7 ms·

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not agai

by akudha 5y ago

I wish something is done about these rentiers. Someone I know is amassing a rental property portfolio, while I am struggling to buy my first home. I am not against people making money and getting rich, but it would be nice if it wasn’t so easy to buy up multiple properties simply because they have the cash. There should be all kinds of incentives for first time home buyers. But it should be made very expensive/very painful from second home onwards. I don’t care that I can’t afford a luxury car or overpay for Google stock. But it annoys me to no end that the so called “investors” (not just rental companies but small time landlords too) buy properties with the sole aim of jacking up the rent and pushing first time buyers out. Housing is not a luxury, it is a basic human need. People can own a hundred Ferraris for all I care, but there should be some sane policy on letting individuals and companies own entire neighborhoods and blocks. Along the same lines, Bill Gates owns 242,000 acres of farm land. What for? I don’t know. It is just plain ugly to let someone own huge lands, water supplies (there are companies buying up large water sources) etc. This amount of monopoly on basic human needs is just bad. I know this is an unpopular opinion here, as many HN readers see real estate as a way to get rich and likely own rental properties themselves. But across the world, in many urban areas, there is severe housing shortage (artificial in most cases, and houses sit empty because “investors”, see Canadian cities for example). On top of all this, most cities and towns have extremely unfriendly policies towards tiny houses. That is whole another level of unfairness.

mc32 5y ago
Some of it is to take money out of authoritarian regimes and move it into more rule of law countries. Another reason is a hedge against inflation which we may be beginning to see right now.
- akudha 5y ago
  The very fact that you are trying to rationalize someone buying multiple homes at the expense of someone trying to buy their first home highlights the problem. Take Canada for example. A whole lot of homes are bought by Chinese buyers and are sitting idle, at the expense of Canadians trying to buy their first home. How can you say this is morally right? It is all find and dandy for the Chinese buyers, but what of Canadians?
  - silicon2401 5y ago
    This is a great example of the many flaws in globalism. If Canada were to put higher restrictions on foreign real estate purchases, Canadians wouldn't be in such a pickle. The flaw of generosity is that it leaves you vulnerable to being taken advantage of, which is what's happening in this case.
    - akudha 5y ago
      If such laws are put in place, it would handle only foreign buyers. It still wouldn't handle local born rentiers. There should be some kind of robust policy change. It would be hard, since landlords aren't exactly a friendly bunch (just look at San Francisco).
      - silicon2401 5y ago
        That's fine, there's no magic bullet to any issue. I don't have an issue with landlords; property is a human right and that includes the right rent it out (similarly, I expect the freedom to rent if I want to in a private contract with a property owner). But if citizen landlords are being abusive, then there should be separate legislation to keep them controlled as well.
    - refurb 5y ago
      Canada’s rate of home ownership has never been higher. Data on foreign purchases puts it in the low single digits in cities like Vancouver. It’s mostly Canadians driving up the cost of housing. I mean, how many foreigners are buying in Winnipeg where prices are way up?
  - mc32 5y ago
    In this case I think countries need to implement reciprocating laws. If you as a Canadian have restrictions when buying land or real estate in China, then Chinese should have similar restrictions imposed to them in Canada. Obviously China should reciprocate if Canada is stricter as well.
  - closeparen 5y ago
TimPC 5y ago
If only there was a law that allowed you to deduct a significant amount of mortgage interest from taxes on a home but not on other property.... Oh wait...
- akudha 5y ago
  Trying to be sarcastic and clever? Any taxes that you pay on your second home onwards simply gets factored into the rent and gets passed on to the tenants. It is just cost of doing business, nothing more. The tenants suffer, not the buyers.
  - deleted 5y ago
    [deleted]
  - refurb 5y ago
    That’s not how rent works. Just because the landlord’s costs go up doesn’t mean rents go up.
    - harambae 5y ago
      Yes, to some extent. The rent is dictated by the market price, which could be a gain or loss for the owner. But if every landlord's costs go up, then everyone's rent probably goes up, since the landlords are competing with each other.
      - refurb 5y ago
        But not all landlords have the same costs. When I was renting my landlord bought back in 1998, so their costs were likely $800 for a place that rented for $3,000.
- mumblemumble 5y ago
  If we're talking the US, that law is for the benefit of the rich. In general, the interest won't exceed the standard deduction unless you've got a rather obscenely priced home.
jhallenworld 5y ago
It could be that the rich are getting into real estate as a hedge against inflation, even if there is no income. But rental income is really nice... the most extreme version of this is the Duchy of Cornwall, earning rent since the 1300s (currently $21M) for the Prince of Wales: https://www.princeofwales.gov.uk/features/duchy-cornwall https://www.princeofwales.gov.uk/features/duchy-cornwall
- akudha 5y ago
  The Prince voluntarily pays income tax on all revenue from the estate. lol, how magnanimous of him!
silicon2401 5y ago
> Along the same lines, Bill Gates owns 242,000 acres of farm land. What for? I don’t know. The point of freedom is that it doesn't matter why he wants it, he's free to buy it if the owner chooses to sell it. There's a chilling implication in your stance that people should need approval for basic freedoms like buying land. That's how you end up with a dictatorship.
- yunohn 5y ago
  > approval for basic freedoms like buying land. That's how you end up with a dictatorship. That escalated quickly. Nobody argued you need approval to buy land. We’re talking about purchasing thousands of acres of land, and exerting that kind of influence. This is exactly a temporarily embarrassed millionaire example - you wanna buy yourself some investment properties, so you’re sitting here arguing on behalf of the richest man on earth.
- akudha 5y ago
  That is not at all what I am implying. When you buy that much amount of land, which is a basic human necessity, at minimum the public needs to know what the plans are for those lands, right? If someone buys 5 acres of land, that is a different story, nobody cares. The scale is what making the difference here. Let me ask you another question - recently (2019 I think), Bill bought 14,500 acres of land for 171M in a single deal. 171M is pocket change for Bill. According to your logic, he can continue to buy farmlands across the country (because "freedom") with nobody asking any questions. What happens if he ends up owning half (or 75% or whatever) of all available farmlands? You want one single man to control your food supply? He can buy all the Ferraris/Picassos/megayachts etc on the planet, that would make zero difference to anyone (except maybe other billionaires). It is when he starts buying water sources, land etc it becomes a problem. It has nothing to do with dictatorship.
  - deleted 5y ago
    [deleted]
  - silicon2401 5y ago
    Who decides where the line is drawn for scale?
mgarfias 5y ago
> Along the same lines, Bill Gates owns 242,000 acres of farm land. What for? I dunno? Maybe to grow food?
throwaway316943 5y ago
242,000 acres sounds big but it isn’t a significant percentage of US farmland. A large farm (in the $1m sales class) is usually above 3,000 acres in size. So Bill has bought less than 100 large farms. There are somewhere around 78,000 US farms in that class making up about 4% of farms and containing 25% of existing farmland. In other words, Bill owns squat. He probably bought those farms as an investment, there’s no reason to be hysterical about it.
- TimSchumann 5y ago
  Not sure where you’re getting these numbers from, but where I grew up a million dollars would buy less than 100 acres of good farm land. Seems similar on the west coast where I live now. By my back of the envelope calculations, 3000 acres of good farmland would cost around 15 million easy. https://extension.umn.edu/farmland-rent-and-economics/farmland-sale-prices https://extension.umn.edu/farmland-rent-and-economics/farmla...
  - throwaway316943 5y ago
    They were national averages from the USDA for 2018-2019. The $1m value was the sales class of the farm, not the cost of land.
thehappypm 5y ago
There are tons of incentives for first time home buyers! They just aren't really marketed. You can take out a mortgage against your own 401(k) for your first home. You can use a VERY low down payment loan (like 0% in some cases) for your first home. Tax rates are lower in many places for homeowners than renters -- in Boston and Somerville MA, this comes out to a pretty substantial tax credit.
- nly 5y ago
  All of those incentives just increase demand for housing and bid up prices. Supply needs fixing.
  - lotsofpulp 5y ago
    Because they are actually benefits for current asset owners looking to sell (or borrow using existing property as collateral). If the government wanted to help buyers, they could just give them cash and/or increase supply of housing in the in demand areas.
    - nly 5y ago
      So in the UK the Government is already underwriting first-time buyer mortgages for anyone with a 5% deposit on properties up to $850K USD. This helps noone short term because the banks just pocket the subsidy, and long-term it just drives prices even higher.
nly 5y ago
The flip side of high property prices is that its currently a pretty shit investment for new wannabe landlords. Rental yields on residential property are around 3% in most of the UK, which is roughly where interest rates are. This means landlords are now entirely dependent on leveraged price appreciation to make a decent return. Many landlords have already sold up because the returns no longer justify the hassle or risk (bad tenants, rent arrears, etc). Of course, one advantage to having your wealth in rental properties is rents are usually linked contractually to some measure of inflation.
closeparen 5y ago
People need places to live and we aren’t making more of them. There’s no world where public policy guarantees such scarcity relative to fundamental demand but speculators look the other way. Let them invest in development instead.
ericmcer 5y ago
It's crazy that we created a similar environment to the last economic collapse again. Not as brittle but the same environment where if I have been aggressively going deep into debt and mortgaging one property to buy another I will be making more than highly paid professionals off my assets. I don't know why we love creating these situations where saving and working hard are punished but recklessness and rent seeking are rewarded.

by akudha 5y ago

mc32 5y ago

Some of it is to take money out of authoritarian regimes and move it into more rule of law countries. Another reason is a hedge against inflation which we may be beginning to see right now.

akudha 5y ago
The very fact that you are trying to rationalize someone buying multiple homes at the expense of someone trying to buy their first home highlights the problem. Take Canada for example. A whole lot of homes are bought by Chinese buyers and are sitting idle, at the expense of Canadians trying to buy their first home. How can you say this is morally right? It is all find and dandy for the Chinese buyers, but what of Canadians?
- silicon2401 5y ago
  This is a great example of the many flaws in globalism. If Canada were to put higher restrictions on foreign real estate purchases, Canadians wouldn't be in such a pickle. The flaw of generosity is that it leaves you vulnerable to being taken advantage of, which is what's happening in this case.
  - akudha 5y ago
    If such laws are put in place, it would handle only foreign buyers. It still wouldn't handle local born rentiers. There should be some kind of robust policy change. It would be hard, since landlords aren't exactly a friendly bunch (just look at San Francisco).
    - silicon2401 5y ago
      That's fine, there's no magic bullet to any issue. I don't have an issue with landlords; property is a human right and that includes the right rent it out (similarly, I expect the freedom to rent if I want to in a private contract with a property owner). But if citizen landlords are being abusive, then there should be separate legislation to keep them controlled as well.
  - refurb 5y ago
    Canada’s rate of home ownership has never been higher. Data on foreign purchases puts it in the low single digits in cities like Vancouver. It’s mostly Canadians driving up the cost of housing. I mean, how many foreigners are buying in Winnipeg where prices are way up?
- mc32 5y ago
  In this case I think countries need to implement reciprocating laws. If you as a Canadian have restrictions when buying land or real estate in China, then Chinese should have similar restrictions imposed to them in Canada. Obviously China should reciprocate if Canada is stricter as well.
- closeparen 5y ago

TimPC 5y ago

If only there was a law that allowed you to deduct a significant amount of mortgage interest from taxes on a home but not on other property.... Oh wait...

akudha 5y ago
Trying to be sarcastic and clever? Any taxes that you pay on your second home onwards simply gets factored into the rent and gets passed on to the tenants. It is just cost of doing business, nothing more. The tenants suffer, not the buyers.
- deleted 5y ago
  [deleted]
- refurb 5y ago
  That’s not how rent works. Just because the landlord’s costs go up doesn’t mean rents go up.
  - harambae 5y ago
    Yes, to some extent. The rent is dictated by the market price, which could be a gain or loss for the owner. But if every landlord's costs go up, then everyone's rent probably goes up, since the landlords are competing with each other.
    - refurb 5y ago
      But not all landlords have the same costs. When I was renting my landlord bought back in 1998, so their costs were likely $800 for a place that rented for $3,000.
mumblemumble 5y ago
If we're talking the US, that law is for the benefit of the rich. In general, the interest won't exceed the standard deduction unless you've got a rather obscenely priced home.

jhallenworld 5y ago

It could be that the rich are getting into real estate as a hedge against inflation, even if there is no income. But rental income is really nice... the most extreme version of this is the Duchy of Cornwall, earning rent since the 1300s (currently $21M) for the Prince of Wales: https://www.princeofwales.gov.uk/features/duchy-cornwall https://www.princeofwales.gov.uk/features/duchy-cornwall

akudha 5y ago
The Prince voluntarily pays income tax on all revenue from the estate. lol, how magnanimous of him!

silicon2401 5y ago

> Along the same lines, Bill Gates owns 242,000 acres of farm land. What for? I don’t know. The point of freedom is that it doesn't matter why he wants it, he's free to buy it if the owner chooses to sell it. There's a chilling implication in your stance that people should need approval for basic freedoms like buying land. That's how you end up with a dictatorship.

yunohn 5y ago
> approval for basic freedoms like buying land. That's how you end up with a dictatorship. That escalated quickly. Nobody argued you need approval to buy land. We’re talking about purchasing thousands of acres of land, and exerting that kind of influence. This is exactly a temporarily embarrassed millionaire example - you wanna buy yourself some investment properties, so you’re sitting here arguing on behalf of the richest man on earth.
akudha 5y ago
That is not at all what I am implying. When you buy that much amount of land, which is a basic human necessity, at minimum the public needs to know what the plans are for those lands, right? If someone buys 5 acres of land, that is a different story, nobody cares. The scale is what making the difference here. Let me ask you another question - recently (2019 I think), Bill bought 14,500 acres of land for 171M in a single deal. 171M is pocket change for Bill. According to your logic, he can continue to buy farmlands across the country (because "freedom") with nobody asking any questions. What happens if he ends up owning half (or 75% or whatever) of all available farmlands? You want one single man to control your food supply? He can buy all the Ferraris/Picassos/megayachts etc on the planet, that would make zero difference to anyone (except maybe other billionaires). It is when he starts buying water sources, land etc it becomes a problem. It has nothing to do with dictatorship.
- deleted 5y ago
  [deleted]
- silicon2401 5y ago
  Who decides where the line is drawn for scale?

mgarfias 5y ago

> Along the same lines, Bill Gates owns 242,000 acres of farm land. What for? I dunno? Maybe to grow food?

throwaway316943 5y ago

242,000 acres sounds big but it isn’t a significant percentage of US farmland. A large farm (in the $1m sales class) is usually above 3,000 acres in size. So Bill has bought less than 100 large farms. There are somewhere around 78,000 US farms in that class making up about 4% of farms and containing 25% of existing farmland. In other words, Bill owns squat. He probably bought those farms as an investment, there’s no reason to be hysterical about it.

TimSchumann 5y ago
Not sure where you’re getting these numbers from, but where I grew up a million dollars would buy less than 100 acres of good farm land. Seems similar on the west coast where I live now. By my back of the envelope calculations, 3000 acres of good farmland would cost around 15 million easy. https://extension.umn.edu/farmland-rent-and-economics/farmland-sale-prices https://extension.umn.edu/farmland-rent-and-economics/farmla...
- throwaway316943 5y ago
  They were national averages from the USDA for 2018-2019. The $1m value was the sales class of the farm, not the cost of land.

thehappypm 5y ago

There are tons of incentives for first time home buyers! They just aren't really marketed. You can take out a mortgage against your own 401(k) for your first home. You can use a VERY low down payment loan (like 0% in some cases) for your first home. Tax rates are lower in many places for homeowners than renters -- in Boston and Somerville MA, this comes out to a pretty substantial tax credit.

nly 5y ago
All of those incentives just increase demand for housing and bid up prices. Supply needs fixing.
- lotsofpulp 5y ago
  Because they are actually benefits for current asset owners looking to sell (or borrow using existing property as collateral). If the government wanted to help buyers, they could just give them cash and/or increase supply of housing in the in demand areas.
  - nly 5y ago
    So in the UK the Government is already underwriting first-time buyer mortgages for anyone with a 5% deposit on properties up to $850K USD. This helps noone short term because the banks just pocket the subsidy, and long-term it just drives prices even higher.

nly 5y ago

The flip side of high property prices is that its currently a pretty shit investment for new wannabe landlords. Rental yields on residential property are around 3% in most of the UK, which is roughly where interest rates are. This means landlords are now entirely dependent on leveraged price appreciation to make a decent return. Many landlords have already sold up because the returns no longer justify the hassle or risk (bad tenants, rent arrears, etc). Of course, one advantage to having your wealth in rental properties is rents are usually linked contractually to some measure of inflation.

closeparen 5y ago

People need places to live and we aren’t making more of them. There’s no world where public policy guarantees such scarcity relative to fundamental demand but speculators look the other way. Let them invest in development instead.

ericmcer 5y ago

It's crazy that we created a similar environment to the last economic collapse again. Not as brittle but the same environment where if I have been aggressively going deep into debt and mortgaging one property to buy another I will be making more than highly paid professionals off my assets. I don't know why we love creating these situations where saving and working hard are punished but recklessness and rent seeking are rewarded.