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It's tricky. One person takes out a loan to start a small business and it fails due the virus. Another takes out a loan to purchase properties and be a landlord

It's tricky. One person takes out a loan to start a small business and it fails due the virus. Another takes out a loan to purchase properties and be a landlord who also gets wiped out. Economic rent is a societal problem. But landlords aren't actually reaping in the profits most of the time, and it might be argued that they're providing useful services to people. On the other hand, most go into it with the hope of just sitting on stuff and making passive income for low amounts of work. If landlords are doing societal good, it's mostly accidental, and at best a local maxima of a well function system. I'd say in the scheme of suffering going on right now this doesn't feel like the most deserving of sympathy. Taking out huge loans is a risk. As a society, this is not a good way for members to build wealth. But they're not villains by any means.

fred_is_fred 6y ago
I agree with your assessment - they are not villains, but they also don't need a bailout from me or you, because they took a risk in making the investment. It should not be a guarantee because if it is we may as well just let the government me the landlord.
sokoloff 6y ago
I think it's more than "might be argued" that providing housing to people seeking a rented place to live is a useful service to people.
ethanbond 6y ago
What’s tricky? The small business owner employs people. The landlord merely purchases the right to keep productivity off of valuable land. Agreed that they are not villains, but nor should we act like they’re doing some service. No one pays their rent because they believe their landlord is adding value. They pay it for access to the jobs, amenities, services that the community (not the landlord) provides.
- zaroth 6y ago
  You pay rent in return for the right of use of the property. Generally you do this because you either do not have the necessary credit to obtain your own property, can not afford the transaction costs of buying/selling a property in your desired timeframe, or simply want the convenience of not having to maintain it yourself. None of this is really the point. Generally when people pay for a service, if they stop paying, the company is allowed to stop providing the service. Eviction laws already impose a higher bar on “stopping service” in the case of rental housing, but an outright moratorium on evictions is just another way the government response to COVID wipes out small/independent business for the benefit of mega corporations. No one should be forced by government decree to offer their property or services for free. I’m sure at some point there is a Constitutional issue to be argued.
  - ethanbond 6y ago
    I think I'm going to launch a new business format where we lease out air for people to breathe, and then convince them that I'm doing them a service by allowing them to breathe it. In any case, I'm not asking for a moratorium on eviction per se. I'm a proponent of giving landlords 100% of the revenues created by their property, but 0% of the revenues created by the things around their property. The Land Value Tax (LVT) mentioned elsewhere on this thread is exactly that.
    - zaroth 6y ago
      If politicians decide to make it illegal to charge rent, or to evict people who don’t pay their rent, they should be anticipating the short and long term effects, and they should be expected to compensate property owners. In this case it’s fair to note as TFA does that the burden will be disproportionately borne by individual landlords holding low income housing. The more units someone holds the more diversified and the less likely this new government policy will wipe them out. Perhaps it is the law of unintended consequences that a policy like this will cause long-term harm to renters by centralizing the market and reducing competition. Also worth noting that the end result of a foreclosure is not just the renter losing their home, but maybe the landlord as well. I don’t understand your quip about renting air. I can understand somewhat being angered over turning a residential home into a short-term AirBnB. But buying a property and renting it is making housing more accessible not less, and a market of individual landlords each buying one house and renting it is extremely competitive. If we were debating whether the government should pay landlords monthly for their vacant units we could agree that bailouts are not appropriate. But forcing someone to rent their personal property for free is not generally ethical or legal. Real Estate taxes are an interesting debate. It’s worth mentioning that whatever the tax rate, the cost of taxes is largely borne by the renter. In fact taxes are a major component of rent cost. Assuming you bundle no services at all (landscaping, utilities, etc.), a property generally cannot rent for less than their taxes, interest, upkeep/depreciation, and a risk adjusted return. There are a massive number of options for investors, they won’t choose to invest in a vehicle which doesn’t cover those four basic things. There are some very narrow circumstances where an investor might depend on equity appreciation to make up for an operating loss. This is more akin to speculating than investing and is significantly more risky.
- klmadfejno 6y ago
  Land lords handle maintenance, property ownership work, snow shoveling, some utilities appliances, some degree of social policy enforcement, etc. Not all small businesses employ other people.
  - ethanbond 6y ago
    As mentioned below, landlords ought to be entitled to 100% of the gains of those efforts. It is the gains due to community investments that they are not entitled to.
  - aries1980 6y ago
    In countries I lived in, it is the tenants' responsibility to maintain the property and its surroundings. Tenants need to move the lawn, cut the trees back, shovel snow, get out the weeds, remove algae off the patio, etc. For flats, concierge service and maintenance is built in the monthly payment, usually included of the lease fee that the landlord pays (about £3/sqft/mo in the UK).
sudosysgen 6y ago
Landlords are always profiting. Their total equity increases at ridiculous rates with minimal risk. I don't understand why we use a different definition of profit for landlords and for other operation. Profit is the derivative of wealth, the derivative of their wealth is positive, thus they are profiting, even if they don't intake enough money to pay for rent.

fred_is_fred 6y ago

I agree with your assessment - they are not villains, but they also don't need a bailout from me or you, because they took a risk in making the investment. It should not be a guarantee because if it is we may as well just let the government me the landlord.

sokoloff 6y ago

I think it's more than "might be argued" that providing housing to people seeking a rented place to live is a useful service to people.

ethanbond 6y ago

What’s tricky? The small business owner employs people. The landlord merely purchases the right to keep productivity off of valuable land. Agreed that they are not villains, but nor should we act like they’re doing some service. No one pays their rent because they believe their landlord is adding value. They pay it for access to the jobs, amenities, services that the community (not the landlord) provides.

zaroth 6y ago
You pay rent in return for the right of use of the property. Generally you do this because you either do not have the necessary credit to obtain your own property, can not afford the transaction costs of buying/selling a property in your desired timeframe, or simply want the convenience of not having to maintain it yourself. None of this is really the point. Generally when people pay for a service, if they stop paying, the company is allowed to stop providing the service. Eviction laws already impose a higher bar on “stopping service” in the case of rental housing, but an outright moratorium on evictions is just another way the government response to COVID wipes out small/independent business for the benefit of mega corporations. No one should be forced by government decree to offer their property or services for free. I’m sure at some point there is a Constitutional issue to be argued.
- ethanbond 6y ago
  I think I'm going to launch a new business format where we lease out air for people to breathe, and then convince them that I'm doing them a service by allowing them to breathe it. In any case, I'm not asking for a moratorium on eviction per se. I'm a proponent of giving landlords 100% of the revenues created by their property, but 0% of the revenues created by the things around their property. The Land Value Tax (LVT) mentioned elsewhere on this thread is exactly that.
  - zaroth 6y ago
    If politicians decide to make it illegal to charge rent, or to evict people who don’t pay their rent, they should be anticipating the short and long term effects, and they should be expected to compensate property owners. In this case it’s fair to note as TFA does that the burden will be disproportionately borne by individual landlords holding low income housing. The more units someone holds the more diversified and the less likely this new government policy will wipe them out. Perhaps it is the law of unintended consequences that a policy like this will cause long-term harm to renters by centralizing the market and reducing competition. Also worth noting that the end result of a foreclosure is not just the renter losing their home, but maybe the landlord as well. I don’t understand your quip about renting air. I can understand somewhat being angered over turning a residential home into a short-term AirBnB. But buying a property and renting it is making housing more accessible not less, and a market of individual landlords each buying one house and renting it is extremely competitive. If we were debating whether the government should pay landlords monthly for their vacant units we could agree that bailouts are not appropriate. But forcing someone to rent their personal property for free is not generally ethical or legal. Real Estate taxes are an interesting debate. It’s worth mentioning that whatever the tax rate, the cost of taxes is largely borne by the renter. In fact taxes are a major component of rent cost. Assuming you bundle no services at all (landscaping, utilities, etc.), a property generally cannot rent for less than their taxes, interest, upkeep/depreciation, and a risk adjusted return. There are a massive number of options for investors, they won’t choose to invest in a vehicle which doesn’t cover those four basic things. There are some very narrow circumstances where an investor might depend on equity appreciation to make up for an operating loss. This is more akin to speculating than investing and is significantly more risky.
klmadfejno 6y ago
Land lords handle maintenance, property ownership work, snow shoveling, some utilities appliances, some degree of social policy enforcement, etc. Not all small businesses employ other people.
- ethanbond 6y ago
  As mentioned below, landlords ought to be entitled to 100% of the gains of those efforts. It is the gains due to community investments that they are not entitled to.
- aries1980 6y ago
  In countries I lived in, it is the tenants' responsibility to maintain the property and its surroundings. Tenants need to move the lawn, cut the trees back, shovel snow, get out the weeds, remove algae off the patio, etc. For flats, concierge service and maintenance is built in the monthly payment, usually included of the lease fee that the landlord pays (about £3/sqft/mo in the UK).

sudosysgen 6y ago

Landlords are always profiting. Their total equity increases at ridiculous rates with minimal risk. I don't understand why we use a different definition of profit for landlords and for other operation. Profit is the derivative of wealth, the derivative of their wealth is positive, thus they are profiting, even if they don't intake enough money to pay for rent.