6 ms·

Some of these landlords also have mortgage on rental property, one of my friend had a rental property, i think he was netting $100 a month. The rest went for m

by pb77 5y ago

Some of these landlords also have mortgage on rental property, one of my friend had a rental property, i think he was netting $100 a month. The rest went for mortgage, property tax, maintenance and property management person. He sold it in 2014. I don't think he could have absorbed 12 month + of non rent payment and pay all those expenses out of his pocket.

Willson50 5y ago
They also end up with a house at the end of that mortgage.
- ms512 5y ago
  While that is also true, the parent post was pointing out that the landlord has a cash flow issue without rent coming in. If they can't pay the mortgage without a renter paying, they may have the property repossessed by the bank.
- j_walter 5y ago
  They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house. When purchasing a house with the intent of renting it there are rules in place to play by when calculating the risk and return...but when the government completely rewrites the rules on the fly and basically forces you to rent for free for >1 year then its a problem.
  - smileysteve 5y ago
    Fortunately, the owner also gets to expense the upkeep (that's a 30+% discount on future cashflows) and depreciate the improvements over a 27 year life, meaning that they have a capital loss even if the house appreciates in value. Oh, and they also got to forego mortgage payments during the pandemic and also potentially write off the less than market rent that they were unable to evict during. (for 30+% off of the missed rent)
    - j_walter 5y ago
      No they didn't...they got to put off mortgage payments for a few months, and all of those became due immediately. Expensing upkeep...writing off rent...you act like thats free money that doesn't come out of their pocket. If you depreciate the improvements, you then have to pay the taxes on it when you sell the place. Stop acting like it's free money and there is no risk...a significant portion of landlords do not make money month to month and do this for their long term financial health. I think if you had significant money and time tied up in any investment you would be just as pissed as they are if the government changed the rules in the middle of the game.
      - danaris 5y ago
        Then stop acting like the government did this capriciously with no reason. The eviction moratorium was a necessary public health measure. Now, if you want to say "well, the government should have also enacted a mortgage moratorium, and made the banks the ones who shoulder the financial burden, rather than landlords (whether individual or corporate)," I won't argue with that in the slightest. But given who "the government" was at the time, that would have been an extremely hard sell. (Even now it would be pretty difficult.)
      - smileysteve 5y ago
        These two statements contradict > They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house. > you then have to pay the taxes on it when you sell the place. Owners only pay taxes if the gain is greater than the depreciated loss; (and if owner doesn't 1031 exchange it for another property to lose money on) so, the premise that a rented house has lost value shouldn't really intersect with a capital gain.
      - smileysteve 5y ago
        > Expensing upkeep...writing off rent Expensing missed rent and eviction costs isn't free money; it does require reserves, but it does help a 1 year impact spread out over many years.
throwaway0a5e 5y ago
That's just the risk of investing in real estate directly instead of through a financial instrument.
- toomuchtodo 5y ago
  The risk of being forced to house someone for free by government edict? Who doesn’t love unfunded mandates.
  - titzer 5y ago
    What's the difference if it's empty? Same loss of revenue. And sure, some maintanence/upkeep for tenants, but given how fast properties rot when vacant, that's probably a wash. Rent seeking with someone else's money? Yeah, that's risky.
    - aww_dang 5y ago
      If empty you can more readily find another tenant, perhaps at a lower price?
    - cronix 5y ago
      > What's the difference if it's empty? Was it empty though? There is a shortage in housing and it's pretty rare to have an empty rental in this market. You're injecting conditions that don't really exist to make your point.
      - threatofrain 5y ago
        > Rent seeking with someone else's money? Yeah, that's risky. This point is enough.
    - _-david-_ 5y ago
      > What's the difference if it's empty? If it is empty then someone who is willing to pay can rent it.
    - 5y ago

by pb77 5y ago

Willson50 5y ago

They also end up with a house at the end of that mortgage.

ms512 5y ago
While that is also true, the parent post was pointing out that the landlord has a cash flow issue without rent coming in. If they can't pay the mortgage without a renter paying, they may have the property repossessed by the bank.
j_walter 5y ago
They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house. When purchasing a house with the intent of renting it there are rules in place to play by when calculating the risk and return...but when the government completely rewrites the rules on the fly and basically forces you to rent for free for >1 year then its a problem.
- smileysteve 5y ago
  Fortunately, the owner also gets to expense the upkeep (that's a 30+% discount on future cashflows) and depreciate the improvements over a 27 year life, meaning that they have a capital loss even if the house appreciates in value. Oh, and they also got to forego mortgage payments during the pandemic and also potentially write off the less than market rent that they were unable to evict during. (for 30+% off of the missed rent)
  - j_walter 5y ago
    No they didn't...they got to put off mortgage payments for a few months, and all of those became due immediately. Expensing upkeep...writing off rent...you act like thats free money that doesn't come out of their pocket. If you depreciate the improvements, you then have to pay the taxes on it when you sell the place. Stop acting like it's free money and there is no risk...a significant portion of landlords do not make money month to month and do this for their long term financial health. I think if you had significant money and time tied up in any investment you would be just as pissed as they are if the government changed the rules in the middle of the game.
    - danaris 5y ago
      Then stop acting like the government did this capriciously with no reason. The eviction moratorium was a necessary public health measure. Now, if you want to say "well, the government should have also enacted a mortgage moratorium, and made the banks the ones who shoulder the financial burden, rather than landlords (whether individual or corporate)," I won't argue with that in the slightest. But given who "the government" was at the time, that would have been an extremely hard sell. (Even now it would be pretty difficult.)
    - smileysteve 5y ago
      These two statements contradict > They end up with a 30 year old house that has been rented. There is a lot of cost in the upkeep of a rented house. > you then have to pay the taxes on it when you sell the place. Owners only pay taxes if the gain is greater than the depreciated loss; (and if owner doesn't 1031 exchange it for another property to lose money on) so, the premise that a rented house has lost value shouldn't really intersect with a capital gain.
    - smileysteve 5y ago
      > Expensing upkeep...writing off rent Expensing missed rent and eviction costs isn't free money; it does require reserves, but it does help a 1 year impact spread out over many years.

throwaway0a5e 5y ago

That's just the risk of investing in real estate directly instead of through a financial instrument.

toomuchtodo 5y ago
The risk of being forced to house someone for free by government edict? Who doesn’t love unfunded mandates.
- titzer 5y ago
  What's the difference if it's empty? Same loss of revenue. And sure, some maintanence/upkeep for tenants, but given how fast properties rot when vacant, that's probably a wash. Rent seeking with someone else's money? Yeah, that's risky.
  - aww_dang 5y ago
    If empty you can more readily find another tenant, perhaps at a lower price?
  - cronix 5y ago
    > What's the difference if it's empty? Was it empty though? There is a shortage in housing and it's pretty rare to have an empty rental in this market. You're injecting conditions that don't really exist to make your point.
    - threatofrain 5y ago
      > Rent seeking with someone else's money? Yeah, that's risky. This point is enough.
  - _-david-_ 5y ago
    > What's the difference if it's empty? If it is empty then someone who is willing to pay can rent it.
  - 5y ago