11 ms·

I've been migrating my vacant rentals to Airbnbs during the moratorium for this very reason. I may not rent them out again to long-term tenants for quite some

I've been migrating my vacant rentals to Airbnbs during the moratorium for this very reason. I may not rent them out again to long-term tenants for quite some time. Local governments should consider all of the perverse incentives they create when making these sorts of changes. (If you do this, note that if you let someone stay in your Airbnb for a month, they also cannot be evicted in some jurisdictions.)

majormajor 6y ago
If you as a government make it hard enough to seek rent as a landlord, can you increase ownership proportions?
- munk-a 6y ago
  You could indeed, which would generally be a positive for society.
- datavirtue 6y ago
  You have to flip that around. It has to be easier and dearer to own than rent. Seeking rents is already hard. If you follow all the rules and regulations it takes decades to profit when renting out homes. We need tax relief and incentives to build affordable housing...bad.
  - monocasa 6y ago
    > it takes decades to profit when renting out homes Only if you don't count the equity built from the rent that you can cash in by selling at pretty much any time.
    - imtringued 6y ago
      You have to pay this thing called interest and it's pretty high in the first 10 years. Your equity portion is not that big.
      - monocasa 6y ago
        Yeah, but rent is covering that too, in addition to the equity. You've also got the inherent equity of the house itself being an appreciating asset. Point is, when renting out an appropriating asset for the same as the monthly payments on your loan, defining "making a profit" as "completely paid off my loans on the appreciating asset that I can sell at any time" is a bit disingenuous.
  - whimsicalism 6y ago
    > If you follow all the rules and regulations it takes decades to profit when renting out homes What do you mean by this? You still have the property which presumably hasn't depreciated in price.
    - datavirtue 6y ago
      Let's say you do eek out some amount that could be called profit. You get taxed on it according to your highest rate bracket. Then you have maintenance costs. These can be substantial and come as a surprise. If you get good renters and they pay for ten years you might get to a point where the whole deal was worth your time. You can always skim a little but it's really a long term prospect. Maybe you get lucky and are building significant equity each month as well. I don't really count that. Maybe a tennant implodes and you are stuck with a huge repair bill for some fucked up reason. It is perilous and fraught with inconvenience...not easy money. Forgot to mention insurance. Oh yeah, one of the towns where I have property just pulled a new rental regulation out of thin air requiring a notification filing and fee for each rental property per year or on each new tennant lease. This country is turning into regulation hell.
      - whimsicalism 6y ago
        I don't think the typical landlord is paying more on maintenance per month than they are gaining from rent. Taxes are paid net of maintenance costs.
      - testesttest 6y ago
        > You get taxed on it according to your highest rate bracket. Why would you personally own the property as opposed to putting it under an LLC or Corp? You would still have to pay taxes on personal income but it offers a lot more options on how to recieve the income and handle expenses.
        o-__-o 6y ago
        And you open up your personal assets to liabilities from the property. Not saying it’s not possible, the additional insurance costs usually even out that difference
  - hnick 6y ago
    In Australia people rarely expect to profit when renting out. It's all about negative gearing to offset your income tax and sell the property for a profit later and move up the ladder. So on one hand you could say the renters get a good deal but in the long run the upward price pressure makes it tougher for everyone.
- waterheater 6y ago
  General rule of thumb: rent if strongly believe you'll be in a place for less than three years, and consider buying if staying longer. Say a potential buyer has a mountain of cash. They can scoop up a property with no issue. Financially, owning makes sense to them (no interest payments due to a mortgage), especially if they pick location correctly and see a property value increase. Next, say a potential buyer has a small pile of cash. A mortgage will almost certainly be needed to finance property, though this buyer should be able to cover the down payment. If location is right, it should work out well for this person, but it will take decades to see a positive return. Finally, say a potential buyer has little-to-no cash, living month-to-month on rent. They simply cannot afford to purchase a property and/or get approved for a mortgage. Let's consider each of these three categories of buyer in your scenario, where a local government makes it more difficult to seek rent. The wealthy buyer doesn't care, unless they own many rental properties, in which case they'll possibly have a harder time filling their units. The second buyer will benefit the most, potentially allowing more of this class to purchase properties (theoretically, more properties will be on the market). However, the third buyer is out-of-luck because they simply don't have the financial resources to outright purchase a property. Decrease the number of rental properties, and rents will increase, unless the number of new buyers balances existing renters. In summary, in your scenario, I would bet the wealthy will sell some properties and cash out, while the middle class will scoop up more properties and be able to pay for higher rents. The poorest, however, will likely need to settle for a lower overall standard of living.
  - nazgulnarsil 6y ago
    breakeven is more like 10 years.
  - whimsicalism 6y ago
    So, in the context of the bay, rather than paying my $3k/mo rent, I should buy a $1 million dollar home?
    - microtherion 6y ago
      If you can afford a 20% or so downpayment (big if, I know), the two options might work out to fairly comparable (after-tax) monthly payments right now. In the longer run, buying will leave you potentially with equity and with a fixed rate mortgage will assure fixed payments. Even in a mildly inflationary economy, making fixed nominal payments on a salary rising more in line with inflation for an asset valued more in line line with inflation can be a fairly attractive deal. But none of the above is meant to be investment advice. Homeownership has its risks and certainly loses flexibility.
- csomar 6y ago
  That's just messing up with the market. You need to make both easy, so that people who want to settle and buy can do that; and people who want to be mobile and rent can do that.
  - munk-a 6y ago
    I think the issue is that in the US the pendulum has swung so far in favor of landlords that the government needs to adjust things just to realign it so that both buying and renting are easy. Both should be options - I absolutely agree - but buying is quite difficult right now and a lot of folks are forced into renting for financial reason. That's pretty bass ackwards - a lot of folks aren't paying extra to be mobile - they're paying extra to be static and the additional costs they're forking over are deferring the time when they'd be able to afford purchasing.
- fshbbdssbbgdd 6y ago
  In a supply-limited housing market, landlords are competing with owner-occupiers for the same units, so you end up housing the same number of people either way. More investor money just means that purchase prices are higher, and rental supply is greater vs. owner-occupied. In that case, the government making it hard to be a landlord will be good for marginal home buyers, but bad for marginal renters. In a market where housing development is less restricted and construction occurs to meet demand, the addition of more investor capital means that more houses will get built. This is a good thing! It means that renters who don’t have enough wealth to build a house still get a place to live. In that case, you want to make it easy to be a landlord to encourage more capital to be in the landlord business and building homes.
  - ska 6y ago
    > This is a good thing! It doesn't always work that well in practice as investor demand can drive housing stock that is a poor match for housing demand. In theory this should all wash out in a free enough market, but no guarantee that won't take many decades - so it's not much help to people needing housing now. The structure of investment vehicles for this makes a big difference in what is actually built too, and how the development companies are funded.
  - hedora 6y ago
    If you pull out investor money, prices drop, and new landlords will be able to charge lower rent at current returns. I’m not convinced higher prices means more supply for housing. Building a house is labor intensive, and labor costs increase with housing costs. As stupid high as Bay Area housing prices are, new construction costs are even worse. It’s literally cheaper to build houses elsewhere and ship them in. However, in SF, at least, the construction worker unions are trying their best to block such projects: https://news.ycombinator.com/item?id=26526455 https://news.ycombinator.com/item?id=26526455
- whiddershins 6y ago
  Many buildings where I live are explicitly rental buildings ... so I guess you would be meaning co ops and condos but they are surprisingly expensive conversions.
asdff 6y ago
Also note that in some areas what you are describing is illegal.
- hossbeast 6y ago
  Why would it be illegal?
  - aidenn0 6y ago
    Lots of municipalities have made short-term rentals illegal for the same reasons that hotels require a license (taxes, safety standards)
    - 908B64B197 6y ago
      ... and rent-seeking!
    - listless 6y ago
      Can confirm. My city shot down ALL Airbnb’s before I could even get in the game.
    - bobthepanda 6y ago
      Also, people generally dislike having short term rentals as neighbors, because the people in them don’t stick around long enough to care for the community, or for punishment/warnings to work if they end up causing a mess.
nullserver 6y ago
I’m trying to move to a family to a new area. The only Rental homes available are through a mega corp. Apartments are all 2 bedroom. Don’t want an apartment anyway. Airbnb are insane once you add fees. Too move we’re left with living in a hotel until something opens up.
j-krieger 6y ago
They do consider it, however they put the needs of the many before the needs of the few.
markdown 6y ago
> If you do this, note that if you let someone stay in your Airbnb for a month, they also cannot be evicted in some jurisdictions. In some jurisdictions, they can establish residence within 3 days and then can't be evicted without a court/judge being involved. https://www.youtube.com/watch?v=tFpdui38Yd0 https://www.youtube.com/watch?v=tFpdui38Yd0

majormajor 6y ago

If you as a government make it hard enough to seek rent as a landlord, can you increase ownership proportions?

munk-a 6y ago
You could indeed, which would generally be a positive for society.
datavirtue 6y ago
You have to flip that around. It has to be easier and dearer to own than rent. Seeking rents is already hard. If you follow all the rules and regulations it takes decades to profit when renting out homes. We need tax relief and incentives to build affordable housing...bad.
- monocasa 6y ago
  > it takes decades to profit when renting out homes Only if you don't count the equity built from the rent that you can cash in by selling at pretty much any time.
  - imtringued 6y ago
    You have to pay this thing called interest and it's pretty high in the first 10 years. Your equity portion is not that big.
    - monocasa 6y ago
      Yeah, but rent is covering that too, in addition to the equity. You've also got the inherent equity of the house itself being an appreciating asset. Point is, when renting out an appropriating asset for the same as the monthly payments on your loan, defining "making a profit" as "completely paid off my loans on the appreciating asset that I can sell at any time" is a bit disingenuous.
- whimsicalism 6y ago
  > If you follow all the rules and regulations it takes decades to profit when renting out homes What do you mean by this? You still have the property which presumably hasn't depreciated in price.
  - datavirtue 6y ago
    Let's say you do eek out some amount that could be called profit. You get taxed on it according to your highest rate bracket. Then you have maintenance costs. These can be substantial and come as a surprise. If you get good renters and they pay for ten years you might get to a point where the whole deal was worth your time. You can always skim a little but it's really a long term prospect. Maybe you get lucky and are building significant equity each month as well. I don't really count that. Maybe a tennant implodes and you are stuck with a huge repair bill for some fucked up reason. It is perilous and fraught with inconvenience...not easy money. Forgot to mention insurance. Oh yeah, one of the towns where I have property just pulled a new rental regulation out of thin air requiring a notification filing and fee for each rental property per year or on each new tennant lease. This country is turning into regulation hell.
    - whimsicalism 6y ago
      I don't think the typical landlord is paying more on maintenance per month than they are gaining from rent. Taxes are paid net of maintenance costs.
    - testesttest 6y ago
      > You get taxed on it according to your highest rate bracket. Why would you personally own the property as opposed to putting it under an LLC or Corp? You would still have to pay taxes on personal income but it offers a lot more options on how to recieve the income and handle expenses.
      - o-__-o 6y ago
        And you open up your personal assets to liabilities from the property. Not saying it’s not possible, the additional insurance costs usually even out that difference
- hnick 6y ago
  In Australia people rarely expect to profit when renting out. It's all about negative gearing to offset your income tax and sell the property for a profit later and move up the ladder. So on one hand you could say the renters get a good deal but in the long run the upward price pressure makes it tougher for everyone.
waterheater 6y ago
General rule of thumb: rent if strongly believe you'll be in a place for less than three years, and consider buying if staying longer. Say a potential buyer has a mountain of cash. They can scoop up a property with no issue. Financially, owning makes sense to them (no interest payments due to a mortgage), especially if they pick location correctly and see a property value increase. Next, say a potential buyer has a small pile of cash. A mortgage will almost certainly be needed to finance property, though this buyer should be able to cover the down payment. If location is right, it should work out well for this person, but it will take decades to see a positive return. Finally, say a potential buyer has little-to-no cash, living month-to-month on rent. They simply cannot afford to purchase a property and/or get approved for a mortgage. Let's consider each of these three categories of buyer in your scenario, where a local government makes it more difficult to seek rent. The wealthy buyer doesn't care, unless they own many rental properties, in which case they'll possibly have a harder time filling their units. The second buyer will benefit the most, potentially allowing more of this class to purchase properties (theoretically, more properties will be on the market). However, the third buyer is out-of-luck because they simply don't have the financial resources to outright purchase a property. Decrease the number of rental properties, and rents will increase, unless the number of new buyers balances existing renters. In summary, in your scenario, I would bet the wealthy will sell some properties and cash out, while the middle class will scoop up more properties and be able to pay for higher rents. The poorest, however, will likely need to settle for a lower overall standard of living.
- nazgulnarsil 6y ago
  breakeven is more like 10 years.
- whimsicalism 6y ago
  So, in the context of the bay, rather than paying my $3k/mo rent, I should buy a $1 million dollar home?
  - microtherion 6y ago
    If you can afford a 20% or so downpayment (big if, I know), the two options might work out to fairly comparable (after-tax) monthly payments right now. In the longer run, buying will leave you potentially with equity and with a fixed rate mortgage will assure fixed payments. Even in a mildly inflationary economy, making fixed nominal payments on a salary rising more in line with inflation for an asset valued more in line line with inflation can be a fairly attractive deal. But none of the above is meant to be investment advice. Homeownership has its risks and certainly loses flexibility.
csomar 6y ago
That's just messing up with the market. You need to make both easy, so that people who want to settle and buy can do that; and people who want to be mobile and rent can do that.
- munk-a 6y ago
  I think the issue is that in the US the pendulum has swung so far in favor of landlords that the government needs to adjust things just to realign it so that both buying and renting are easy. Both should be options - I absolutely agree - but buying is quite difficult right now and a lot of folks are forced into renting for financial reason. That's pretty bass ackwards - a lot of folks aren't paying extra to be mobile - they're paying extra to be static and the additional costs they're forking over are deferring the time when they'd be able to afford purchasing.
fshbbdssbbgdd 6y ago
In a supply-limited housing market, landlords are competing with owner-occupiers for the same units, so you end up housing the same number of people either way. More investor money just means that purchase prices are higher, and rental supply is greater vs. owner-occupied. In that case, the government making it hard to be a landlord will be good for marginal home buyers, but bad for marginal renters. In a market where housing development is less restricted and construction occurs to meet demand, the addition of more investor capital means that more houses will get built. This is a good thing! It means that renters who don’t have enough wealth to build a house still get a place to live. In that case, you want to make it easy to be a landlord to encourage more capital to be in the landlord business and building homes.
- ska 6y ago
  > This is a good thing! It doesn't always work that well in practice as investor demand can drive housing stock that is a poor match for housing demand. In theory this should all wash out in a free enough market, but no guarantee that won't take many decades - so it's not much help to people needing housing now. The structure of investment vehicles for this makes a big difference in what is actually built too, and how the development companies are funded.
- hedora 6y ago
  If you pull out investor money, prices drop, and new landlords will be able to charge lower rent at current returns. I’m not convinced higher prices means more supply for housing. Building a house is labor intensive, and labor costs increase with housing costs. As stupid high as Bay Area housing prices are, new construction costs are even worse. It’s literally cheaper to build houses elsewhere and ship them in. However, in SF, at least, the construction worker unions are trying their best to block such projects: https://news.ycombinator.com/item?id=26526455 https://news.ycombinator.com/item?id=26526455
whiddershins 6y ago
Many buildings where I live are explicitly rental buildings ... so I guess you would be meaning co ops and condos but they are surprisingly expensive conversions.

asdff 6y ago

Also note that in some areas what you are describing is illegal.

hossbeast 6y ago
Why would it be illegal?
- aidenn0 6y ago
  Lots of municipalities have made short-term rentals illegal for the same reasons that hotels require a license (taxes, safety standards)
  - 908B64B197 6y ago
    ... and rent-seeking!
  - listless 6y ago
    Can confirm. My city shot down ALL Airbnb’s before I could even get in the game.
  - bobthepanda 6y ago
    Also, people generally dislike having short term rentals as neighbors, because the people in them don’t stick around long enough to care for the community, or for punishment/warnings to work if they end up causing a mess.

nullserver 6y ago

I’m trying to move to a family to a new area. The only Rental homes available are through a mega corp. Apartments are all 2 bedroom. Don’t want an apartment anyway. Airbnb are insane once you add fees. Too move we’re left with living in a hotel until something opens up.

j-krieger 6y ago

They do consider it, however they put the needs of the many before the needs of the few.

markdown 6y ago

> If you do this, note that if you let someone stay in your Airbnb for a month, they also cannot be evicted in some jurisdictions. In some jurisdictions, they can establish residence within 3 days and then can't be evicted without a court/judge being involved. https://www.youtube.com/watch?v=tFpdui38Yd0 https://www.youtube.com/watch?v=tFpdui38Yd0