4 ms·

So I know a guy that he bought some real estate he owns 3 properties I think. He isn't a millionaire just a software engineer working the 9-5 and the properties

by hpoe 6y ago

So I know a guy that he bought some real estate he owns 3 properties I think. He isn't a millionaire just a software engineer working the 9-5 and the properties exist mostly to help him prepare for retirement. Now he has some money set aside so that if one of his properties goes dormant he can cover it for a while, but if he were to lose all three of them at the same time. That would be bad. Then you suggest the government can just buy him out at market rates. Who decides what the market rate is? What if the government decides to value the property for $50,000 less than it is worth? Well suddenly he has just had $150,000 taken from him by the government. When things restabiloxe what do we do then? The government owns tons of housing? Who is going to manage and administer that? If they dump them than all that you've done is transferred the properties from small owners to massive multi-million dollar firms that managed to take the hit. What about people who got laid off and still don't have a job after it is over? Because it was a result of the coronavirus do we just continue to say it's okay don't pay rent? If we do that guarantee a year from now tons of properties won't be paying rent still. It sounds like an easy and simple fix but it is usually more complicated than that and drastic decisions made will often have downsteam effect for years and decades that we can't see now.

ethanbond 6y ago
As far as pricing: simply purchase the properties for whatever their value was last declared on tax forms. Can even add 5-10% for good measure. You lowballed the government to decrease tax burden? No problem, that’s the price you get. This isn’t an anti-millionaire plot, so it doesn’t matter much what he earns. This is a hibernate-then-stimulate plot. We cannot hibernate if businesses and individuals are getting absolutely gutted at the end of each month. We cannot stimulate if stimulus checks are going directly into landlords’ pockets. After this is over, yes, either the government can keep it (as Singapore does) or even sell them back, giving preference to the original owners at the original price (who had been kept employed throughout the hibernation). The land itself is not charging landlords to hold it, so landlords don’t need to be charging tenants to exist on it (except mortgages/taxes, which would be frozen).
- JMTQp8lwXL 6y ago
  In some states (e.g., California) the taxed value is not equal to the market value. Especially for home purchases made decades ago.
  - benrbray 6y ago
    Sounds like a problem that should be fixed by setting the tax value equal to market value.
    - JMTQp8lwXL 6y ago
      Prior to 1978, that was indeed the case. Rising property values were kicking seniors on fixed incomes out of their homes, then Prop 13 was passed.
baby 6y ago
This is the problem when people start treating real estate as an investment when it should be a human right.
- aserafini 6y ago
  I think the problem is individuals treating real estate as a risk free asset (it’s not) and our cultural acceptance of retail investors placing highly leveraged bets (via mortgages) on those assets. If you have a bad portfolio (100% real estate) and you’re highly leveraged, you’re going to have a bad time.
  - WWLink 6y ago
    This sounds most correct to me. A lot of landlords out here see their houses as ATMs and milk them for all its worth. You can't even "take your business elsewhere" because they're all janky and in bad need of a remodel.
ipnon 6y ago
The fairest solution would be for tenants to pay as much as they can instead of the government declaring that all tenants in the nation are incapable of paying the entirety of their rent for the foreseeable future (because this is obviously false, some tenants can pay all or their rent, some of them can pay some of it). You are correct here. The only caveat is that ownership of financial assets including real estate is inherently risky. A monthly rent to retain the right to use a financial asset is in many ways the opposite, both for the reasons of not being liable for the underlying asset in addition to the variety of tenant rights in this county. Your guy assumed these risks when he purchased his 3 properties. An abhorrent attitude is emerging in the United States among the ownership class. They feel they are entitled to steady, eternal returns on their financial assets, equity, real estate or otherwise. Concurrently the labor class has no guarantee of a right to steady, eternal income through sale of their time and energy. In nature, ownership of anything is no guarantee of receiving from it productive benefits. We would be wise as Americans to remember this when we expect anything more from the civil society we inhabit.
- deleted 6y ago
  [deleted]
grecy 6y ago
The comment you replied to suggested freezing all mortgage and rent. So the guy guy know doesn't have to pay the mortgages on the properties and his tenants don't have to pay rent. No need to sell them at all, everything is just on hold.
- pfranz 6y ago
  Mortgages seem a lot simpler to me. You just keep accruing interested and add payments onto the end of the mortgage. With rent there are a few issues--you just get to live there for free? Do you add rent onto the backend (good luck collecting on that)? If you own a property and are renting it out there are other expenses rent covers; sometimes it pays for utilities, it covers insurance, property tax, and maintenance, sometimes it pays the salaries of a property manager or lawn service. One would hope that mortgages are the largest cost and other services could be negotiated with. I think eliminating property tax is infeasible for almost all areas. Depending on the area, that's where a majority of the local government's income comes from and most local governments are not allowed to run a deficit. However, like income taxes, many areas are delaying the due date.
  - TheSpiceIsLife 6y ago
    > keep accruing interested Why? Why does some particular type of business get a free pass to profit from this scenario?
    - pfranz 6y ago
      Loan deferments are already a common practice. Even if you came up with a different accommodation, the point is that mortgages are significantly simpler to address compared to rent.
      - TheSpiceIsLife 6y ago
        I keep seeing people claim that loans should keep accruing interest when people have had their livelihoods evaporate by government degree. My point is: why ya’ll keep saying that? Just freeze the loans. Should be a simple as fuck to implement.
pfranz 6y ago
Item #1 was to cancel mortgage payments and property taxes. This person would only be paying for things like maintenance contracts, lawn service, and insurance. I would think those would be relatively low and all of them are very likely negotiable right now. I know many are proactively reaching out to accommodate. Much like Japan subsidizing 100% of salaries, there would be a timetable for it to sunset since it's obviously can't happen indefinitely. Not that I think that idea is 100% feasible (I don't think states and counties can function without property taxes), but losing an investment seems like a better option than losing where you live. Ideally, "the market" would fix itself. Nobody has leverage here. It's not like there are new tenants waiting to move in and pay rent. So everyone is motivated to renegotiate--unfortunately, the volume of renegotiations often means enforcing silly policies like "evict everyone immediately" might get used. This happened in 2008. I, too, am worried about consolidation. I know that will happen without any action, and will likely happy if the government does.
zebnyc 6y ago
If I buy a stock at $100 with the assumption that there is an upside that it could go to $1000 but the lowest it could go to is $95 cause the government will step in, that is practically a risk free investment. If there is a lesson to be learnt from this crisis and the 2008 housing crash, it is to invest in real estate as a risk free investment. Housing is too big to fail.
- chii 6y ago
  do you know how many people lost their houses during the GFC? housing has never been bailed out. Banks have been bailed out for lending money as mortgages for people who couldn't have ever paid up.
Pfhreak 6y ago
This person has equity in three properties. Are they equally invested elsewhere or did they over leverage their current properties? Because something isn't adding up - either they put all their chips on one number (real estate) or they are playing with a lot more chips than you are suggesting.

by hpoe 6y ago

ethanbond 6y ago

As far as pricing: simply purchase the properties for whatever their value was last declared on tax forms. Can even add 5-10% for good measure. You lowballed the government to decrease tax burden? No problem, that’s the price you get. This isn’t an anti-millionaire plot, so it doesn’t matter much what he earns. This is a hibernate-then-stimulate plot. We cannot hibernate if businesses and individuals are getting absolutely gutted at the end of each month. We cannot stimulate if stimulus checks are going directly into landlords’ pockets. After this is over, yes, either the government can keep it (as Singapore does) or even sell them back, giving preference to the original owners at the original price (who had been kept employed throughout the hibernation). The land itself is not charging landlords to hold it, so landlords don’t need to be charging tenants to exist on it (except mortgages/taxes, which would be frozen).

JMTQp8lwXL 6y ago
In some states (e.g., California) the taxed value is not equal to the market value. Especially for home purchases made decades ago.
- benrbray 6y ago
  Sounds like a problem that should be fixed by setting the tax value equal to market value.
  - JMTQp8lwXL 6y ago
    Prior to 1978, that was indeed the case. Rising property values were kicking seniors on fixed incomes out of their homes, then Prop 13 was passed.

baby 6y ago

This is the problem when people start treating real estate as an investment when it should be a human right.

aserafini 6y ago
I think the problem is individuals treating real estate as a risk free asset (it’s not) and our cultural acceptance of retail investors placing highly leveraged bets (via mortgages) on those assets. If you have a bad portfolio (100% real estate) and you’re highly leveraged, you’re going to have a bad time.
- WWLink 6y ago
  This sounds most correct to me. A lot of landlords out here see their houses as ATMs and milk them for all its worth. You can't even "take your business elsewhere" because they're all janky and in bad need of a remodel.

ipnon 6y ago

The fairest solution would be for tenants to pay as much as they can instead of the government declaring that all tenants in the nation are incapable of paying the entirety of their rent for the foreseeable future (because this is obviously false, some tenants can pay all or their rent, some of them can pay some of it). You are correct here. The only caveat is that ownership of financial assets including real estate is inherently risky. A monthly rent to retain the right to use a financial asset is in many ways the opposite, both for the reasons of not being liable for the underlying asset in addition to the variety of tenant rights in this county. Your guy assumed these risks when he purchased his 3 properties. An abhorrent attitude is emerging in the United States among the ownership class. They feel they are entitled to steady, eternal returns on their financial assets, equity, real estate or otherwise. Concurrently the labor class has no guarantee of a right to steady, eternal income through sale of their time and energy. In nature, ownership of anything is no guarantee of receiving from it productive benefits. We would be wise as Americans to remember this when we expect anything more from the civil society we inhabit.

deleted 6y ago
[deleted]

grecy 6y ago

The comment you replied to suggested freezing all mortgage and rent. So the guy guy know doesn't have to pay the mortgages on the properties and his tenants don't have to pay rent. No need to sell them at all, everything is just on hold.

pfranz 6y ago
Mortgages seem a lot simpler to me. You just keep accruing interested and add payments onto the end of the mortgage. With rent there are a few issues--you just get to live there for free? Do you add rent onto the backend (good luck collecting on that)? If you own a property and are renting it out there are other expenses rent covers; sometimes it pays for utilities, it covers insurance, property tax, and maintenance, sometimes it pays the salaries of a property manager or lawn service. One would hope that mortgages are the largest cost and other services could be negotiated with. I think eliminating property tax is infeasible for almost all areas. Depending on the area, that's where a majority of the local government's income comes from and most local governments are not allowed to run a deficit. However, like income taxes, many areas are delaying the due date.
- TheSpiceIsLife 6y ago
  > keep accruing interested Why? Why does some particular type of business get a free pass to profit from this scenario?
  - pfranz 6y ago
    Loan deferments are already a common practice. Even if you came up with a different accommodation, the point is that mortgages are significantly simpler to address compared to rent.
    - TheSpiceIsLife 6y ago
      I keep seeing people claim that loans should keep accruing interest when people have had their livelihoods evaporate by government degree. My point is: why ya’ll keep saying that? Just freeze the loans. Should be a simple as fuck to implement.

pfranz 6y ago

Item #1 was to cancel mortgage payments and property taxes. This person would only be paying for things like maintenance contracts, lawn service, and insurance. I would think those would be relatively low and all of them are very likely negotiable right now. I know many are proactively reaching out to accommodate. Much like Japan subsidizing 100% of salaries, there would be a timetable for it to sunset since it's obviously can't happen indefinitely. Not that I think that idea is 100% feasible (I don't think states and counties can function without property taxes), but losing an investment seems like a better option than losing where you live. Ideally, "the market" would fix itself. Nobody has leverage here. It's not like there are new tenants waiting to move in and pay rent. So everyone is motivated to renegotiate--unfortunately, the volume of renegotiations often means enforcing silly policies like "evict everyone immediately" might get used. This happened in 2008. I, too, am worried about consolidation. I know that will happen without any action, and will likely happy if the government does.

zebnyc 6y ago

If I buy a stock at $100 with the assumption that there is an upside that it could go to $1000 but the lowest it could go to is $95 cause the government will step in, that is practically a risk free investment. If there is a lesson to be learnt from this crisis and the 2008 housing crash, it is to invest in real estate as a risk free investment. Housing is too big to fail.

chii 6y ago
do you know how many people lost their houses during the GFC? housing has never been bailed out. Banks have been bailed out for lending money as mortgages for people who couldn't have ever paid up.

Pfhreak 6y ago

This person has equity in three properties. Are they equally invested elsewhere or did they over leverage their current properties? Because something isn't adding up - either they put all their chips on one number (real estate) or they are playing with a lot more chips than you are suggesting.