patrick.net

burritos says

These 10+ year landlords at one time were newbies. Or they inherited it, which from a meritocratic point of view, is even worse. So why can’t there be new newbies? 10 years ago, I was just getting out of college, so I personally need some time to get up to speed to build my portfolio. Now, I’m not saying “you” need to rent from a newbie. But this thread gives me the impression that there should be no landlords newbie or otherwise and that all residences should be owned by the occupant.

First, thank you for voting green.

Second, there are many reasons why I will not rent from a new landlord. I would have to make a list in order to be of help to you. Don't have the time now.

Although I will say one thing about new landlords - they seriously underestimate the maintenance costs of property ownership and they generally carry heavy loans against the property that gives them an observable level of financial anxiety which leads to frequent rent increases because they failed to plan for their investment. I don't want to rent from someone who cannot afford to take care of their property.

This precarious financial position results in an over-anxiety about their investment situation and they tend to over-worry about everything since they are on the edge assetwise. They tend to be tense and overly concerned with power.

Established landlords who are wealthy and whose net worth isn't dependent upon one or two investment positions have a relaxed attitude and don't get all upset because the water heater needs to be replaced, the dishwasher has rust and the pipes are severely corroded, or that an overceiling water pipe burst during an earthquake necessitating ceiling repairs.

I could go on but you should get an idea of where I'm coming from. My spouse is an engineer who performs all sorts of repairs himself so the landlord's repair or maintenance costs are kept as low as possible. (We do not charge for labor, only replacement cost of items agreed upon.) Hate to brag, but we are ideal renters.

And another thing about new landlords is that they tend to withhold security deposits (for very minor repairs that are legally considered "normal wear and tear") more than established landlords.

I haven't personally experienced this however in my line of work (law) I do a fair amount of legal counseling to tenants who are facing this problem.

I have other reasons, don't have time to do a comprehensive list. In any event, for these causes I will not rent from a new landlord with less than 10 years experience.

~Misstrial

I've experienced this first hand. I'm a first time buyer with a baby on the way. I have been using Patrick's formula and trying to at least break even with a home around 400-430K in the San Jose area. The two houses I have found and made offers on have not worked out because in both cases I have had to compete with 5-10 all cash offers. It's discouraging to say the least.

Yep thats another way around it. Those dagnabity investors driving the price of houses down. WHY YOU COULD HAVE PAID MORE. I say we all go after that investor. Because he deprived you of paying 20% more. I think every retail buyer should pay more. Because well even a realtor will tell you nothing better than a big juicy steer for dinner.

So a realtor probably got screwed in this one too. See now you could go out an find a house for 20% less in this enviornment. Because if you look out your window realtors are now eating grass instead of food for dinner. But you have no window of course because the stupid investor stole that from you. I like Patricks formula also. However this give me a chance to ask if Californians like paying the highest gas prices in the land. Because well the tax base is so eroded. The price of gas has gone up. The only joy in this for me is the leeches have to pay for their freebies now.

ArtimusMaxtor says

However this give me a chance to ask if Californians like paying the highest gas prices in the land.

Hawaii has the highest gas prices, not California.

http://www.honolulugasprices.com/Honolulu/index.aspx

~Misstrial

Investors can be people like you & me. I know some of the REIT's I own are buying up the cheap real estate with dollars that people put into these funds & ETF's. They are getting income from the rentals which gets passed on to the investors. It's like hating oil companies, utilities, banks, etc. Almost everyone owns some of these stocks through pensions, retirement vehicles & mutual funds. If you dislike these people "buying low" so bad, join them. Look into buying some REIT mutual funds or ETF's that are benefiting from this bubble in real estate.

Investors are the bane of the existence of someone like me, a REAL first-time home buyer. I put in an offer on a short sale earlier this year. Above asking price. Listing agent told my realtor he didn't want to take my offer because the "first offer was gold." My realtor couldn't believe it--the bank hadn't yet closed the offer window. So about four weeks after my offer and after calling the listing agent weekly, we finally found out that the "first offer" had been accepted with a closing date two weeks earlier than mine. Last week I checked on the property and found out it sold for $6,000 less than my offer. My realtor and I could not believe it. Terms were exactly the same--20% down, conventional loan, and the only difference was my closing date was two weeks later. D'ya think there was something fishy going on there? And for what it's worth, folks, the reason we first-time home buyers are staying away is precisely because of crap like this. I cannot possibly compete with an all-cash investor (don't have $200,000 laying around gathering dust). And I might add that I actually want to live in the community and be a productive member of a community which is why I want to buy. Investors just want to rent for the highest rent they can get. You should see some of the homes that are being rented for top dollar and the renters just trash the place, and the "investor" doesn't give a rat's patoot. Puh-leeze. Spare me. And in my market prices need to come down another 25% to get back to historical affordability, a dubious term if ever there were one.

EconomicReasoning says

They are getting income from the rentals which gets passed on to the investors. It’s like hating oil companies, utilities, banks, etc.

This is like offering the jews at Auschwitz shares in I.G. Farben.

If you dislike these people “buying low” so bad, join them. Look into buying some REIT mutual funds or ETF’s that are benefiting from this bubble in real estate.

I don't dislike them for making money, I dislike them for being scumfuck leeches bringing down the system (increasing inequality and impoverishing others) at their personal gain.

http://www.cooperativeindividualism.org/churchill_monopolyspeech.html

this is how they drive up prices... They scoop up houses for cash, do some cosmetic work, then put them back on the market at vastly inflated prices. Then you bid on one, win the contract, send out your inspector, and find it needs $40K in foundation, $10K in electrical, and another few thousand in roofing. So, in order to have liquid cash to fix the foundation on a 1914 farm house with no permits for the additions that have been plopped onto it, so it doesn't slide across the driveway in an earthquake, you ask to adjust the bid price down. They cry that they break even $30,000 *above* what you are offering, and say no. It's not your job to make sure the gamble they took pans out, so you walk away. It sits on the market for another month or so until a greater fool thinks it's a good deal. Bingo... house is way to expensive for condition, neighborhood, trouble.

Prairie Rose
If you're still looking for your first home purchase, then you are a renter. And you clearly think renters are inferior beings who trash places. So there's your reason why people don't like first-time homebuyers. They are renters now and will not know how to handle property of their own.

Watch your bigotries. They can come back to haunt you.

Wow, this appears to be a forum for people to slam each other instead of providing helpful advice. I'm sure that wasn't Patrick's intent in setting it up.

I don't have a huge resentment toward flippers/investors who legitimately spend their
effort fixing the property and sell it. Some how, maybe lack of my imagination,
I don't see it as a blatant act of inflating the price of housing. I resent the
fact that some investors just throw money at the housing market just to
inflate the price for their profit.

Here is what I vow to do. If I see any act of flipping with an intent just to inflate
the price of housing, I will just walk away. I hope some of you here will also be
wise enough to boycott the flippers and reckless investors. But if everyone does it,
the housing price will bottom out much faster, also.

Misstrial says

Now just think how much better we’d all be if you weren’t in this position to begin with, such as having lived within your means like renters have to do each and every month.
And you think you’ll recover in 3 years?
Having counseled hundreds of debtors in various legal predicaments, all I can say is that son, “You’re dreamin’.”
To this very day, the banks and lenders are not even granting secured credit cards until one year has passed from a foreclosure date (lenders look at short-sales as foreclosures).
And to top it off there is the big increase in energy, food costs, and interest rates coming by summertime.
Its sickening to see homedebtors and the broke-@ssed former property owners boast how quickly they’re going to make their comeback. Hah!

I think what really sickens you is how someone who has been down can recover while you just sit and watch. And saying "just think how it would be if you had never been in that position" is like telling someone "Well you shouldn't have been in a car accident and broke your legs". Sometimes things happen, we pick up, and move on. We all can't have a perfect lives but we learn and help others along the way as well. Pouring salt over open wounds doesn't really help.

Troy says

I don’t dislike them for making money, I dislike them for being scumfuck leeches bringing down the system (increasing inequality and impoverishing others) at their personal gain.

common_sense says

I’ll bet many of these investors are Chinese. This same thing happened in Vancouver Canada just before the 1997 reversion of Hong Kong to communist China. Hong Kongers were walking in with cash, buying up several $1M houses at once and leaving us mortgage buyers out in the cold. It’s unfortunate, but expect it to continue with the demise of the US dollar and China’s economic growth.

Only in The Fortress. That leaves the rest of Santa Clara County for us "API gentiles".

Nice head fake mistrall

ArtimusMaxtor says

Nice head fake mistrall

Its "misstrial" as in miss and trial.

~Misstrial

Infiltrate says

I think what really sickens you is how someone who has been down can recover while you just sit and watch. And saying “just think how it would be if you had never been in that position” is like telling someone “Well you shouldn’t have been in a car accident and broke your legs”. Sometimes things happen, we pick up, and move on. We all can’t have a perfect lives but we learn and help others along the way as well. Pouring salt over open wounds doesn’t really help.

Life has consequences and many times these consequences for faulty decision-making are worse than we could have ever imagined.

Not lacking compassion for you here, however, the multitude of those like yourself who over-borrowed, over-spent, over-loaned, over-everythinged has severely weakened the rest of the nation financially.

Try to think of how you and others like you have inflicted a tremendous amount of financial pain on America and particularly upon those who are innocent and had nothing to do with participating in the real estate run-up. People such as retirees with homes fully paid-for, disabled people on fixed incomes, injured people who subsist on disability payments, and renters who must live within our means all of the time.

btw, Salt is an antiseptic which is why there is a burning sensation. Other antiseptics such as rubbing alcohol, betadine (povidone iodine), dry red wine, hydrogen peroxide, propolis, and/or injected antibiotics all deliver pain to one extent or another. Sorry, but its time to man-up and take your medicine.

~Misstrial

@E-man,

Great comment above!

@Misstrial

>And another thing about new landlords is that they tend to withhold security deposits (for very minor repairs that are legally considered “normal wear and tear”) more than established landlords.

This, unfortunately, is he norm in Japan and tenants often have to use the threat of a lawsuit to get back their deposit (if it is deserved but not returned).

E man,

It was a group of investors. I should have mentioned it. The property was
closed quickly and put back on the market right away. The listing price went
up by 20%.

I was approached about 2 to 3 months afterward. They asked only 10% from the
original price. My original offer was 7% above their purchase price, so they thought
I would be a good buyer. I asked if they have renovated the place. No.
The place was as is. So I declined. If this was a legitimate owner occupying the
home, I would have helped by buying the property. And I would not have felt
this much resentment of losing out on the deal.

What I am trying to say is that you can tell investors/flippers by a simple
research through Zillow or other website. I feel that by purchasing the
properties like that would only contribute to the bubble.

My inclination and resentment happened for a reason.

American in Japan says

This, unfortunately, is he norm in Japan and tenants often have to use the threat of a lawsuit to get back their deposit (if it is deserved but not returned).

My LL was a nice guy and gave me back my Y220,000 in Y10,000 notes when I was leaving after 5 years.

He was kinda shocked that I kicked back Y20,000 to him to cover cleaning the outside veranda since I left that quite a mess.

I need to temper my LL-hate to remember that not all LL are scum. He bought in 1984 I think and I have zero problem with him pocketing 100% of my rent, since his building had 5 units in the footprint of a SFH of the area, which is very "virtuous" in the Georgist scheme of things (plus for bonus points he was living on the first floor, LOL)

http://goo.gl/maps/qG0o for the satellite view.

Nobody says

I feel that by purchasing the
properties like that would only contribute to the bubble.

You should have come in with an all cash offer like 33% of the buyers in February (and 50% if you are in Miami, Phoenix or Vegas). If it is a good price from the flippers don't cut off your nose to spite your face. Your one trasaction is not going to change the world of real estate one iota. The patrick posters that do not want to pump up another bubble are like a few pieces of sand on the worlds beaches. Others will purchase the property and capitalism will reward them.

Troy says

Investment in SFH is *entirely* parasitical in nature and if I were king I’d tax it so hard to break these fuckers’ business models.

This “risk” investment is not funding job growth or new capital formation here, it is sheer economic vampirism, *utterly* worthless, other than providing a market or people needing to sell in a given area, but there are other ways to accomplish that (eg. community land banks).

I disagree. There will always be a rental market for SFHs, and therefore a need for SFH investors.

I am not going to pretend that any investor in any market does so for altruistic reasons, but "economic vampirism" is a bit over the top, no? By that logic, all businesses would have to sell their products at cost, thereby ceasing to be businesses.

An investor has an obvious incentive to improve the property, up to the point that the neighborhood will bear. This funds job growth just as much as any long-term owner-occupant, and clearly more than a short-term owner. (The counterpoint is that the investor has only the incentive to maintain the property slightly above the level of market rejection, but that is also true of owner-occupants when the RE market is illiquid...illiquidity sometimes caused by lack of investors..)

Despite Ms. Trial's excessive pedantry, she has a point about inexperienced landlords. Cf. inexperienced anything-elses too, but landlords can cause more life drama than most.

I am not going to pretend that any investor in any market does so for altruistic reasons, but “economic vampirism” is a bit over the top, no?

Not much, no. The typical SFH investor is inserting himself into a market that does not need him to clear.

As a flipper, he is just screwing things up for the actual, real, buyer who is looking for a place to live in this world.

As a landlord, he is engaging in the predatory monopolism of taking land -- a scarce resource wherever it is desirable -- permanently off the market and making it available for fee, a great societal evil that is responsible for so much of our ills today, both social and economic, since collecting ground rent -- site value -- is simply reaping what the LL did not sow (and is very profitable thanks to Prop 13 and historical inflation).

An investor has an obvious incentive to improve the property, up to the point that the neighborhood will bear. This funds job growth

Do you think i am a moron? These improvements are totally minor in the overall scale of rent, and also not some arcane service that an actual homeowner cannot also perform -- hiring the same contractors and patronizing the same retailers -- for himself should he desire. Plus these improvements are pure consumption in the scheme of things and unnecessary from an economic growth standpoint. So much of our trade deficit with China was all this luxury "improvement" of the housing stock; they got $2T of our wealth, we got granite countertops, stainless steel appliances, and decorative lighting.

I think your dogma is shading your thinking.

Many people value the ability to avoid a long term commitment to a neighborhood/city/state/region, and rental property provides them an opportunity to live their lives without having to navigate the vagaries of unpredictable markets and broker commissions. It also protects them from most forms of risk and liability involved. The landlord assumes these in exchange for a fee, because there's really no other way to assume them.

Troy says

Do you think i am a moron? These improvements are totally minor in the overall scale of rent, and also not some arcane service that an actual homeowner cannot also perform

No, I don't think you're a moron, but I do think you're trying real hard to get reality to conform to your decided beliefs.

I can tell you that it's uncommon for a SFH investor to collect significantly more rent than is needed to cover expenses, because real estate is always financed in some way. If not with a loan from a bank, then by the investor herself in the form of allocated capital. You could look at it as a loan to the general public: the property is made available for use by the public in exchange for a market-determined rent, which might (or might not) represent a return on risked capital. I'm sure you object to that perspective, and to finance in general. I won't argue that you're all wrong, but I will argue that the list of "better ideas" is equally dubious.

That an investor does not perform some arcane service to society does not invalidate that service, nor suggest that it's inferior in any way to the "value" added by (or received by) a homeowner.

I won't debate your consumption argument, but I do wonder why you think a homeowner would do something important and different.

I get the sense that this is just one facet of your larger complaint about private property in general. These systems have all evolved over hundreds/thousands of years and obviously they're not perfect. They're certainly not efficient, which is wasteful and definitely creates disparity. But whose model of an efficient society would you trust? I think messy is better, in the long run.

quesera says

I think your dogma is shading your thinking.

Of course it is! Back before I discovered Georgism in 2002 I sensed something was profoundly wrong with the way things were but I couldn't indentify what exactly.

The Georgist argument that land and its natural resources were not rightful property really opened my eyes.

This philosophy of property was not even originally from Henry George, it comes from other great thinkers like John Locke -- http://en.wikipedia.org/wiki/Lockean_proviso -- and JS Mill's stuff.

Once you identify that around 20% of this nation's income flows are completely "wrong" -- and you see how much of this nation's wealthy powers are invested in real estate -- you come to understand why things are so shitty for the middle class and below now.

This dogma further informed me that it is impossible to cut taxes to improve things, since lower taxes will just result in higher land prices and rents. The price appreciation after the 2001-2003 tax cuts certainly demonstrate this, although many other contributory causes were present besides tax rates falling 10-20% on people.

Many people value the ability to avoid a long term commitment to a neighborhood/city/state/region, and rental property provides them an opportunity to live their lives without having to navigate the vagaries of unpredictable markets and broker commissions.

This is simply self-serving hokum. Today's unpredictable and inefficient markets can be fixed with a) a land value tax that eventually knocks down the acquisition cost of real estate 50% or more and b) busting the NAR and MLS monopolies.

If people only had to pay up-front for the fixed improvements (and not the NPV of all future rents) real estate would be much more affordable. Plus if all the leeches were purged from the system supply would go up, further dropping the price.

You could look at it as a loan to the general public: the property is made available for use by the public in exchange for a market-determined rent, which might (or might not) represent a return on risked capital. I’m sure you object to that perspective, and to finance in general.

No, you don't understand Georgism at all. Georgism simply denies that land is rightful private capital, not that capital itself is bad. Marx called Henry George "Capitalism's last ditch". It was discovering Henry George's simple description that capital was that which was created by labor that opened my eyes.

Further essays on the subject eg http://www.cooperativeindividualism.org/churchill_peoples_rights.html developed this, but, alas, the world moved on in the WW I postwar and this basically became lost knowledge.

but I do wonder why you think a homeowner would do something important and different.

Your argument that LLs provide housing improvement jobs was just claptrap on two levels. One was owner-occupiers are perfectly capable of making the exact same purchases, and the second was the mistake of thinking of housing as some sort of capital asset that is beneficial in the macro sense to improve.

"Basically what has happened somewhere along the line is that, as a society, we confused the notion of home with the possibility of an investment opportunity" -- Stewart Lee

http://www.youtube.com/watch?v=5mk04v2pu1g#t=4m7s

But whose model of an efficient society would you trust?

Both Singapore and Hong Kong capture land rents by only allowing leasehold development of real estate.

I think messy is better, in the long run.

"Messy" resulted in landlords shot in prison yards in many places in the 20th century. There is a better way, that encourages private capital to invest in actual exportable wealth-creation and not mere parasitical local monopolism of landholding.

This landholding is a 20% hole in our economy, that directs wealth -- via rent -- from the very poorest to the very wealthiest. It is largely why things have gotten so unsustainable here in the US, as the top 1-5% of the nation enjoy increasing their income flows from real estate (and the financial industry that increasingly latched onto these income flows in the 1990s and bubble 2000s).

Income from increasing ground rents is a free lunch for landowners, and since landowners did not labor to produce this wealth, they should not rightfully pocket it. Taxing this parasitical income away for those who speculate in SFH would be a good start.

http://www.wealthandwant.com/docs/Buckley_HG.html

I agree with many of your assertions and disagree with most of your conclusions, strongly. But I appreciate that your dogma is internally consistent, for that is rare.

I sympathize with the desire to eliminate the bad parts, but I believe you'd devastate the good parts in the process. Strict orderliness and equitability come at an awfully high price. Your examples are not relevant, in my opinion, but they do prove this much. Messiness is necessary, inevitable, and (on balance) good.

In any case, I stand by my original comment that demonizing SFH investors is histrionic. They are bit players in your tragedy, and even if you shamed them into nonexistence, your structural complaints would not change.

On the way up, the "flippers" played more than a bit part. Many buyers, that is ones buying their own homes to live in, reluctantly paid up (in price) based on the ignorant belief that prices only go up. So they paid prices that they knew were too high, feeling the risk was limited. Of course in some cases risk was limited for completely different reasons, namely down payments close to zero (even the banks in many cases bought the "prices only go up" fallacy).

Add flippers to this market dynamic of easy money, and "everyone should own," and you now have a much more destructive and steep bubble.

Think about it. Say in some small area you have 5 sellers and 7 people looking to buy (if they can) to live in. Add another 6 flippers (that is buyers) to the mix, who have strong reason to believe that the easy money and buyers and double digit increases will continue to be there, and you have a problem.

Lurking,

I don't care what other people would do. My belief is that I should not contribute
to the bubble. And I chose not to. And it is not so realistic to expect the
first time home buyers to come with all cash offer.

Well, capitalism does not always reward them. Where have you been for the last
few years? Or are you in denial that we have been in recession? The investment
is always a risk.

The point for this website is to offer another perspective, when everyone is
going crazy on the housing market. And I am telling my side of the story and
belief. Yup, I am insignificant in the face of greed and capitalism. So what?
At least you heard me.

In any case, this group of investors is buying up the properties in Silicon Valley.
I saw another property that I looked was picked up buy these guys. I guess
I am going to rent for a little while longer until their greed is satiated. Maybe
not.

@marcus: I was trying to maintain a distinction between SFH investors and flippers, but didn't succeed, sorry. Nevertheless, flippers are a symptom, not the cause.

@Nobody: I hope you'll look back on 2011 and be relieved that the investors were greater fools than you. They'll probably do just fine for themselves, it sounds like they can absorb the losses and opportunity costs and probably have a greater time horizon than you.. But they might have saved you from a costly personal mistake.

I don't think this is over.. That doesn't mean buying is the wrong thing to do for any individual situation, but it does make real estate a suboptimal financial investment.

Troy says

Today’s unpredictable and inefficient markets can be fixed with a) a land value tax that eventually knocks down the acquisition cost of real estate 50% or more

Troy--I think you've written this many times but I fail to see how this would occur with a LVT. No matter how you collect taxes or where they are collected from, all that matters is the total taxation level that one sees. Assuming that you are not raising total tax level, and you are correct that all excess money goes to land, then I don't see how a LVT wouldn't really drive down real estate. The money would just come from a different pocket.

It would make for a more efficient use a land though--that is certainly true.

tatupu70 says

Assuming that you are not raising total tax level, and you are correct that all excess money goes to land, then I don’t see how a LVT wouldn’t really drive down real estate.

Key thing is to increase the supply of housing (and/or reduce demand of land) such that there is true surplus and renters hold the whip hand.

A LVT would incent the market to build up. My life in Tokyo is a good example I guess. I think I'd let the owner of the 5-unit condo I lived in keep all the rent he could collect, since the building's footprint was basically one of a SFH. Same thing with the place I stayed in after getting kicked out of my college dorm after the first year. . . some old lady who had lived there since the Janss Brothers subdivided Westwood in the 1920s. I paid $90/week for the room in her back place, it was a nice quiet neighborhood that I could not afford to buy into (the house sold for $500K after her death in 1993), and a mutually beneficial transaction. Note that both of these places were OWNER OCCUPIED.

SFHs would hopefully fall into a similar state of over-supply, with the community holding a "land bank" of houses for people desiring them. I haven't thought this through at all and how to preserve improvement value in such a lending model is difficult, not that our current system is doing any great job of preserving the capital value of the RE property falling into foreclosure now of course.

I primarily want the LVT slapped on uneconomic users of land and commercial property landlords. Maybe my numbers are wrong, but I just don't see the service commercial property owners are providing as landlords, and this revenue source is immense. Simply removing Prop 13 protections on commercial property would be a first step. If we can't do that then all this talk of Georgism is seriously wasted electrons.

@Troy

Why would you want the state to force communities into building upward? Most towns have zoning laws restricting the height of buildings and minimum lot sizes . . . precisely because most people associate quality of life with relatively low density. The vast majority of Americans would not want to live a life like those in Tokyo.

I don't hope you had something to do with the death of your old landlord. . . seeing that you think they are "liquidatable." Remind me not to enter into mutually beneficial transaction with you, because you consider counter-parties as thieves and liquidatable.

Commercial land use often has very high volatility, due to the fluctuating conditions of the economy (rent income) and carrying cost (mortgage interest rate; they are refi'ed all the time). They are already appraised for much higher value than residential lots per acre. Prop-13 on commercial property is the result of combination between the desire to keep businesses and jobs in town and a bit of skulduggery that is typical in the legislative process.

@Troy,

So you want the US to follow the HK and Singapore model? Guess what? They have even higher real estate prices than we do! Rental housing is widespread in both places.

You really need to give up on your Marxian Labor Theory of Value. Modern economics has long moved beyond that. Karl Marx himself halted the second volume of Das Kapital after learning about Carl Menger's Marginal Utility Theory (invalidating Marx' earlier faith in Ricardian labor theory of value as shown in Volume One of Das Kapital). Value is determined subjectively by the two parties in an exchange, and a voluntary exchange takes place not because both parties agree the two goods are of equal value but because each party has exactly reciprocal preference! e.g. if I have 10 apples and you have 10 oranges, my preference for my first orange is greater than my preference for my 10th apple, and your preference for your first apple is greater than your preference for your 10th orange . . . then we can have an exchange. Whether an apple is exactly equal to an orange is irrelevent and impossible to judge (apples to oranges).

Money for housing exchange (rent) is legit so long as both parties enter into the rental agreement voluntarily, without coercing each other (or third party agents acting on behalf of either). Rental housing provide several very important social functions:

1. Provide housing to people who want housing on intermediate time horizons (a few weeks to a few years), much less expensive than hotel stays or the vagaries of buying houses;

2. Upkeep and maintenance of those same houses. Short-term home users wouldn't pay for long-term improvements like trees, fences, driveways, etc., or even properly fixed roofs.

3. A stable retirement income for retirees; no I'm not in favor of liquidating them.

4. A stable tax base for the town in times of economic downturns and vacancy

5. Lower cost of housing in boom times. I'm have been taking advantage of this for half a decade waiting for purchase price to drop, and you obviously took advantage of that too when renting from the old lady for $90/wk. Cost of housing would be much higher if either of us had to buy. If I had bought a similar house in the area when I started my current lease half a decade ago, I would have lost $300k by now! in capital depreciation alone, and another $270k in interest payment and taxes (total $570k in potential dead losses) instead of the $180k or so that I have paid in rent so far.

6. Less credit-worthy people and families need a place to live too, even if the banks wouldn't lend them enough money to buy a house.

Individual landlords can upkeep and market the rental units much more effectively than a government bureaucracy. We get a hint of what a bureaucracy for housing is like in the fiasco that is known as mortgage lending in the past decade (most of those loans were passed on instead being retained by the lender, like an individual landlord would be have his skin in the game). So long as the government is not forcing people to stay with a particular landlord (like a mental hospital or prison), the private landlords are actually working pretty hard for their money: the tenant can leave and sign up with another landlord at any time! A high LVT would actually function as a cartel price fixing for landlords.

@quesera,

In regard to this particular property, I didn't care if it goes up or down. As far
as I'm concerned, I could afford it. I could practically pay down in 10 years, if
I wanted to. And my son does not have to suffer from asthma being so
close to the beach.

Now the property sits empty. The big beautiful window is broken. The sun
deck is damaged. When I first looked, the house only needed minor repair.
I wish the property was bought by a renovator who at least knows how
to fix and maintain a property. Now, I don't really want to live in it.

I am not so sure whether the housing market is still heading down. Looking
at Silicon Valley, I am not so sure. My real estate agent told me that her
clients are making money flipping still. That sounds like "Lurking" is right.
And suckers are born every minute especially in Silicon Valley.

Like Lurking said, I am just a few grains of sand in the beach. But I think
I would stick to it. It served me well.

@Troy

>My LL was a nice guy and gave me back my Y220,000 in Y10,000 notes when I was leaving after 5 years.

A very rare (in my experience) yet pleasant story. Maybe you can rent from again if you return here...