5 ms·

Are we saying a rent payment is a “transfer of wealth”? I’m not invested in real estate, but I imagine many people in real estate were just as impacted. Don’t y

Are we saying a rent payment is a “transfer of wealth”? I’m not invested in real estate, but I imagine many people in real estate were just as impacted. Don’t you likely need to pay towards a mortgage and put some aside for capital and day to day maintenance? Your comment is written as if a rent payment is a transfer from one person to directly to someone else’s savings account. I’m not convinced this is true.

deleted 5y ago
[deleted]
oblio 5y ago
I think he's saying that at a certain level of wealth, you don't need mortgages anymore. And especially with super low interest rates - bonus points if the interest rate is fixed - mortgages are more of an investment than a liability. So people with a ton of money can just buy a lot of property which they then rent out. Renovation work can be delayed and property values have only went up in the past 30 years or so (minus the financial crisis, which in the greater scheme of things turned out to be just a blip). So they have an ever appreciating asset that's a constant stream of revenue. Double-win. Which makes this whole multiple-bankruptcy thing for the former US president even the more baffling :-))
bredren 5y ago
The great recession resulted in the creation of Blackstone's Invitation Homes, which is the largest owner of single-family rental homes in the US. Homes that used to be owned and rented locally by individuals or small businesses are now rented and managed from elsewhere. Profits resulting from higher rents and cheaper maintenance flow to stock holders, creating bad incentives. These homes are no longer rotating into the market for sale, reducing inventory. Even for rental homes rented by local owners, the increased rent due to the commercialization of rented residential housing created conditions for everyone's rent to go up. https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html https://www.nytimes.com/2020/03/04/magazine/wall-street-land...
- deathtraphomes 5y ago
  Ah, I moved into one of invitation homes a few years ago. Looked nice when we drove up, didn’t think about why all the windows were open when we signed paperwork. Their negligence nearly killed my family, and left us with life long injuries. The gas line was leaking natural gas, improper installation? the furnace and stove were emoting lethal levels of carbon monoxide. Detector was defective. A portion of the AC fell into the kids room. One wall got so hot it burned my wife. Only reason we didn’t die is smell was so bad we nearly always had all windows open. At every stage they lied and did what they could to cover up problems. I still recall spending an hour each morning trying to wake kids, not realizing we were all being poisoned. Just last week they tried to settle the matter by paying back my deposit if I agreed to Silence, and gave up all legal claims. https://lease.invitationhomes.com/homes/665-cranberry-ct-30076-8599 https://lease.invitationhomes.com/homes/665-cranberry-ct-300...
  - sizzle 5y ago
    This sounds like an issue with that specific home. I’ve never heard of a home with this nanny life threatening issues not be condemned by fire or county authorities.
    - deathtraphomes 5y ago
      House had issues. A simple home inspection would have uncovered a lot. Lots of things out of code. Various workers IH sent admitted they were told to do as little as possible to make it look good.
    - bredren 5y ago
      There are many descriptions of problems with homes managed by IH. Reuters covered a few examples in 2018: https://www.reuters.com/article/us-usa-housing-invitation-special-report-idUSKBN1KH1L4 https://www.reuters.com/article/us-usa-housing-invitation-sp...
      - sizzle 5y ago
jiofih 5y ago
Not at all. Their equity remains the same, and chances are you can stay solvent for a couple years if you own a second property. It just means they get to earn 1/30 less rent (in its original meaning) over the whole mortgage.
nly 5y ago
It's the power of capital vs the power of income. If you have a high salary and no ability to save for a deposit then property can be unaffordable and you're stuck paying someone else's mortgage. If you have a 5% deposit saved and a high salary, you still can't afford a home because lots of people are in your position and have driven up house prices and rates and leverage available sucks. If you have 20-25% down and a high income you can afford a home to live in and it's probably cheaper than renting long term. If you have 100% in cash then you can buy one to live and buy 3 more as buy-to-lets as a side business.
- daddylongstroke 5y ago
  > If you have a 5% deposit saved and a high salary, you still can't afford a home because lots of people are in your position and have driven up house prices and rates and leverage available sucks. I keep hearing this trope and reading about it. Not positive why it gets repeated. It doesn't take long to do a realtor.com or trulia search to find a shit-ton of affordable homes. It seems to me that, there's a certain class of people, many of which I gather hang out on HN, that don't have either a long enough lifetime behind them to possess an acute perspective or just outright completely have false expectations. My home value in the midwest hasn't risen in 15 years. My value actually decreased by 10K two years ago. Within 6 blocks of my house in SE WI, I can find about 80, 3bdr, single family houses for sale, many if not most under 120K. I'm looking at a 3bdr, 1bath now for 60K that I would love to fix up and turn into a rental. If you feel like 120-130K is not 'affordable' to someone with a 5% deposit saved and a "high salary", let me blow your mind. Nobody, and I mean, not a single person on my block makes more than 48K/year. Me and my wife bought our house for 124K, while making 28K/year jointly!
  - nixgeek 5y ago
    Right now all I hear near Seattle is properties that are relatively unexceptional, that people bought 2-4 years ago for $800k, and are now being listed at $1.2M. They’ll list on a Friday, get 35 viewings over the weekend, and the seller has 10+ offers by Wednesday and accepts $300k over asking with all contingencies waived. I’ve personally heard over a dozen such examples in the last 90 days. I’m sure someone’s looked at MLS data and done a better analysis. Lenders continue to appraise nearer the initial asking, availability of capital is tightening up because of risk and underwriting has become more conservative since Summer 2020, typically meaning buyers need >740 credit and good debt-to-income ratios to do 5% down, and then they also need the $300k cash to bridge the gap between appraisers valuations and what it actually takes to do a deal in this market. Despite COVID purporting to offer more work location flexibility, what we seem to be experiencing in WA is downtown renters looking to buy within 30 miles of work, perhaps for a “Hybrid” future, rather than packing their bags and moving to WI.

deleted 5y ago

[deleted]

oblio 5y ago

I think he's saying that at a certain level of wealth, you don't need mortgages anymore. And especially with super low interest rates - bonus points if the interest rate is fixed - mortgages are more of an investment than a liability. So people with a ton of money can just buy a lot of property which they then rent out. Renovation work can be delayed and property values have only went up in the past 30 years or so (minus the financial crisis, which in the greater scheme of things turned out to be just a blip). So they have an ever appreciating asset that's a constant stream of revenue. Double-win. Which makes this whole multiple-bankruptcy thing for the former US president even the more baffling :-))

bredren 5y ago

The great recession resulted in the creation of Blackstone's Invitation Homes, which is the largest owner of single-family rental homes in the US. Homes that used to be owned and rented locally by individuals or small businesses are now rented and managed from elsewhere. Profits resulting from higher rents and cheaper maintenance flow to stock holders, creating bad incentives. These homes are no longer rotating into the market for sale, reducing inventory. Even for rental homes rented by local owners, the increased rent due to the commercialization of rented residential housing created conditions for everyone's rent to go up. https://www.nytimes.com/2020/03/04/magazine/wall-street-landlords.html https://www.nytimes.com/2020/03/04/magazine/wall-street-land...

deathtraphomes 5y ago
Ah, I moved into one of invitation homes a few years ago. Looked nice when we drove up, didn’t think about why all the windows were open when we signed paperwork. Their negligence nearly killed my family, and left us with life long injuries. The gas line was leaking natural gas, improper installation? the furnace and stove were emoting lethal levels of carbon monoxide. Detector was defective. A portion of the AC fell into the kids room. One wall got so hot it burned my wife. Only reason we didn’t die is smell was so bad we nearly always had all windows open. At every stage they lied and did what they could to cover up problems. I still recall spending an hour each morning trying to wake kids, not realizing we were all being poisoned. Just last week they tried to settle the matter by paying back my deposit if I agreed to Silence, and gave up all legal claims. https://lease.invitationhomes.com/homes/665-cranberry-ct-30076-8599 https://lease.invitationhomes.com/homes/665-cranberry-ct-300...
- sizzle 5y ago
  This sounds like an issue with that specific home. I’ve never heard of a home with this nanny life threatening issues not be condemned by fire or county authorities.
  - deathtraphomes 5y ago
    House had issues. A simple home inspection would have uncovered a lot. Lots of things out of code. Various workers IH sent admitted they were told to do as little as possible to make it look good.
  - bredren 5y ago
    There are many descriptions of problems with homes managed by IH. Reuters covered a few examples in 2018: https://www.reuters.com/article/us-usa-housing-invitation-special-report-idUSKBN1KH1L4 https://www.reuters.com/article/us-usa-housing-invitation-sp...
    - sizzle 5y ago

jiofih 5y ago

Not at all. Their equity remains the same, and chances are you can stay solvent for a couple years if you own a second property. It just means they get to earn 1/30 less rent (in its original meaning) over the whole mortgage.

nly 5y ago

It's the power of capital vs the power of income. If you have a high salary and no ability to save for a deposit then property can be unaffordable and you're stuck paying someone else's mortgage. If you have a 5% deposit saved and a high salary, you still can't afford a home because lots of people are in your position and have driven up house prices and rates and leverage available sucks. If you have 20-25% down and a high income you can afford a home to live in and it's probably cheaper than renting long term. If you have 100% in cash then you can buy one to live and buy 3 more as buy-to-lets as a side business.

daddylongstroke 5y ago
> If you have a 5% deposit saved and a high salary, you still can't afford a home because lots of people are in your position and have driven up house prices and rates and leverage available sucks. I keep hearing this trope and reading about it. Not positive why it gets repeated. It doesn't take long to do a realtor.com or trulia search to find a shit-ton of affordable homes. It seems to me that, there's a certain class of people, many of which I gather hang out on HN, that don't have either a long enough lifetime behind them to possess an acute perspective or just outright completely have false expectations. My home value in the midwest hasn't risen in 15 years. My value actually decreased by 10K two years ago. Within 6 blocks of my house in SE WI, I can find about 80, 3bdr, single family houses for sale, many if not most under 120K. I'm looking at a 3bdr, 1bath now for 60K that I would love to fix up and turn into a rental. If you feel like 120-130K is not 'affordable' to someone with a 5% deposit saved and a "high salary", let me blow your mind. Nobody, and I mean, not a single person on my block makes more than 48K/year. Me and my wife bought our house for 124K, while making 28K/year jointly!
- nixgeek 5y ago
  Right now all I hear near Seattle is properties that are relatively unexceptional, that people bought 2-4 years ago for $800k, and are now being listed at $1.2M. They’ll list on a Friday, get 35 viewings over the weekend, and the seller has 10+ offers by Wednesday and accepts $300k over asking with all contingencies waived. I’ve personally heard over a dozen such examples in the last 90 days. I’m sure someone’s looked at MLS data and done a better analysis. Lenders continue to appraise nearer the initial asking, availability of capital is tightening up because of risk and underwriting has become more conservative since Summer 2020, typically meaning buyers need >740 credit and good debt-to-income ratios to do 5% down, and then they also need the $300k cash to bridge the gap between appraisers valuations and what it actually takes to do a deal in this market. Despite COVID purporting to offer more work location flexibility, what we seem to be experiencing in WA is downtown renters looking to buy within 30 miles of work, perhaps for a “Hybrid” future, rather than packing their bags and moving to WI.