Should Single Family Home Rentals be Legal?

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dockinGA
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Re: Should Single Family Home Rentals be Legal?

Post by dockinGA » Sun Jun 06, 2021 5:39 am

tomfoolery wrote:
Sun Jun 06, 2021 2:08 am
5 years ago I would have said of course it should be legal for someone to be a landlord of a single family home. Now, I question that.

There’s a shortage of single family homes, which is pretty evident.

Institutional buyers have been scooping them up to rent our for the last decade.

Air BNB has scooped up some inventory to turn into unlicensed hotels.

The fewer homeowners in houses, the less skin people have in the game for their communities. All else equal a city with 100% resident-owned houses will be taken better care of then one with 100% landlords renting single family houses out to vacationers for a few nights or to long term tenants who can’t afford a house.

People don’t rent because they want to rent, they rent because they can’t afford to buy. And the “landlords” of single family housing are hoovering up all inventory, becoming an oligopoly that is raising prices, pushing more people on the margin away from ever being able to afford a house, and making them lifelong renters. Which increases profits for the landlords even more.

The more money the “landlords” throw into single family housing, the more profits they make because the more they can raise rents because the less opportunity for competition exists.

So they go into a historically low cost of living area in 2010 to 2019, like Vegas or Phoenix, buy every low end property possible to rent out, wait for price appreciation, either because some local residents who were renting have finally saved up enough to buy even at the higher rates the landlords are asking if they were to sell. And then the landlords do a 2:1, where they can flip the house for double, and use the money to buy two new houses in whatever low cost of living area still exists like Omaha or Indianapolis. Now they can buy up double rhe number of houses they did initially, taking inventory away from potential resident homebuyers.

And in 5 to 10 years they’ll have doubled the price of those houses simply by sucking up all inventory In those markets, they’ll sell, and buy 2:1 in a new cost of living city like rural Kansas or something. Now they own 4x as many houses as when they started in Vegas and Phoenix.

And while they wait 5 to 10 years for the prices to double, they are collecting rents that cashflow positively.

Meanwhile they pay zero income tax on this venture because when they sell the houses at 2x profits there’s no tax if they 1031 exchange into more houses in a cheaper city. And if they want money to pay themselves or buy more houses, they can cash out re-fi which is a tax free way to get money.

Seems like our system is designed to make the rich richer and the poor poorer and destroy anyone’s incentive to maintain a clean, friendly, or safe community, since when you own nothing, you don’t care about what happens in the community. Which is why poor poverty areas of town look like crap with litter and broken glass and loud music, and the rich part of town is clean, quiet and safe. The rich people have skin in the game. The poor people might as well throw trash on the sidewalk, they don’t own any of it anyway.
The highlighted statement is just plain wrong. There are plenty of people who just want to rent. Homeownership isn't always what it's made out to be. Anyone who isn't sure that they will be staying in their current home for many years and is not in a financial position to make extra principal payments is most likely better off renting.
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jalanlong
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Re: Should Single Family Home Rentals be Legal?

Post by jalanlong » Sun Jun 06, 2021 9:27 am

dockinGA wrote:
Sun Jun 06, 2021 5:39 am
tomfoolery wrote:
Sun Jun 06, 2021 2:08 am
5 years ago I would have said of course it should be legal for someone to be a landlord of a single family home. Now, I question that.

There’s a shortage of single family homes, which is pretty evident.

Institutional buyers have been scooping them up to rent our for the last decade.

Air BNB has scooped up some inventory to turn into unlicensed hotels.

The fewer homeowners in houses, the less skin people have in the game for their communities. All else equal a city with 100% resident-owned houses will be taken better care of then one with 100% landlords renting single family houses out to vacationers for a few nights or to long term tenants who can’t afford a house.

People don’t rent because they want to rent, they rent because they can’t afford to buy. And the “landlords” of single family housing are hoovering up all inventory, becoming an oligopoly that is raising prices, pushing more people on the margin away from ever being able to afford a house, and making them lifelong renters. Which increases profits for the landlords even more.

The more money the “landlords” throw into single family housing, the more profits they make because the more they can raise rents because the less opportunity for competition exists.

So they go into a historically low cost of living area in 2010 to 2019, like Vegas or Phoenix, buy every low end property possible to rent out, wait for price appreciation, either because some local residents who were renting have finally saved up enough to buy even at the higher rates the landlords are asking if they were to sell. And then the landlords do a 2:1, where they can flip the house for double, and use the money to buy two new houses in whatever low cost of living area still exists like Omaha or Indianapolis. Now they can buy up double rhe number of houses they did initially, taking inventory away from potential resident homebuyers.

And in 5 to 10 years they’ll have doubled the price of those houses simply by sucking up all inventory In those markets, they’ll sell, and buy 2:1 in a new cost of living city like rural Kansas or something. Now they own 4x as many houses as when they started in Vegas and Phoenix.

And while they wait 5 to 10 years for the prices to double, they are collecting rents that cashflow positively.

Meanwhile they pay zero income tax on this venture because when they sell the houses at 2x profits there’s no tax if they 1031 exchange into more houses in a cheaper city. And if they want money to pay themselves or buy more houses, they can cash out re-fi which is a tax free way to get money.

Seems like our system is designed to make the rich richer and the poor poorer and destroy anyone’s incentive to maintain a clean, friendly, or safe community, since when you own nothing, you don’t care about what happens in the community. Which is why poor poverty areas of town look like crap with litter and broken glass and loud music, and the rich part of town is clean, quiet and safe. The rich people have skin in the game. The poor people might as well throw trash on the sidewalk, they don’t own any of it anyway.
The highlighted statement is just plain wrong. There are plenty of people who just want to rent. Homeownership isn't always what it's made out to be. Anyone who isn't sure that they will be staying in their current home for many years and is not in a financial position to make extra principal payments is most likely better off renting.
You beat me to it. I rent a house in suburban Dallas. I could easily afford to buy one but I don’t want to. Firstly because I feel that the benefits of home ownership are a bit of a myth. After I pay taxes, insurance and upkeep on the property plus commissions and fees to buy and sell, I am not sure I have made as much profit as I would have just renting and investing the difference. One new Central AC unit can really put a hole in your budget. I will let a landlord take that risk.

Plus I know this is not the place I will be retiring to in 7-10 years. I don’t want to have to worry about whether the housing market here is up or down when I decide to leave.
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I Shrugged
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Re: Should Single Family Home Rentals be Legal?

Post by I Shrugged » Sun Jun 06, 2021 5:30 pm

Tom I think you are too focused on financial optimization of your life. There is a point of diminishing or even negative returns in terms of the amount of financial focus. Houses are expensive. Spouses are expensive. Kids are expensive. Super early retirement is super expensive. And then what?
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Re: Should Single Family Home Rentals be Legal?

Post by pp4me » Sun Jun 06, 2021 6:20 pm

I Shrugged wrote:
Sun Jun 06, 2021 5:30 pm
Tom I think you are too focused on financial optimization of your life.
How can anyone possibly tell what Tomfoolery is focused on?
jswinner
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Re: Should Single Family Home Rentals be Legal?

Post by jswinner » Sun Jun 06, 2021 8:15 pm

pp4me wrote:
Sun Jun 06, 2021 6:20 pm
I Shrugged wrote:
Sun Jun 06, 2021 5:30 pm
Tom I think you are too focused on financial optimization of your life.
How can anyone possibly tell what Tomfoolery is focused on?
And he has stated holding positions in AMH. ???
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Smith1776
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Re: Should Single Family Home Rentals be Legal?

Post by Smith1776 » Sun Jun 06, 2021 8:17 pm

Yes they should be legal.
I still find the James Rickards portfolio fascinating.
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Re: Should Single Family Home Rentals be Legal?

Post by boglerdude » Mon Jun 07, 2021 4:06 am

Land Value tax, or more simply vacancy/underuse tax. There are derelict commercial lots all over socal that could be stacked with housing
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Re: Should Single Family Home Rentals be Legal?

Post by boglerdude » Mon Jun 07, 2021 7:11 am

Market rate housing above retail. There are empty storefronts all over DTLA because inflation is 8% and property tax increase is 2%. Land is hoarded like gold.
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Kriegsspiel
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Re: Should Single Family Home Rentals be Legal?

Post by Kriegsspiel » Wed Jun 09, 2021 3:00 pm

You there, Ephialtes. May you live forever.
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