The core of being a landlord is rent-seeking, or in other words monetising a superior economic position to extract a payment from those who do not have such a superior economic position.
You wouldn’t be able to rent that room if other people had a choice to just easilly buy a small dwelling in that area for as much as you charge for that room - the market is tight, there is a natural barrier to entry and you entered that market at a more favorable time that now so your present day tenants have to pay you for the priviledge of living there because they have no other reasonable options.
That said, landlords can create at least some value and some do - for example my first landlord bought a large house and divided it into 1 bedroom apartments, in effect taking a dwelling from a market with lower demand and making from it 4 dwellings serving a market with higher demand, which is a way to create value, especially as he spent money on the conversion.
However the rents charged by landlords at present are almost always significantly higher than the value they create (if any), which is why in many places they actually exceed the cost of servicing a mortgage, so the landlord is really just exploiting having a better financial position (or even just better creditworthiness) than the tenant, as if there was no such advantage tenants would simply choose the cheaper mortgage over the more expensive rent.
(Even the mortgages themselves are much higher than they should be, as Price-To-Income ratios of realestate are 4+ times higher than the historical average all over the World, but that’s a different discussion though I wanted to point it out because it shows the imperfections of said market: a highly competitive market would’t stay so long above the historical relation between its prices and people’s average income)
Also in my personal experience of 25 years and 4 countries, most landlords create little value: even good ones charge rents far above the little service they provide (basically maintenance, and often only because they’re forced to by law) and the depreciation over time of the dwelling they’re renting (which in the last couple of decades has actually been negative as even those houses getting older have gone up in price faster than inflation) plus a little profit.
Mind you, I’ve had mostly good landlords (sometimes both as persons and as landlords) and very few really bad ones, but that doesn’t alter the fact that their profit from that business only comes courtesy of the low liquididity and natural high barriers to entry of the housing market and either a superior financial position or first mover advantage - their quality as persons and fairness as landlords don’t change the inherent nature of the business they’re in.
Genuinely can’t believe you people that does hatred make you so dumb
All I see in this thread is vitriol towards real estate rental from people who don’t have a strong understanding of finance and economics. The dumb hatred you speak of is going the other direction.
Now you’re just making shit up and whatabouting in every direction you can think of to see if it sticks…
I’m literally quoting Adam Smith
You can believe whatever imaginary economics you want, but these terms have actual meaning
Which has absolutelly nothing at all to do with the definition of rent-seeking including landlords, hence it’s simply whataboutism.
Landlords don’t necessarily rent-seek. If I just rent a room in my house out, I’m not a rent-seekers, by any sane economic definition.
That’s the discussion, and I’m quoting the person who invented the term.
Genuinely can’t believe you people let this hatred make you so dumb.
I see.
The core of being a landlord is rent-seeking, or in other words monetising a superior economic position to extract a payment from those who do not have such a superior economic position.
You wouldn’t be able to rent that room if other people had a choice to just easilly buy a small dwelling in that area for as much as you charge for that room - the market is tight, there is a natural barrier to entry and you entered that market at a more favorable time that now so your present day tenants have to pay you for the priviledge of living there because they have no other reasonable options.
That said, landlords can create at least some value and some do - for example my first landlord bought a large house and divided it into 1 bedroom apartments, in effect taking a dwelling from a market with lower demand and making from it 4 dwellings serving a market with higher demand, which is a way to create value, especially as he spent money on the conversion.
However the rents charged by landlords at present are almost always significantly higher than the value they create (if any), which is why in many places they actually exceed the cost of servicing a mortgage, so the landlord is really just exploiting having a better financial position (or even just better creditworthiness) than the tenant, as if there was no such advantage tenants would simply choose the cheaper mortgage over the more expensive rent.
(Even the mortgages themselves are much higher than they should be, as Price-To-Income ratios of realestate are 4+ times higher than the historical average all over the World, but that’s a different discussion though I wanted to point it out because it shows the imperfections of said market: a highly competitive market would’t stay so long above the historical relation between its prices and people’s average income)
Also in my personal experience of 25 years and 4 countries, most landlords create little value: even good ones charge rents far above the little service they provide (basically maintenance, and often only because they’re forced to by law) and the depreciation over time of the dwelling they’re renting (which in the last couple of decades has actually been negative as even those houses getting older have gone up in price faster than inflation) plus a little profit.
Mind you, I’ve had mostly good landlords (sometimes both as persons and as landlords) and very few really bad ones, but that doesn’t alter the fact that their profit from that business only comes courtesy of the low liquididity and natural high barriers to entry of the housing market and either a superior financial position or first mover advantage - their quality as persons and fairness as landlords don’t change the inherent nature of the business they’re in.
How many fucking times do I have to teach you people that “rent-seeking” is not “charging rent”
Fuck man
I do not give a shit about your opinion about landlords. Love them. Hate them. I don’t care. Stick to words you know.
How many times and in how many different ways do we need to tell you that you’ve misunderstood what economic rent is.
Be wrong all ya want. This is dumb
All I see in this thread is vitriol towards real estate rental from people who don’t have a strong understanding of finance and economics. The dumb hatred you speak of is going the other direction.
That’s the hatred I’m calling out