Assume that you intend to live in said house indefinitely, we are comparing two options:
You taking a loan to buy a house, which upon full payment you own the house.
A landlord takes a loan to buy a house, you (and other tenants) pay off said loan, then landlord owns the house.
In both cases you are paying off a loan and incurring risk of increasing interest rates, but in one you end up owning your home, in the other you end up owning nothing.
At face value the effort put by the tenant is the same, but the reward is disproportionate, which is why one is a robbery and the other is not.
I am not against the idea of renting out property, or earning money as a landlord. But this arrangement is unfair. To help rectify this imbalance I propose, in the case of rental contracts, move the risk of the loan from the tenant to the landlord. What? How? You might ask. By controlling the rent, and not allowing it beyond a reasonable threshold. The rent may not depend on:
Increasing interest rates.
Perceived inflation (Oh my God, Ukraine, Coronavirus, we need to rake up the rent fast fast fast… you get my point).
But it can depend on other factors, such as provable unforeseen maintenance costs or officially reported inflation rates.
tl;dr If you want to become a landlord by taking a loan, you have to incur the risk yourself, otherwise you are being unfair to long-term tenants.
First, I’ve had a lot of evil landlords, so I understand the animosity. However, as a landlord who owns two houses that I rent to my friends, let me risk getting downvoted to hell to explain the value that I add, and the reason why both friends prefer this arrangement despite my offering to sell them the properties they live in.
You say the effort is the same, but it’s not true. Here are some of the things I do that take either the physical or mental load of home ownership off my tenants:
escrow and pay property taxes on time
shop around for the best insurance and make sure the property is covered with not only homeowner’s insurance but also flood insurance
perform various regular maintenance tasks like pesticide application, HVAC checkups twice a year, inspection and repair of any damage reported to me
perform emergency repairs or call in workers when things break, being available during the day when the contractors come - or replace broken appliances, etc.
shop around and pay for utilities
landscaping and lawn maintenance
My best friend is one of my tenants. She has severe ADHD and lost a home once before due to her inability to save money for the inevitable repairs and unexpected expenses, plus not staying on top of needed maintenance and repairs. This arrangement where I take care of all the details and she just pays monthly rent is a win-win. My other tenant is my handyman who literally begged me to rent a townhome that I was planning to sell. He didn’t want to buy it because his credit isn’t that great and he wasn’t planning on being there more than about five years. I charge both of them a really fair rate that just covers my expenses.
So yes, at the end of the day, they own nothing. But they are not getting nothing for their money. They’re getting comfortable, well maintained shelter and peace of mind.
It’s interesting to hear from the other side and thank you for the reply. I can acknowledge that what you are saying is true. The peace of mind of not having to deal with said responsibilities, has a value and therefore a cost. Tenants also have the freedom to move out whenever they want.
However, grievances arise when:
Landlord overcharges.
Landlord doesn’t take their responsibilities and leaves their property to deteriorate with paying tenants (read: human beings) still in them. It doesn’t help when said landlord owns a nice villa and a couple of boats.
Tenant stays in one apartment for 30 years, realizing they have been given the short end of the stick. The issue is further exacerbated when combined with point #1 or #2.
It’s a mix. There are people out there with genuine grievances, while at the same time others are very happy with renting their current apartments. I’ve seen both, personally.
Assume that you intend to live in said house indefinitely, we are comparing two options:
In both cases you are paying off a loan and incurring risk of increasing interest rates, but in one you end up owning your home, in the other you end up owning nothing.
At face value the effort put by the tenant is the same, but the reward is disproportionate, which is why one is a robbery and the other is not.
I am not against the idea of renting out property, or earning money as a landlord. But this arrangement is unfair. To help rectify this imbalance I propose, in the case of rental contracts, move the risk of the loan from the tenant to the landlord. What? How? You might ask. By controlling the rent, and not allowing it beyond a reasonable threshold. The rent may not depend on:
But it can depend on other factors, such as provable unforeseen maintenance costs or officially reported inflation rates.
tl;dr If you want to become a landlord by taking a loan, you have to incur the risk yourself, otherwise you are being unfair to long-term tenants.
First, I’ve had a lot of evil landlords, so I understand the animosity. However, as a landlord who owns two houses that I rent to my friends, let me risk getting downvoted to hell to explain the value that I add, and the reason why both friends prefer this arrangement despite my offering to sell them the properties they live in.
You say the effort is the same, but it’s not true. Here are some of the things I do that take either the physical or mental load of home ownership off my tenants:
My best friend is one of my tenants. She has severe ADHD and lost a home once before due to her inability to save money for the inevitable repairs and unexpected expenses, plus not staying on top of needed maintenance and repairs. This arrangement where I take care of all the details and she just pays monthly rent is a win-win. My other tenant is my handyman who literally begged me to rent a townhome that I was planning to sell. He didn’t want to buy it because his credit isn’t that great and he wasn’t planning on being there more than about five years. I charge both of them a really fair rate that just covers my expenses.
So yes, at the end of the day, they own nothing. But they are not getting nothing for their money. They’re getting comfortable, well maintained shelter and peace of mind.
It’s interesting to hear from the other side and thank you for the reply. I can acknowledge that what you are saying is true. The peace of mind of not having to deal with said responsibilities, has a value and therefore a cost. Tenants also have the freedom to move out whenever they want.
However, grievances arise when:
It’s a mix. There are people out there with genuine grievances, while at the same time others are very happy with renting their current apartments. I’ve seen both, personally.
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