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It 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 prop

by shard 6y ago

It 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.

PaulDavisThe1st 6y ago
150k a year is nearly 3x the median household income. I'm sorry, but I don't regard this as someone who "scrimps and saves to make a living". Yes, they are not part of the 0.01%, but that level of income puts them in the top 15% or so, and talking about such landlords as if they are representative of an average person is misleading. They are not wealthy mega corporations, that is true. But they are people in vastly more fortunate positions that the vast majority of the population, and although there's no reason to be punitive towards them, I don't find their situation incredibly demanding of sympathy.
- shard 6y ago
  You are correct. Such earnings are above the median. Note that typical incomes are heavily based on salaries, and will not have the expenses of a business owner (such as the ones I listed earlier), and thus the $150k income of the business owner does not equate to $150k of a wage earner. Since business expenses can vary widely, it's hard to put an estimate on what the equivalent wage is, but consider it more like a $75k salary -- definitely above average, but still clipping coupons and waiting for sales and applying for financial aid when the kids go to college. I'm glad you agree that there is no need to be punitive towards them. This is a reoccurring issue I often find on HN which I find surprising, the derision towards lines of business that people don't have much understanding of. There are no free lunches in the world that will not get optimized out quickly, and any business you believe are simple are likely to have hidden complexities that you did not consider.

by shard 6y ago

PaulDavisThe1st 6y ago

150k a year is nearly 3x the median household income. I'm sorry, but I don't regard this as someone who "scrimps and saves to make a living". Yes, they are not part of the 0.01%, but that level of income puts them in the top 15% or so, and talking about such landlords as if they are representative of an average person is misleading. They are not wealthy mega corporations, that is true. But they are people in vastly more fortunate positions that the vast majority of the population, and although there's no reason to be punitive towards them, I don't find their situation incredibly demanding of sympathy.

shard 6y ago
You are correct. Such earnings are above the median. Note that typical incomes are heavily based on salaries, and will not have the expenses of a business owner (such as the ones I listed earlier), and thus the $150k income of the business owner does not equate to $150k of a wage earner. Since business expenses can vary widely, it's hard to put an estimate on what the equivalent wage is, but consider it more like a $75k salary -- definitely above average, but still clipping coupons and waiting for sales and applying for financial aid when the kids go to college. I'm glad you agree that there is no need to be punitive towards them. This is a reoccurring issue I often find on HN which I find surprising, the derision towards lines of business that people don't have much understanding of. There are no free lunches in the world that will not get optimized out quickly, and any business you believe are simple are likely to have hidden complexities that you did not consider.