loan. With a land contract, the seller/lender retains 100% of the equity for a couple years, before the agreement automatically converts to a private mortgage.
Completely false. Absolute worse case scenario, they abandon their equity and return title to the lender/seller. Terminating the loan/purchase agreement in this absolute worse case scenario is functionally identical to renting. At its best, renting gives you this outcome, and creates new, worst-case possibilities: where the landlord absconds with security deposits and charges additional fees.
I have to ask: in which country do things work like that? Because definitely not in mine.
Good on you for not knowing shit but still making assumptions.
Right, because if not for the horrible me, they’d be able to rent for significantly more in the area.
Like, they’re not “we have nothing but the clothes on our backs” refugees, they’re a family that got a kid coming and needed something relatively good-standard, and pay for it thanks to the husband’s IT job.
“I’m 12 and this is deep”.
Why would they buy a property in my country? They want to go back to their own country. WTF are you talking about?
Again, they don’t want to own an apartment in a foreign country.
Sure. I could bear the costs for the high and mighty idea.
Sadly, I can’t afford that.
The only options for me would be to:
What would you have done in my shoes?
I’ll give you another scenario.
A house gets inherited. The person receiving the house has a child who wants to live there, but the child is about 5 years away from moving out. So they want to rent the house out rather than trying to leave it unoccupied. The tenant knows up front it is a limited time arrangement.
Note this is an unusual circumstance, but there are folks who find themselves in need of temporary housing and people who have an upcoming need, but not current need for a property.
In his case, if he had said he was renting for an overseas assignment but was going to move back, then I would have thought it was a slam dunk. I suppose if the refugees had explicitly stated they wanted to move back home in a couple of years, similar situation.
That is even less helpful than renting it out.
Let’s start from the beginning: a mortgage is a neutral agreement. Effectively, the lender conveys equity to the borrower over time. Equity is the right to permanent, unlimited use of the property.
A rental agreement conveys no equity. What the tenant gains is a short-term, limited use of the property. “Temporary” is considerably less valuable than “permanent”, so a fair value for “rent” is considerably less than a fair value for a mortgage.
Rent prices don’t reflect this. Even after including a maintenance expense, (that the owner would have to pay regardless of who is living in the property), fair rent for that temporary privilege is still far less than the mortgage for the permanent right.
And yet, the market has been manipulated to the point that rent prices are well above mortgages. In a fair market, people seeking housing would generally choose the better option. If a mortgage is cheaper than rent, they would choose a mortgage. The laws of supply and demand would react to this choice by increasing the price of a mortgage, and decreasing the price of rent.
Since this isn’t happening, we know that the market is being manipulated, and tenants are being exploited. “Fair rent” does not exist: tenants are paying far more than the cost of a mortgage, yet they are not receiving the value of a mortgage.
You would have a point if “fair rent” existed, but it does not. In the absence of “fair rent”, we are left with the perverse position that a vacant home does, indeed, cause less harm than a rented home.
The full context of that scenario includes the manipulated market. The scenario you present is only reasonable in a fair market.
Same thing: the scenario for renting is only reasonable in a fair market, but the underlying context of your scenario is the manipulated market where the value of a temporary privilege is modeled greater than the value of a permanent right.
So this is even in the USA over here not seemingly universal. Hitting up some detached housing in Zillow in my area, even with 20% upfront, mortgaging 80% over 30 years, the minimum property tax+mortgage+insurance on a house that might be $3,000 based on the sales price of other houses in the neighborhood in the past year, the typical rent is about $2300… So absolutely someone renting out a mortgaged property in this area is paying for that equity while the renter can come in with a modest deposit and get maintenance taken care of at a much lower rate than even a 30 year mortgage. At least the rental market here seems to be aggressively competing with 30 year mortgage payments with 20% down sort of picture…
Property doesn’t get damaged through use if nobody lives there, what are you talking about?
You’re looking at this from the perspective of someone just looking at a spreadsheet.
Sure, you’re technically correct - money-wise, they are not getting anything in exchange for them renting the apartment.
What you’re seemingly blind to is the utility. They don’t have the money for a purchase, they don’t have the ability take mortgage themselves, most importantly - they don’t want to own property in a foreign country, but due to the geopolitical situation and due to the employment status of the husband, the family wants to temporarily live in my home country.
Sure, there should be cheap rental opportunities, but both the rental market and the mortgages are fucked where I come from. I’ll be 80 by the time I’m done paying off the apartment, and thank god I was able to purchase it before getting married, because that has lowered my credit score to the point where I wouldn’t be able to purchase at all.
So, I have two options here - sell (to an investment company or a hoarder, because practically nobody else can afford apartments in that area of that city at this moment), or rent way below the average for the area, but still above my mortgage - because I can’t afford to pay that on top of being the breadwinner for my family.
Holy fuck, my sides. How can you be this BLIND to reality? You fucking said yourself that you have A FAMILY OF WAR REFUGEES PAYING OFF YOUR MORTGAGE. In 30 years time, you’ll own a house and those refugees will own what exactly?
For reference, when the war broke out I was a tenant in Germany. You know what I did? I HOUSED a Ukrainian refugee in MY OWN DAMN HOME for NO COST, because I’m not a piece of shit
Hopefully a home in Ukraine, where they want to go back to?
Like, what do you expect them to do? Run away from their home and BUY a house in a foreign country? What exactly was your point?
Good for you! I did the same. 9 people in total lived in my apartment made for 3-4. I slept on 90cm cot with my wife, so that they could use the bedroom bed to sleep with their little children.
What was your point again?
And how exactly will they purchase a home in Ukraine if they’re spending their income to pay your mortgage?
It might surprise you, but:
You know you can choose who to sell it to, you can reject offers from investors. The family in need may not get you the highest price but reducing the price makes housing more affordable, at the expense of your bottom line though.
Sure the family could’ve tricked you and sold it right back to an investor but with closing costs, fees etc. it would make it hard to make a profit by doing that.
Not how it works in my home country. There were even cases of people selling to families, and then those families immediately selling to investment firms, because they were just plants.
That’s one issue. The second issue is that most actual families can’t afford apartments at all. Sure, I could sell way below market value, but I’m not well off enough to do it for the cause, I wouldn’t be able to afford the leftover mortgage.
The economists’ answer is that renting exists for the people in this situation. You may be moving to another country for a year or two. Are you going to buy a new house every time you move? Renting gives flexibility in that regard.
Likewise for refugees, putting them up in a rental is a more efficient solution than building new housing for each family.
That said, the model provides an inherently exploitative market and needs some kind of overlay to function efficiently, which in most US cities it doesn’t at all.
“But if I wasn’t a parasite someone else would be so that makes me good”
Said the nazi taking over the Jewish bakery. Said the zionist taking the Palestinian home.
How generous of you!
deleted by creator
While you are undoubtedly better than what I’m about to say… I still wouldn’t say you’re a good guy in this instance.
But, the real massive issue I see here is that big companies and rich douchebags use owning land and housing solely for profit. THAT should be illegal.
Renting out property between individuals should pe perfectly legal though, as long as some now-inexistent laws are followed, like not being able to hoard housing for rent money.
Renting solely for profit should be illegal.
Renting just to be able to keep a property that you may need in the future should be legal.
Vampires are legal they just can’t bottle it
I have two options: either sell (to an investor/hoarder) or rent. In the latter case, I can’t afford being both the breadwinner for my family and the mortgage for the prior apartment.
What would you suggest I should do in this situation to “be the good guy”?
100% agree with this and the rest.
Well, selling to someone who needs it would be best in my book but yea… You staying the owner is a billion times better than some company or land developer buying it… You’re right, no hard feelings
Why is that better? A parasite owns it either way.
What? I said
As in someone that needs it to live in it
Why lie?
Huh? I don’t follow
I said him owning it is better than a laege company owning it
I mean isn’t that better??? You can reason with a guy, given that he’s reasonable, but you have no chance with a company. And his price is probably lower than that of a company looking to maximise profits with constant market data available to them
And I asked you why, at which point you claimed you didn’t say that.
I see no reason to think you have any better chance reasoning with this guy.
I see zero reason to believe he’s renting for below market rate. Individual owners don’t general charge lower rent than companies, so your assertion that he “probably” does is completely baseless.