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I don't understand this attitude that someone who decides to invest their money into real estate instead of the stock market should be derided as a plague on so
by shard 6y ago
I don't understand this attitude that someone who decides to invest their money into real estate instead of the stock market should be derided as a plague on society, as if it's not much more work to be a landlord than a stock market investor. When you are a landlord, you have to worry about tenants that don't pay (and threaten you with physical violence when you try to collect), tenants that damage your property, having to fix the property (some even do their own work to save money). You might not even be able to evict a problem tenant easily without some long dragged out court case, during which time you are collecting no rent. When tenants move out, you worry about how long it will take to find another tenant, as mortgage payments and taxes and repairs don't stop when there is no tenant. You have to worry about the local market situation changing, perhaps some new construction like a factory might make your property less desirable, perhaps young people just think that the area is played out, and so you will have to try to sell your property ahead of the change while looking for a new one. You have to constantly track possible changes in other neighborhoods as potential places to buy if needed. This information is not available online, you have to beat feet and constantly talk to other people and track down rumors, trying to get the big picture over all the little neighborhoods in your city. And if you are actually forced to sell and buy somewhere else, you have to spend months or years going all over the city to find another property (good real estate are just not on the market that often). Mistakes have a huge cost, and a poor choice could wipe you out as you are locked in to a property that doesn't bring income and have no buyers. You have to worry about tax laws and real estate laws changing, maybe forcing you to sell at a loss just to avoid a bigger loss later. Landlords are not people sitting on the porch, drinking iced tea and twirling their mustache while the money gets delivered in big bags. There's a lot of work and stress that goes into it, just like most other jobs.
- true_religion 6y agoI don’t think it’s derision, just the attitude that people in power ought to defend themselves. Banks have no shortage of money, lawyers, and friends in high places. They do not need you or I also apologizing their actions. If anything we should be extremely suspicious of ant bailout and scrutinize it to ensure it’s well deserved, and will result in a better society overall.
- shard 6y agoI was referring to landlords, which many of mine have been just small time business owners who scrimp and save to make a living. One lived in the garage of the house he was renting out in order to make ends meet. Technically they have the power since they own the properties, but laws are very tenant friendly, and often landlords get left with the short end of the stick if there is a dispute.
- PaulDavisThe1st 6y agoThis is not a useful anecdata-driven analysis of the commercial real estate market. Yes, landlords like the ones you know do exist. They do not own substantive commercial real estate, and certainly not the stuff the Neiman Marcus or GNC have been renting.
- shard 6y agoYou are right about Neiman Marcus, as they occupy huge spaces in shopping malls. However, GNC stores are very small, and many are in strip malls, which can cost only a few million to purchase, not out of the range of small business owners with some collateral. At a cursory search, I can't find any numbers on the percentage of CRE owned by institutions and corporations, do you have any data you can share? In any case, my point was not to discuss how much CRE is owned by individuals and small businesses, but rather the dismissive attitude that sweeps individual and small business landlords into the same bucket as giant CRE corporations.
- PaulDavisThe1st 6y ago"small business owners who scrimp and save to make a living", to me, is not really aligned with "a few million to purchase". Perhaps it is for you.
- shard 6y agoIt seems like you are assuming that the few millions used in the purchase are 1. liquid, and 2. all from the owner. Many owners take out a loan to purchase property, so they are paying monthly mortgage. Also, the millions are locked up in the property and is inaccessible, so they have to live off of the rental income from the property. A $3M property with a 5% CAP, which is not bad for the US, nets the owner $150k a year, hardly Rich Uncle Pennybags' level of income. Subtract mortgage and any taxes/insurance/repairs not covered by the tenant, and also self purchased health insurance, and you are basically living a middle class lifestyle. If things go awry, such as a few bad tenants or unfavorable changes in local rental market, and you're in a situation similar to being "house poor", where you have a high value asset, but not a lot of cash for day-to-day expenses.