There are very few jobs that provides as little value as being a landlord. Imagine all of them dying tomorrow, what happens? People just keep on living as usual, maybe they'll have to clean their own drain and paint their poorly maintained (ex)rental unit...
Its the upscale equivalent of ticket or GPU scalping (the practice of buying up all material and simply only upselling it for more money).
The world has a lot of buildings. Buildings are valuable. Every building you see, unless it's been abandoned, is owned by someone or some entity that's responsible for acquiring, protecting, and maintaining it. Some do a better job than others.
Not that landlords do construction work themselves - that's a different industry. But someone has to arrange financing. Many renters are not trusted by banks enough to get a mortgage, often for good reasons. They still need a place to live, though.
Someone has to try to prevent people from damaging the buildings and repair them when they are damaged. Maybe that's the super, but someone has to hire them. The people who damage buildings are often pretty nasty.
In theory, the state could do this. In some countries, the state does a lot of it. But someone has to do it. It's an essential job, and if not a landlord, there will be a manager that does pretty much the same thing.
Just about everything can be outsourced, but it adds overhead. The labor doesn't go away, it just gets moved around.
Not everyone is ready and willing to be responsible for a building.
No, it's to do with being a useless middleman who extracts wealth without serving any productive economic purpose. Regulation isn't required in the slightest.
Markets naturally tend towards monopoly. The idea that monopolistic incumbents are always disrupted in laissez-faire markets is incorrect; incumbents have plenty of non-regulatory levers to keep themselves on top once they stay on top: kickbacks to suppliers and distributors, industrial espionage/sabotage, slanderous ad campaigns, cornering the markets for inputs, forming cartels with monopolistic producers of complementary products, poaching key employees, etc. If you think the government is the only barrier to competition, you haven't given this enough thought.
That seems like an easy, reflexive way to ride current wave of discontent over housing prices. I am not suggesting that landlords are not entirely blameless in the equation, but suggesting they add no value at all is shortsighted.
Not to mention the obvious, the new owner would become the new landlord and the process would start all over.
I have to tell you though. This weird attitude makes me hesitate on my next move. My family unit was discussing keeping current house ( and likely rent ) and moving into something further away. I will admit that this anti-landlord sentiment makes consider just straight sale to the highest bidder.
Like.. I have a married friend, whose dad is an actual landlord asshole ( and he was confronted over that ), but not everyone is an asshole despite what some recent actions by humans may suggest.
> Imagine all of them dying tomorrow, what happens?
The majority of landlords in the US (at least in the small scale - not sure about big complexes) do not own the property outright. They have a loan (e.g. mortgage) just like anyone else.
So what will happen? The banks will become the new owners. And they'll sell it at a discount to someone else (with a loan, of course).
I know it's easy to complain about landlords, but if you suddenly kill all landlords and ban landlording, you'll get a lot more homeless people.
I guess in this hypothetical, imagine all ownership of the rental units suddenly transferred to the tenant. Would the net effect to the economy be positive or negative?
The construction industry would collapse as buying confidence would disappear. Buildings with large amounts of renters would likely fall into disarray over the long term.
Co-ops that are involved in building apartments? They're so few they're irrelevant. It still needs the members to put in a fair amount of money - likely a lot more than the average renter can afford. And it requires "decent" members.
Try being a landlord for the "median" renter, and you'll see how many irresponsible people are out there. A lot of below median folks have zero interest in maintaining their place - even if they own it. They'd make for very poor co-op members.
Seems like the same problem results: now what if you're a new renter? You can't live anywhere, because there's no landlords. Does somebody just give you a house, in this scenario, and if so, who?
I mean, you'd eliminate the rental market entirely, meaning that the only way to live anywhere is to buy.
That would be utterly disastrous. Homelessness would skyrocket. I mean, where are people who can't afford a down payment going to live?
Also, a lot of people don't want to buy, even if they can. If you know you're going to live in a city for a two-year employment contract before moving again, you want to rent.
Although I agree with the sentiment, is there a quantifiable way to demonstrate this? For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?
I'd imagine they do but I try hard to not just imagine data matches my priors. (Yes, this almost always makes me unpopular)
> For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?
Not really. Being a landlord takes a bunch of money to sink into the real estate assets. If you don't put it in there you'd just leave it in a mutual fund or whatever and be making passive income of about the same order. Real Estate is a solid investment choice but it's not *that* much better.
Basically this argument is for the form "being a landlord looks like a working class job but pays better and that's not fair".
But the actual truth on the ground is "being a landlord is just a different way of being wealthy, and you have to fix plumbing on the side instead of working a day job in an office".
Maybe the number of bankruptcies of landlords versus other professions normalized for age (since many bankruptcies are health related and landlords tend to be older).
Is there some hard data somewhere that can be scrutinized rather than narratives and sentiment?
Well, sure, but "get to" is doing a lot of work in that sentence. It's just wealth. Your complaint isn't about the "gig", it's about the wealth. People can hold wealth in any of a zillion ways, most of which are invisible (c.f. Vanguard accounts, BTC, yada yada). Don't be upset with your landlord just because you can see their assets.
I mean to be really, truly Marxist about it, it's not the occupation of landlord but the rentier social relation that's problematic.
The theory is it extracts productive capital which could have a better multiplier effect allocated elsewhere such as education, research, public infrastructure, etc.
I'm sure there's some economic wonks that have long academic papers on this to support or refute this 170 or so year old idea, but I'm merely an amateur.
There was an economic movement after Henry George that very adamantly advocated for redoing this social relationship if you're curious. It was (most likely) the inspiration for the original version of Monopoly among other things. It might be regarded as a form of Economic Populism if you look at the adjacent beliefs of the prominent early 20th c. Georgists, but that'd probably be a 5,000+ word article.
Merely the fact that a typical landlord works far fewer hours than most other careers. Even a property portfolio of 100 properties probably isn't a full time job if you have managing agents.
Sure but many groups of people work to service debt, such as the purchase of a house, education, medical expense or a small business loan. Demonstrating that landlords are not all of the leisure class is insufficient to imply they are equally living hard scrabble working lives compared to the population writ large.
the vast majority of landlords are small potatoes not worth talking about. understand that, when people talk about landlords, they're probably talking about the landlords of the vast majority of rentals.
In a rent-controlled area like in parts of Canada, it's not unusual for the tenant to improve the apartment they are renting with the consent of the landlord. This is ultimately to the tenants' benefit. Imagine investing $1200 into new flooring. Spread over 3/4 years of rent controlled rent, it comes out to $25 a month.
It's a problem whether the occupier is a renter or homeowner. The landlord is, in my experience, just going to call a handyman anyway. May as well cut out the middleman as thats something I can do myself.
The modern way is to have a handyman (just like you have a gardner or cleaner). The handyman has a list of gutters to empty, squeaky hinges to oil, HVAC filters to clean, etc.
Keep adding these small tasks to the list, and when the list gets long or something urgent comes up, call the handyman out for a half-day.
Funny the same people that say stuff like this say that the person who can't even clean their own drain should plan their own retirement using a 401K as the vehicle and if they fail at it and starve well that's their fault, there's no way we could have seen it not working out.
I tell you even worse group. Stock owners. Those people put some money to fancy ETF or investment fund. They do absolutely zero work and some how expect that money to appreciate or even give out dividends. While the poor workers of these companies get pittance or sub-standard wages with which they can barely afford nothing. And then those same companies exploit their customers while always pumping up the prices and extracting maximal margins...
Really if these people just died and the companies moved to their workers or customers what would change?
Landlords provide one thing capital. And capital expects returns. Maybe at times there is not enough competition in where capital is spend, but in general it is not that great place to put capital.
Well, investing is always exploiting labour of others... Exactly like being landlord... Well I suppose, your own private means of production you only use yourself could be reasonable.
As if landlords clean the drains, provide a decent paint job.
Maybe in an apartment, a maintenance person might; but smaller rentals; at most the landlord charges the tenant and calls a plumber;
in reality the tenant is often responsible for calling and paying the plumber;
At worst, the landlord has never had the plumbing cleaned or inspected, the tenant or landlord hires a plumber, the plumber finds an object stuck at the tree roots in the pipe, and the landlord charges the tenant for the whole job, threatens the security deposit, and when the tenant refuses to pay, the landlord evicts them.
Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.
And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
What would probably happen is following. It depends on many things, but assuming it is done near instantly and there aren't side effects.
For some time house values would drop, they will be sold to largest possible buyers. This isn't small buyers but probably banks, since they have lots of capital. Because of price drops, demand will be lessened and house construction industry will experience layoffs.
Many people will be without a house to rent, so banks or large money interests will offer their stockpile of houses under strict terms i.e. rent without renting (timeshare/leasing/house borrowing).
Why wouldn't they just convert to owner-occupied apartments?
There's an argument to be made about affordability, but there are a lot of arguments against paying someone else, for which you receive no equity, and they get to keep any price appreciation of the property.
It'd be interesting to see a rental market that banned anything but rent-to-own contracts, where some portion of your monthly rent had to buy equity in the property you occupy. (With standardized terms for disposal, sale, etc)
Because most people can't afford to buy the apartment they are renting. Some huge percentage of US citizens can't scrape together enough money to pay for a car repair. How are they going to afford an apartment?
Doesn't that indicate we should be building more and cheaper housing?
The other components of the market aren't fixed and immutable.
If state governments wanted to mandate denser rezoning and smaller minimum unit sizes once unaffordability reached a certain level... they could.
Pointing at expensive housing and saying "We therefore have to make it cheaper by forcing more people into bargains in which they receive none of the gains" seems like the tail wagging the dog.
Sure, but it wouldn't change anything, unless your plan is to make housing so cheap that it literally costs less than a month of rent to buy the whole place, I don't think you're going to have a lot of luck.
This is trivially false.
The sum of the rents of the tenants of the property is enough to cover the landlord's purchase of the building, any interest on any loan used to secure that purchase, hire upkeep for the building, and still have money left over for profit in the landlord's pocket.
Therefore, the sum of the rents of the tenants of the property is enough to cover the purchase of the building, which is a subset of those costs.
> The sum of the rents of the tenants of the property is enough to cover the landlord's purchase of the building, any interest on any loan used to secure that purchase, hire upkeep for the building, and still have money left over for profit in the landlord's pocket.
The "sum of the rents of the tenants" isn't relevant to a single tenant, the loan isn't used to "secure the purchase", and you're confusing cash flow for total equity.
A building owner puts down a deposit for some percentage (say, 20%) of the building's cost, gets 80% in debt, and pays down that debt over time with the cash flow from the tenants' rent payments. They make a small margin net of expenses, plus whatever equity accumulates over time.
Setting aside the (significant) question of whether or not a given tenant would have the credit necessary to do such a thing, a tenant is not necessarily able to do the same thing, just because they can afford to pay the rent.
Real scenario: Someone buys a 4-plex for $1M. They put in $240K down payment. That's $60K per apartment. Will those tenants have that $60K they can put down to continue living there?
Sure, they'll own it and can get it back if they sell, but the majority of tenants don't have that kind of cash lying around.
I've always heard owner occupied apartments called condos. Is there a difference I'm not aware of?
You're paying the landlord for the cost of capital and the property management. And a 400k house in the stock market would on average generate 40k a year in appreciation. Most apartments in functional markets aren't anywhere near that appreciative.
> And a 400k house in the stock market would on average generate 40k a year in appreciation.
Only in your dreams. The massive value increase in the last decade is an extreme outlier. Schiller showed that in the long run, looking overall, the appreciation is only 1-1.5% above inflation.
Sure, some places do get big increases. But it's not the norm.
And some places get big downgrades. Look at Detroit for example. Or commercial real estate at this moment... Line does not always cost up so there is also risk involved.
Why would they be demolished(a debit) when they could be sold(a credit)? 34% of people live in rental housing. If those units flooded the market, it'd be much easier to save up to buy while living with parents or friends.
If everyone's saving up to buy then the prices will go up. This is a demand problem, not a landlord problem. Too much demand vs supply makes prices go up. Far, far too much demand vs supply means landlords step in and invest, and divide properties into smaller pieces to rebalance supply to demand, or as much as is in each one's power.
It's really hard to get a mortgage for multiple people that aren't married.
Basically if you and 3 friends want to buy a 4-plex for 400k you would assume the bank would just make sure each person could afford 100k, they don't. Instead the bank will ensure each person individually has sufficient financial resources to afford a 400k home.
That and converting a 4 plex into condos doesn't make financial sense when you could just demolish it and build townhomes.
would they be demolished? or would their prices drop to the point that the people paying the mortgage might be able to afford to actually own the equity?
> Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.
> And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
You are using a logical fallacy known as false dichotomy. We have many other possibilities such as commie blocks and even denser privately owned residential housing with fair competition and pricing. Maybe hard to achieve fair pricing but not impossible.
Its the upscale equivalent of ticket or GPU scalping (the practice of buying up all material and simply only upselling it for more money).
Parasites of the system.