Renting out property does create wealth. Think of a house as a factory that produces shelter. Running the factory, as opposed to leaving it idle, increases the amount of shelter in the world, and shelter is a form of wealth.
That’s a well-established economic theory and I’m not contradicting it. What I’m saying is that renting out the house after it’s built continues to create wealth. A world in which I build a nice house but keep it empty is wealthier than a world in which I leave the land unimproved, but a world where I rent that house out (or live in it myself) is wealthier still. The experience of living in that house, as opposed to some inferior option, has value.
Oh ffs, being a private landlord owning a few houses for rent is not a risk-free endeavor and not purely parasitic. You typically have to fix up the properties first (an investment), do work to vet renters, manage the property (maintenance effort/time/cost), and absorb the risk of bad renters destroying the interior. The landlord has to invest their own time and money to provide a livable shelter to others, who exchange money for not having to deal with all the above listed. That livable shelter is a big freaking deal, or why else would someone choose to spend money on it?
Companies developing monopolies on rental markets is a very different scenario, and I don’t think it should be legal. Small private landlords? Yes.
You do realize that being a landlord is typically a negative cashflow business, meaning they lose money every year? The only upside they get from renting out that property if the possible growth in equity, which is typically less than that of investing in the stock market.
We’re talking about landlording, not what they did to afford to start landlording.
They didn’t make the building and, while they put down the first payments, their tennants are the ones paying for it.
That’s not creating wealth. That’s not work. That’s living off the wealth created by others.
If it’s so easy to own a house, go buy one
Like all other passive income, the challenge is having enough money to start with.
Once you get past that point, it IS easy, but due to the inherent inequities of capitalism, getting there is literally impossible for the vast majority of people.
It’s clear there is a fundamental misunderstanding in the amount of capital required to own an investment property without first living in it as a primary residence for a few years.
If one were to purchase a property with the expressed intent of immediately renting it, most banks will require at least 25% down with no option to pay PMI to cover the difference. That’s an insane amount of money to put down just so the landlord can make a negative cash flow for the first 10 years. If an investor has that kind of money, and still want to be involved in real estate, they should buy a share in an apartment complex where the margins are more favorable, and the property actually has a positive cash flow.
Thus nearly ever single family home was purchased initially as a primary residence, with the intent to live there. But then by some circumstance one way or another they needed toove away. Selling a home will cost you 10% of the home’s value in fees. So if that person has any intent to return to the home in the future, it’s better to eat the temporary loss and rent out the property.
Fixed it for you. Landlording is one of many forms of “growing one’s existing wealth without creating new wealth”
Renting out property does create wealth. Think of a house as a factory that produces shelter. Running the factory, as opposed to leaving it idle, increases the amount of shelter in the world, and shelter is a form of wealth.
Building a house creates wealth. Owning the land underneath it does not, it merely captures a portion of the wealth produced by others.
That’s a well-established economic theory and I’m not contradicting it. What I’m saying is that renting out the house after it’s built continues to create wealth. A world in which I build a nice house but keep it empty is wealthier than a world in which I leave the land unimproved, but a world where I rent that house out (or live in it myself) is wealthier still. The experience of living in that house, as opposed to some inferior option, has value.
Oh ffs, being a private landlord owning a few houses for rent is not a risk-free endeavor and not purely parasitic. You typically have to fix up the properties first (an investment), do work to vet renters, manage the property (maintenance effort/time/cost), and absorb the risk of bad renters destroying the interior. The landlord has to invest their own time and money to provide a livable shelter to others, who exchange money for not having to deal with all the above listed. That livable shelter is a big freaking deal, or why else would someone choose to spend money on it?
Companies developing monopolies on rental markets is a very different scenario, and I don’t think it should be legal. Small private landlords? Yes.
No, get a real job and stop exploiting people.
You do realize that being a landlord is typically a negative cashflow business, meaning they lose money every year? The only upside they get from renting out that property if the possible growth in equity, which is typically less than that of investing in the stock market.
Ok, you gonna go build your own house then?
The vast majority of landlords don’t do that. They just buy one someone else built and then make others pay for it.
They just buy one out of thin air? Or is it with the wealth they’ve created through their own skills?
If it’s so easy to own a house, go buy one.
We’re talking about landlording, not what they did to afford to start landlording.
They didn’t make the building and, while they put down the first payments, their tennants are the ones paying for it.
That’s not creating wealth. That’s not work. That’s living off the wealth created by others.
Like all other passive income, the challenge is having enough money to start with.
Once you get past that point, it IS easy, but due to the inherent inequities of capitalism, getting there is literally impossible for the vast majority of people.
It’s clear there is a fundamental misunderstanding in the amount of capital required to own an investment property without first living in it as a primary residence for a few years.
If one were to purchase a property with the expressed intent of immediately renting it, most banks will require at least 25% down with no option to pay PMI to cover the difference. That’s an insane amount of money to put down just so the landlord can make a negative cash flow for the first 10 years. If an investor has that kind of money, and still want to be involved in real estate, they should buy a share in an apartment complex where the margins are more favorable, and the property actually has a positive cash flow.
Thus nearly ever single family home was purchased initially as a primary residence, with the intent to live there. But then by some circumstance one way or another they needed toove away. Selling a home will cost you 10% of the home’s value in fees. So if that person has any intent to return to the home in the future, it’s better to eat the temporary loss and rent out the property.
However you dress it up, charging others for shelter isn’t creating anything. It’s profiting off others.
Besides, the vast majority of tennants rent apartments, not houses, so don’t pretend that your very specific example is the norm.