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I like the cut of your jib. I've been considering buying rental properties to supplement my income, but something deep inside somewhere, based on living close

by t2015_08_25 11y ago

I like the cut of your jib. I've been considering buying rental properties to supplement my income, but something deep inside somewhere, based on living close to people well below my income level as one of a 4-unit building, prevented me from doing it. When I tried to compute how much rent I would charge, I realized I would be profiting simply by taking money from them because they have been unable to accumulate capital at the pace I have been. While that does indicate some skill on my part - hey, I scrimp and shop wisely - I don't feel it morally qualifies me to skim from others. That would be paying myself twice. When I scrimp and shop wisely, I benefit from having extra savings, but using that savings to get more from others without adding more value is something I don't feel right doing. I could morally accept money as a landlord based on my labor doing maintenance and time spent bookkeeping, I suppose. That - speaking as a current tenant - does have some value, but I just don't think it would be much, approximately that of a day laborer or accountant for several hours a week. So screw it, i'll make a lot more money creating something of real value. Thank you for helping me recognize and articulate this, branchless.

branchless 11y ago
Glad to help. Spread the word and don't accept the empty US rhetoric that "it's just business, baby". Good for you for having some back-bone. Deriving income by adding value is fine. The rentier just takes.
OrwellianChild 11y ago
I'm really confused... The thing of value you are providing as a landlord is housing. How is it skimming? Putting money towards a house/condo instead of investing it in business has an opportunity cost. You lose out on the profits from dividends/interest/cap gains. That has to be replaced. If you charge too much rent, other people will under-cut you. The price is set by available housing. Where is the deceit? Do you feel you would owe people the freedom to use your property free-of-charge? What about the mortgage payments you endure? The maintenance/upkeep (roofs, siding, carpet, plumbing, electrical, all amortized over the life of the building)? Should this be a loss you take in order to let someone else sleep in your house? Disclosure of bias: In Seattle where I live, the cost of real estate is higher than the prevailing rents, when you factor mortgage payments, maintenance, utilities, HOA, etc. This makes it a little easier for me to see the equity in pricing between rentals and owned homes. It may be different in your parts of the world.
- t2015_08_25 11y ago
  It's got nothing to do with deceit or skimming, it's power. There is no fraud, it would be simply taking advantage of people beyond the amount of value that I would be interesting in providing. Your allusion to a market that would correct the price doesn't account for a market which no tenants can enter because none of them can afford the entrance (a 20% down payment). They'll get the benefit of housing no matter how much I would charge, but if I charge more than the value of the maintenance and accounting them I would be exploiting them, taking advantage of their inability to produce capital in the time it's taken me to produce it. And everyone else who is in the position I am could exploit them just as easily so the market doesn't help there. It's like gas prices: if so many gas stations can compete, how come they prices aren't driven down to nothing? Because of the entrance cost to the market. You can't start a well and refinery, so you have to go to one of the established ones. For luxury items like phones, art, fancy cars, etc., I don't care about charging people a lot of money. But for water, air, food, medical and housing, which people have no choice to acquire or consume I'm not going to gouge them. This is not some rational choice about what a person or market theory can or should do, this is my personal code of ethics.
  - OrwellianChild 11y ago
    Not trying to change your mind, and I appreciate the chance for a dialogue... Your perspective seems based on the idea that housing (shelter) is a basic need and should be provided for, and at some fundamental level I'm inclined to agree. (In my mind, it would be pretty basic housing...) I did want to call attention to your gas prices example... Gas prices are driven down to approximately the cost of getting more oil out of the ground, refining it into gasoline, and transporting it to your local Chevron. These are costs inherent to "making gas" - it's not free. The same goes for housing, so whether you'd have renters pay it or have the government pay it for them, someone's going to have to cut down trees, pour concrete, level land, install plumbing, etc. This is this "value" of the housing I'm talking about, which is separate from the moral right to shelter that seems to guide your judgement on the issue. Thanks for being willing to engage me in the discussion!
    - 11y ago

branchless 11y ago

Glad to help. Spread the word and don't accept the empty US rhetoric that "it's just business, baby". Good for you for having some back-bone. Deriving income by adding value is fine. The rentier just takes.

OrwellianChild 11y ago

I'm really confused... The thing of value you are providing as a landlord is housing. How is it skimming? Putting money towards a house/condo instead of investing it in business has an opportunity cost. You lose out on the profits from dividends/interest/cap gains. That has to be replaced. If you charge too much rent, other people will under-cut you. The price is set by available housing. Where is the deceit? Do you feel you would owe people the freedom to use your property free-of-charge? What about the mortgage payments you endure? The maintenance/upkeep (roofs, siding, carpet, plumbing, electrical, all amortized over the life of the building)? Should this be a loss you take in order to let someone else sleep in your house? Disclosure of bias: In Seattle where I live, the cost of real estate is higher than the prevailing rents, when you factor mortgage payments, maintenance, utilities, HOA, etc. This makes it a little easier for me to see the equity in pricing between rentals and owned homes. It may be different in your parts of the world.

t2015_08_25 11y ago
It's got nothing to do with deceit or skimming, it's power. There is no fraud, it would be simply taking advantage of people beyond the amount of value that I would be interesting in providing. Your allusion to a market that would correct the price doesn't account for a market which no tenants can enter because none of them can afford the entrance (a 20% down payment). They'll get the benefit of housing no matter how much I would charge, but if I charge more than the value of the maintenance and accounting them I would be exploiting them, taking advantage of their inability to produce capital in the time it's taken me to produce it. And everyone else who is in the position I am could exploit them just as easily so the market doesn't help there. It's like gas prices: if so many gas stations can compete, how come they prices aren't driven down to nothing? Because of the entrance cost to the market. You can't start a well and refinery, so you have to go to one of the established ones. For luxury items like phones, art, fancy cars, etc., I don't care about charging people a lot of money. But for water, air, food, medical and housing, which people have no choice to acquire or consume I'm not going to gouge them. This is not some rational choice about what a person or market theory can or should do, this is my personal code of ethics.
- OrwellianChild 11y ago
  Not trying to change your mind, and I appreciate the chance for a dialogue... Your perspective seems based on the idea that housing (shelter) is a basic need and should be provided for, and at some fundamental level I'm inclined to agree. (In my mind, it would be pretty basic housing...) I did want to call attention to your gas prices example... Gas prices are driven down to approximately the cost of getting more oil out of the ground, refining it into gasoline, and transporting it to your local Chevron. These are costs inherent to "making gas" - it's not free. The same goes for housing, so whether you'd have renters pay it or have the government pay it for them, someone's going to have to cut down trees, pour concrete, level land, install plumbing, etc. This is this "value" of the housing I'm talking about, which is separate from the moral right to shelter that seems to guide your judgement on the issue. Thanks for being willing to engage me in the discussion!
  - 11y ago