this post was submitted on 22 Apr 2024
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A Boring Dystopia
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I am a landlord and also have a full time job. I also spend my time fixing my units.
With the maintenance cost and taxes, I'm actually losing money or breaking even depending on the year.
My tenants are living in a house that they wouldn't be able to afford on their own in today's market. Being able to live near their work.
So why am I the bad guy?
Literally the hottest real estate market in history, after we just came out of the lowest interest rate market in history, and my man up here still can't even break even on a residence he is renting out to someone else out of the pure kindness of heart.
Maybe you are the rare, golden One Good Landlord, or maybe you're just some asshole on the internet posting utter bullshit. Who can say?
But I've never met any landlord like you IRL. Hell, I've never actually met a landlord who owned the property I rented. They always went through property management companies that do all the work for the owner and just forwarded on a chunk of my rental payment at the end of every month.
Dude he's losing money year on year and capital gains carry it through to make it profitable longer term. The problems isn't "landlords make a profit", the problem is "speculative investors are removing housing stock driving up costs".
Through that lense this guy is no saint.
In this particular highly-niche scenario, he's got housing stock that he's letting at-cost to people who would otherwise be somewhere else in the housing market. So its a push.
The "speculative investors removing housing stock to drive up costs" folks tend to be corporately owned and industry coordinated properties that deliberately keep units open above the clearing rate, in hopes of driving up the prevailing cost of new housing.
He's not saint. He's just a guy who is giving close personal friends a place to live at-cost. Which would be fine, if this kind of service was available to everyone. Its just that he doesn't have enough friends or enough units to clear the national backlog.
This is dependant on the market (the post didn't say where they are), but I understand is true in the US.
In Australia, the speculation is driven by individuals who get incredible tax incentives if their income is above a certain level. Because of this, the housing market is distorted to the point where housing values are detached from rent potential, with all the value being driven by capital gains and tax offsets. This further leads to a situation where it's often more economically viable to leave a house empty (and therefore not have to maintain the property or deal with tenants) while the value grows and the tax is written down.
Functionally what happened in East Asia, with "Investment Property" glut leading to the Evergrande bankruptcy, the current Seoul real estate bubble, and the 1990s Chiyoda-ku bubble which valued downtown Tokyo at a higher price than the entire nation of Canada.
Housing reform has been on the menu across the Pacific Rim for decades, thanks to the bid-price of land wildly outpacing its utility value.