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On the other hand, landlords are not friends. You create a situation where the owner is building equity and the friends are building the owner's equity. I co b

On the other hand, landlords are not friends. You create a situation where the owner is building equity and the friends are building the owner's equity. I co bought a house with my wife and another couple. We spent about 18 months figuring out the legal agreement, including many permutations on failure to pay. Fwiw, our 'failure to pay' arrangement is in two steps. First step is the generation of interest bearing loans, secured against the non paying owner's equity. (Effectively auto sale of part of the non-paying owner's portion of the house.) Stage two is an actual sale process, which might be owner to owner, or might be dissolving entirely and selling the house. All of this is in our TiC contact. On the flip side, we were able to pay 40% down on an awesome place that we couldn't have done individually, and even the lowest earner is getting significant equity because of the way we've structured our terms. Rent is theft.

gnicholas 8y ago
> You create a situation where the owner is building equity and the friends are building the owner's equity. Conversely, if there's an earthquake/fire/mold problem, then the equity holder is on the hook and the renters can just move on.
chrisseaton 8y ago
> Rent is theft. Wow that's strong. Do you really believe anyone who offers property for rent at market price is morally equivalent to a conventional thief?
- jjoonathan 8y ago
  My take on it isn't that strong, but perhaps it will give you an idea where they're coming from. Part of rent pays for goods and services: construction costs, upkeep costs, administration costs, insurance costs, etc. Insofar as it does that, I believe that it is a healthy net-positive economic exchange. Rent also partly goes to pay an individual or company for the service of everyone else staying away from that particular chunk of space. That's the problematic part. See also: banks selling mortgages are financial arms dealers profiting off of exacerbating all of this. The real trick is figuring out what to do about it and how, of course.
  - chrisseaton 8y ago
    > Rent also partly goes to pay an individual or company for the service of everyone else staying away from that particular chunk of space. That's the problematic part. That sounds like a general aversion to any property rights or right to privacy at all, if you mean that you're paying for nobody else to come and be in the property at the same time as you. Not sure how it's specific to rent?
    - jjoonathan 8y ago
      It's an aversion to a very specific form of property right. Henry George is the one to look up for details. It's not an aversion to property rights in general. In particular, it isn't an aversion to allowing private ownership of the means of production (communism) or, on the flip side of the modern acceptability coin, private ownership of people (slavery). You're right that the phrasing of the argument was general. There are more specific moral arguments on every side of every one of these, but the practical side of it always boils down to: how do you preserve incentives in a market's growth phase while discouraging rents (in the economic sense of the word) in the steady state? That's a tricky one, and I don't claim to have a general answer, but I'm pretty sure that in the particular case of land it has something to do with society not making unbounded promises in exchange for bounded goods, e.g. of eternal, transferable land exclusivity to a private entity in exchange for building a log cabin on it. From that perspective, the government of past generations stole the exclusivity rights from modern citizens, and the present landowners are in a situation similar to any other possessor of stolen goods.
- imtringued 8y ago
  Tool rental maybe. I once rented a power tool for 30€ that cost 200€ in total. 7 days and I could just buy it outright... However the residential rent market is pretty fair in my opinion. It is viable for an individual to rent for a whole lifetime and not pay significantly more than the property cost in the first place. As a comparison: I could buy that power tool hundreds of times if I rented it for three years.
charlesdm 8y ago
Rent means having access to liquid capital that you can invest in alternatives that are not property. It also means: no property taxes, maintenance costs, stamp duty, and it makes it easy to move.
- chrisseaton 8y ago
  > Rent means having access to liquid capital No rent means you're spending more on housing, as you need to pay for someone's mortgage, costs and their profit, so it means you save less and so have less liquid capital, and also don't have any non-liquid capital in your equity. > It also means: no property taxes, maintenance costs, stamp duty No you're paying for all that, via your rent.
  - dragonwriter 8y ago
    > > Rent means having access to liquid capital > Rent means you're spending more on housing That's not a contradiction; liquidity has a cost. Yes, by tieing up capital in property purchase, you can, on average, trade liquidity for lower total cost if you are using the property forever. (Whether the actual total cost ends up being lower if you ever decide to move depends on market conditions and timing and transaction costs; transaction costs on both ends of a home purchase or sale are a lot higher than entering or exiting a residential lease.)
    - chrisseaton 8y ago
      I still don't understand what you mean. If I pay $2000 a month rent I'm always going to have less liquid capital than if I pay $1000 a month mortgage, aren't I? The mortgage payer ties up their money in the equity so it's not liquid, but the rent payer's money is just gone, so it's infinitely not liquid, and on top of that more of their money is gone. When you've paid off the mortgage the mortgage payer has more liquid capital, and a property.
      - spoonie 8y ago
        You’re forgetting about the opportunity cost of locking up all of that capital in an asset that has a high carrying cost (maintenance, taxes). The initial downpayment could have been used for other investments, so you have to compare how much you could have earned if you’d invested and rented instead of bought the house. https://youtu.be/NZR_vMTLfIk https://youtu.be/NZR_vMTLfIk
ThrustVectoring 8y ago
For most people's financial situation, home equity is less desirable than its dollar value. Housing prices are based off prevailing rents, which are based off prevailing wages. These prevailing wages are a large factor into your wages, too, and your future wages are one of the biggest factors going into your overall financial health. Owning your own house is thus exposed to significant downside risks that can hit both your income and your assets simultaneously. Imagine being a Ford employee who bought a house in Detroit in 2007. The auto employers ran into severe issues and many cut employee pay in 2008, right when Detroit's housing prices basically fell by half. The only way to make matters worse would be to own significant amounts of Ford stock, too. >First step is the generation of interest bearing loans, secured against the non paying owner's equity. (Effectively auto sale of part of the non-paying owner's portion of the house.) Yeah, that's actually a great point that I should have thought more about. Co-owners have home equity, which means that you have an asset right there that the other owners can lay claim to in case of non-performance. This works better with significant down payment to ensure positive equity, too. >Stage two is an actual sale process, which might be owner to owner, or might be dissolving entirely and selling the house. All of this is in our TiC contact. Suppose a co-owner got a job offer halfway across the country that pays significantly more than their current salary. Would they be able to unwind their position here without significant loss of equity? Or does an entering agreement like this effectively limit your labor mobility?
- sdenton4 8y ago
  For the distant job offer case: There are a number of ways out can play out, depending on circumstances. Can do an owner to owner sale, if possible. Or we can fail over to taking a renter, which (given my position stated above) is less than ideal, but a fine resolution for the short term. Or can always fail over to sale and a move if all else fails. (Which, fwiw, is equivalent to what any home owner taking a distant job offer would face, though more people are impacted. The fall back to renting, though, leaves other owners in the house, to ensure things are well taken care of, at least; much better than the absence landlord situation...)
shabirgilkar 8y ago
and paying interest to bank is executive theft :)

gnicholas 8y ago

> You create a situation where the owner is building equity and the friends are building the owner's equity. Conversely, if there's an earthquake/fire/mold problem, then the equity holder is on the hook and the renters can just move on.

chrisseaton 8y ago

> Rent is theft. Wow that's strong. Do you really believe anyone who offers property for rent at market price is morally equivalent to a conventional thief?

jjoonathan 8y ago
My take on it isn't that strong, but perhaps it will give you an idea where they're coming from. Part of rent pays for goods and services: construction costs, upkeep costs, administration costs, insurance costs, etc. Insofar as it does that, I believe that it is a healthy net-positive economic exchange. Rent also partly goes to pay an individual or company for the service of everyone else staying away from that particular chunk of space. That's the problematic part. See also: banks selling mortgages are financial arms dealers profiting off of exacerbating all of this. The real trick is figuring out what to do about it and how, of course.
- chrisseaton 8y ago
  > Rent also partly goes to pay an individual or company for the service of everyone else staying away from that particular chunk of space. That's the problematic part. That sounds like a general aversion to any property rights or right to privacy at all, if you mean that you're paying for nobody else to come and be in the property at the same time as you. Not sure how it's specific to rent?
  - jjoonathan 8y ago
    It's an aversion to a very specific form of property right. Henry George is the one to look up for details. It's not an aversion to property rights in general. In particular, it isn't an aversion to allowing private ownership of the means of production (communism) or, on the flip side of the modern acceptability coin, private ownership of people (slavery). You're right that the phrasing of the argument was general. There are more specific moral arguments on every side of every one of these, but the practical side of it always boils down to: how do you preserve incentives in a market's growth phase while discouraging rents (in the economic sense of the word) in the steady state? That's a tricky one, and I don't claim to have a general answer, but I'm pretty sure that in the particular case of land it has something to do with society not making unbounded promises in exchange for bounded goods, e.g. of eternal, transferable land exclusivity to a private entity in exchange for building a log cabin on it. From that perspective, the government of past generations stole the exclusivity rights from modern citizens, and the present landowners are in a situation similar to any other possessor of stolen goods.
imtringued 8y ago
Tool rental maybe. I once rented a power tool for 30€ that cost 200€ in total. 7 days and I could just buy it outright... However the residential rent market is pretty fair in my opinion. It is viable for an individual to rent for a whole lifetime and not pay significantly more than the property cost in the first place. As a comparison: I could buy that power tool hundreds of times if I rented it for three years.

charlesdm 8y ago

Rent means having access to liquid capital that you can invest in alternatives that are not property. It also means: no property taxes, maintenance costs, stamp duty, and it makes it easy to move.

chrisseaton 8y ago
> Rent means having access to liquid capital No rent means you're spending more on housing, as you need to pay for someone's mortgage, costs and their profit, so it means you save less and so have less liquid capital, and also don't have any non-liquid capital in your equity. > It also means: no property taxes, maintenance costs, stamp duty No you're paying for all that, via your rent.
- dragonwriter 8y ago
  > > Rent means having access to liquid capital > Rent means you're spending more on housing That's not a contradiction; liquidity has a cost. Yes, by tieing up capital in property purchase, you can, on average, trade liquidity for lower total cost if you are using the property forever. (Whether the actual total cost ends up being lower if you ever decide to move depends on market conditions and timing and transaction costs; transaction costs on both ends of a home purchase or sale are a lot higher than entering or exiting a residential lease.)
  - chrisseaton 8y ago
    I still don't understand what you mean. If I pay $2000 a month rent I'm always going to have less liquid capital than if I pay $1000 a month mortgage, aren't I? The mortgage payer ties up their money in the equity so it's not liquid, but the rent payer's money is just gone, so it's infinitely not liquid, and on top of that more of their money is gone. When you've paid off the mortgage the mortgage payer has more liquid capital, and a property.
    - spoonie 8y ago
      You’re forgetting about the opportunity cost of locking up all of that capital in an asset that has a high carrying cost (maintenance, taxes). The initial downpayment could have been used for other investments, so you have to compare how much you could have earned if you’d invested and rented instead of bought the house. https://youtu.be/NZR_vMTLfIk https://youtu.be/NZR_vMTLfIk

ThrustVectoring 8y ago

For most people's financial situation, home equity is less desirable than its dollar value. Housing prices are based off prevailing rents, which are based off prevailing wages. These prevailing wages are a large factor into your wages, too, and your future wages are one of the biggest factors going into your overall financial health. Owning your own house is thus exposed to significant downside risks that can hit both your income and your assets simultaneously. Imagine being a Ford employee who bought a house in Detroit in 2007. The auto employers ran into severe issues and many cut employee pay in 2008, right when Detroit's housing prices basically fell by half. The only way to make matters worse would be to own significant amounts of Ford stock, too. >First step is the generation of interest bearing loans, secured against the non paying owner's equity. (Effectively auto sale of part of the non-paying owner's portion of the house.) Yeah, that's actually a great point that I should have thought more about. Co-owners have home equity, which means that you have an asset right there that the other owners can lay claim to in case of non-performance. This works better with significant down payment to ensure positive equity, too. >Stage two is an actual sale process, which might be owner to owner, or might be dissolving entirely and selling the house. All of this is in our TiC contact. Suppose a co-owner got a job offer halfway across the country that pays significantly more than their current salary. Would they be able to unwind their position here without significant loss of equity? Or does an entering agreement like this effectively limit your labor mobility?

sdenton4 8y ago
For the distant job offer case: There are a number of ways out can play out, depending on circumstances. Can do an owner to owner sale, if possible. Or we can fail over to taking a renter, which (given my position stated above) is less than ideal, but a fine resolution for the short term. Or can always fail over to sale and a move if all else fails. (Which, fwiw, is equivalent to what any home owner taking a distant job offer would face, though more people are impacted. The fall back to renting, though, leaves other owners in the house, to ensure things are well taken care of, at least; much better than the absence landlord situation...)

shabirgilkar 8y ago

and paying interest to bank is executive theft :)