7 ms·

>you pay no income tax on your rental income And are losing value on the property, which is the point of depreciation. >~30 years later, you've deprecated it

>you pay no income tax on your rental income And are losing value on the property, which is the point of depreciation. >~30 years later, you've deprecated it down to an effective value of $0 An no one will now rent, since your building has an effective value of $0 since it has become crap. All throughout your list you ignore all the costs involved in being a landlord. Have any friends that have tried it? (I do). Did they become silly rich? Or did they quit because it is a major problem to actually make it very profitable versus other uses of capital and time? I'm a decently saavy investor (in many things), and have watched multiple friends start up rental properties, only to stop once it became clear that tenants destroy things, costs to maintain properties are volatile and astronomical, the work required is significant, and so on. I have done the math on real estate investing many times, and each time have decided the returns are not worth it. >The net result is that rental properties generate a ton of income for the owners If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing. But the fact is that being a landlord is not very profitable, so capital doesn't flood into that market - it is still mostly elsewhere. Historically, housing has performed quite similar to the stock market for returns - as it should be. If housing were a better investment, money would flow in until they balanced. If housing is too poor an investment by screwing with taxes, then money will flow out into other more productive places. And if money flows out, people wanting housing will then have to pay even higher prices for less stock.

wonnor 4y ago
>>~30 years later, you've deprecated it down to an effective value of $0 >An no one will now rent, since your building has an effective value of $0 since it has become crap. Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old?
- bitexploder 4y ago
  Narrator: They were not arguing in good faith. I know we like to give the benefit of doubt here on HN, but that crosses a line. Landlords are known to perhaps not take the best care of their property, but in general, even if a tenant totally trashes the place it isn't too hard to strip down whatever got abused and rebuild it. Same thing happened to us when we rented a property. Tenant did as much damage as you can imagine with pets and abuse short of ripping wires and pipes out of the walls. It was really annoying to fix, but not hard. In the [late] 2020 real estate market it was easy to sell it and the house appreciated like 30-40K since we sold it easily.
  - robertlagrant 4y ago
    It doesn't cross any lines. This is HN, not some chest-thumping political rag.
- jefftk 4y ago
  Maybe they're saying that if you don't maintain a house for 30y it will be unlivable?
- andrewmutz 4y ago
  He's saying that you factored in the depreciation deduction, but never factored in the expenses of related to keeping the property in good shape. So you either left them out of your math, or you planned to do zero upkeep (hence, "nobody would rent it")
  - wonnor 4y ago
    To claim that you need to spend money equal to the tax-assessed value of the building over the course of 30 years to maintain equal value is slightly less ridiculous, but still not exactly reasonable. The (conservative) rule of thumb is 1% of the property value per year in repairs, which would be 30% of the property value over 30 years. And even then, it seems there's no shortage of fairly decrepit buildings that have no problem finding tenants.
    - ChrisLomont 4y ago
      >To claim that you need to spend money equal to the tax-assessed value of the building over the course of 30 years to maintain equal value is slightly less ridiculous, but still not exactly reasonable. No one wrote that either. You're reading what you want to argue into what is written yet again. > which would be 30% of the property value over 30 years Ignoring increasing property value, compound interest, opportunity cost, that plenty of places put this between 1 and 4%, and that pretty much all places indicate the rate increases as the property ages, and that this rate is for owners whereas tenants are statistically worse on property, then sure. For example, State Farm [1] recommends between 1% and 4%, which would vastly increase your estimate. And tenants are statistically worse on property than owners In reality it's a far larger cost over 30 years than 30% of the original price. [1] https://www.statefarm.com/simple-insights/residence/how-to-budget-and-save-for-home-maintenance https://www.statefarm.com/simple-insights/residence/how-to-b...
    - DubiousPusher 4y ago
      Here is a starter list of things a house will need over the course of 30 years. - a new roof (maybe two if they are 15 year rooves) -new siding (unless fiber cement siding was installed originally) -new exterior paint -new windows -major repairs to the driveway -2 new furnaces -2 to 3 new water heaters -2 to 3 full new sets of appliances -1 cosmetic kitchen remodel -1 cosmetic remodel of each bathroom -1 to 2 cosmetic relandscapings -1 to 2 new floors (depending on the flooring material chosen) -new exterior doors -new garage doors and openers None of this includes any repairs the home may have needed at the time of purchase. Nor does it include any upgrades. Nor does it include any unexpected repairs that may not be covered by insurance (there are many). Nor does it include any of the dozen or so minor repairs you either have to do yourself or get a handy man for. I'm not going to symp for the landlords but maintaining property is brutally expensive. I know because I bought a 40 year old house. Since I bought a home I've become very convinced that there are a ton of landlords losing their ass out there. Some have been saved by the ridiculous property valuations we've seen lately. But that is not the norm. Houses typically increase in value at a pace with inflation. Personally, I would only ever rent housing I had specced myself because the design choices and material choices have a huge impact on the cost of maintenance.
- ChrisLomont 4y ago
  >Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old? Nope, pointing out that in order to keep the house rentable, the landlord has in put money into over all those years, which the OP left out. A house that has had no money spent on for 30 years would not be rentable, right? So depreciation is not a free ride.
  - lovich 4y ago
    Why would it not be rentable? That’s an assumption that doesn’t stand on its face when you look at the unmaintained crackhouses landlords will rent easily because demand is so high for housing.
    - ChrisLomont 4y ago
      Are you claiming zero money was spent on those properties for 30 years? I don't think that claim would stand on it's face. Over 30 years all sorts of things would break, pipes, leaks, batteries corroding and leaking out, animals move in, windows broken, doors removed.... Detroit ruins show what zero money put into a building for 30 years looks like - gutted shells. Show me an ad for a rentable place that has had zero money spent on the building for any maintenance for 30 years and I'll believe you.
      - lovich 4y ago
        Does >0 money spent equal 100% deprecation over 30 years? If the landlord spends a single penny in paint does that make up for getting an asset that’s considered zero value but still gets to be sold for hundreds of thousands?
- saiya-jin 4y ago
  I'd say the truth is somewhere in between. It is really, really not that great unless you have some superbly well located shiny great apartment in Manhattan or some other center center which gets 100% short term rental ie airbnb. But then this is multi-million $$ property. Long term rentals - the gains are minimal given how much capital is completely locked in that property and not doing anything else. If you are lucky, you have long term nice tenants and stuff generally doesn't break (ie heating/wash machine bursting and flooding everything, including 5 apartments below). If unlucky, 1 bad accident that needs to be fixed asap will wipe out any income you have for given month, if not more. Utterly random example - I got locked out (if thats the proper term) last sunday evening, went for a walk and big weird key wasn't turning in our old very massive (15cm thick & heavy) doors that look like they could handle a nuclear blast. Called some emergency services for this and they opened it, but showed me the lock basically disintegrated and I was lucky they didn't have to drill huge hole in those doors to get in and pay tripple the cost. The cost for new lock in those doors with all work? 2400 Swiss francs (cca 2500$), and that was work week rate of one of the cheaper agencies doing this, albeit in Geneva, one of the most expensive places to live. For a freaking lock that is just old design, fitting some 50 years old doors. Guess who pays that? Well me but I will get 100% reimbursement from agency who will get it from owner. Properties are great if you inherit them and suddenly have a nice passive income (and management worries). Or if you are lucky with timing and in 10 years they jump 3x with value. Thats over now. I wouldn't invest in properties now unless its for primary residence and then a lot of emotions and other concerns come into equation, but financially its not great.
  - fwip 4y ago
    $2500 isn't that far off of the monthly rent for a single apartment in a lot of American cities. Sure, your old door might need a new lock after 30+ years (although given it was 15cm thick I'll bet it was much older than that).
- Ajedi32 4y ago
  If it's worth $0 then by definition you couldn't sell the property for more than $0, let alone charge a monthly rent higher than that. Obviously that wouldn't actually happen in real life, which I think is the GP's point.
- djbebs 4y ago
  Are you aware of the concept of risk? The amortization schedules are what they are for a reason, even if not all houses only last 30 years, the average is what matters here. Any number of things can result in houses being destroyed and become worthless prior to that time, including damage from earthquakes, fires. Additionally poor initial building standards, or changing building standards, or new regulatory barriers can make certain properties become not just worthless, but have an active cost to their owners and therefore have negative value.
Emma_Goldman 4y ago
>"Did they become silly rich? Or did they quit because it is a major problem to actually make it very profitable versus other uses of capital and time? I'm a decently saavy investor (in many things), and have watched multiple friends start up rental properties, only to stop once it became clear that tenants destroy things, costs to maintain properties are volatile and astronomical, the work required is significant, and so on." I'm sorry but this flies in the face of my experience. Most landlords I have met buy properties and then outsource their administration to property management companies. I have never seen or spoken to my last three landlords, none of whom lived anywhere near the same city as the property. Landlordism is parasitic in the literal sense of the word. Landlords get rent and capital appreciation for doing nothing but possessing an ownership title. The propertyless pay the propertied a premium to live. In light of both those observations, I would say any enrichment in this case is "silly", and that landlords don't tend to do much - or any - work. >"If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing." This is a non sequitur. If X is profitable and the market knows X is profitable then it should, in theory, be attracting exactly the amount of capital it merits already. In the UK, where I live, the rental sector has exploded, jumping from 2.8 million households in 2007 to 4.5 million in 2017. [1] [1] https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018 https://www.ons.gov.uk/economy/inflationandpriceindices/arti...
- ChrisLomont 4y ago
  And there was a housing crash in there and decent growth in population over that time. Next, instead of picking a window wrapping the biggest housing bust in a century, pick various decades and see how normal volatility behaves - and you might find this variability not uncommon. In fact, from your own source, Figure 1 - the percent of rented properties is, well, nearly constant over the entire window (31% rented in 2007, 37% rented in 2017). And somewhere in there mortgage laws got significantly tighter - no need for pesky investors to be the cause of less mortgages. So go figure, right? Lots of reasons and complexity in there.
  - Emma_Goldman 4y ago
commandlinefan 4y ago
> once it became clear that tenants destroy things Or/and just refuse to pay rent for years while you try to evict them.
- fwip 4y ago
  Then you're not trying very hard. https://rentprep.com/evictions/when-can-i-evict-a-tenant-for-nonpayment/ https://rentprep.com/evictions/when-can-i-evict-a-tenant-for...
  - ChrisLomont 4y ago
    That's a list of how long until the landlord can file an eviction, not how long an eviction takes. "Thus, the eviction process can take from five weeks to three months, assuming there are no delays. If there are delays, the process can take as much as a year." [1] https://www.findlaw.com/realestate/landlord-tenant-law/how-long-does-the-eviction-process-take.html https://www.findlaw.com/realestate/landlord-tenant-law/how-l...
    - fwip 4y ago
      True. When the normal case is 1-3 months, and the high-percentile is "up to a year", it seems a little misleading to use the plural "years."
cheriot 4y ago
> And are losing value on the property, which is the point of depreciation. The house depreciates while the land appreciates. In the US for the last 50 years has been net appreciation for most homes. > If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing. Hedge funds have been buying houses at scale since the great recession. > Historically, housing has performed quite similar to the stock market for returns Which increases faster than incomes. Hence the way each generation has a declining rate of home ownership.
- djbebs 4y ago
  Why do you believe land appreciates?
  - cheriot 4y ago
    A house without a major renovation will slowly depreciate yet housing prices in mid to major cities continue rising.
  - adgjlsfhk1 4y ago
    read some Adam Smith. land appreciates as long as population increases because you can't make more of it.
    - djbebs 4y ago
      There's a limited number of atoms in the universe, under that argument everything appreciates.
- ChrisLomont 4y ago
  >Hedge funds have been buying houses at scale since the great recession. Zillow tried that and lost over a billion dollars - I'd expect lots of those purchases are not the money makers you think they are. >Which increases faster than incomes. Not for the same size houses - the median house now is many times the size of a median house from 1950, and a few times the size of a median house from 1970. If you buy the same house previous generations bought, you'd find prices relatively the same. >Hence the way each generation has a declining rate of home ownership. That's not what historical data shows [1,2], going all the way back to 1900. Each generation has had higher ownership rates at equal points in life than each previous one, except perhaps a recent one due to the 2008 crash, but they're catching back up again. Certainly there is no way you can claim each generation declines and see the same data FRED and Census post. For example, FRED shows that Q2, 2022, at 65.8% is higher than all of history except the decade before the crash, and it is trending up again. [1] https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N [2] https://www2.census.gov/programs-surveys/decennial/tables/time-series/coh-owner/owner-tab.txt https://www2.census.gov/programs-surveys/decennial/tables/ti...
bps4484 4y ago
"An no one will now rent, since your building has an effective value of $0 since it has become crap." This isn't true. You will have put money into the property to keep its value up, also writing off all of those expenses, so that you can still rent it out.
- ChrisLomont 4y ago
  >You will have put money into the property to keep its value up You're ignoring what was written: if the building has value 0, then it is not maintained to keep the value up. Of you kept the value up, then it would not have an effective price of 0. Of course most people put money into properties exactly to keep value up. >also writing off all of those expenses Writing off expenses does not make them free - you are still paying for them - out of otherwise profit. It just means you get taxed on net profit instead of taxed on property gross income. But you are still losing money. Writing off expenses is not some free money giveaway. The point was to illustrate that OP ignored costs involved for landlords in the thought experiment.
  - bps4484 4y ago
    oh it's certainly not free money (queue the seinfeld episode of kramer telling jerry to "write it off") but the discussion is about taxes or lacktherof. In no other investment that I know of are you allowed this double write-off: you can write off both the investment as it depreciates and the costs to make sure it doesn't depreciate.

wonnor 4y ago

>>~30 years later, you've deprecated it down to an effective value of $0 >An no one will now rent, since your building has an effective value of $0 since it has become crap. Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old?

bitexploder 4y ago
Narrator: They were not arguing in good faith. I know we like to give the benefit of doubt here on HN, but that crosses a line. Landlords are known to perhaps not take the best care of their property, but in general, even if a tenant totally trashes the place it isn't too hard to strip down whatever got abused and rebuild it. Same thing happened to us when we rented a property. Tenant did as much damage as you can imagine with pets and abuse short of ripping wires and pipes out of the walls. It was really annoying to fix, but not hard. In the [late] 2020 real estate market it was easy to sell it and the house appreciated like 30-40K since we sold it easily.
- robertlagrant 4y ago
  It doesn't cross any lines. This is HN, not some chest-thumping political rag.
jefftk 4y ago
Maybe they're saying that if you don't maintain a house for 30y it will be unlivable?
andrewmutz 4y ago
He's saying that you factored in the depreciation deduction, but never factored in the expenses of related to keeping the property in good shape. So you either left them out of your math, or you planned to do zero upkeep (hence, "nobody would rent it")
- wonnor 4y ago
  To claim that you need to spend money equal to the tax-assessed value of the building over the course of 30 years to maintain equal value is slightly less ridiculous, but still not exactly reasonable. The (conservative) rule of thumb is 1% of the property value per year in repairs, which would be 30% of the property value over 30 years. And even then, it seems there's no shortage of fairly decrepit buildings that have no problem finding tenants.
  - ChrisLomont 4y ago
    >To claim that you need to spend money equal to the tax-assessed value of the building over the course of 30 years to maintain equal value is slightly less ridiculous, but still not exactly reasonable. No one wrote that either. You're reading what you want to argue into what is written yet again. > which would be 30% of the property value over 30 years Ignoring increasing property value, compound interest, opportunity cost, that plenty of places put this between 1 and 4%, and that pretty much all places indicate the rate increases as the property ages, and that this rate is for owners whereas tenants are statistically worse on property, then sure. For example, State Farm [1] recommends between 1% and 4%, which would vastly increase your estimate. And tenants are statistically worse on property than owners In reality it's a far larger cost over 30 years than 30% of the original price. [1] https://www.statefarm.com/simple-insights/residence/how-to-budget-and-save-for-home-maintenance https://www.statefarm.com/simple-insights/residence/how-to-b...
  - DubiousPusher 4y ago
    Here is a starter list of things a house will need over the course of 30 years. - a new roof (maybe two if they are 15 year rooves) -new siding (unless fiber cement siding was installed originally) -new exterior paint -new windows -major repairs to the driveway -2 new furnaces -2 to 3 new water heaters -2 to 3 full new sets of appliances -1 cosmetic kitchen remodel -1 cosmetic remodel of each bathroom -1 to 2 cosmetic relandscapings -1 to 2 new floors (depending on the flooring material chosen) -new exterior doors -new garage doors and openers None of this includes any repairs the home may have needed at the time of purchase. Nor does it include any upgrades. Nor does it include any unexpected repairs that may not be covered by insurance (there are many). Nor does it include any of the dozen or so minor repairs you either have to do yourself or get a handy man for. I'm not going to symp for the landlords but maintaining property is brutally expensive. I know because I bought a 40 year old house. Since I bought a home I've become very convinced that there are a ton of landlords losing their ass out there. Some have been saved by the ridiculous property valuations we've seen lately. But that is not the norm. Houses typically increase in value at a pace with inflation. Personally, I would only ever rent housing I had specced myself because the design choices and material choices have a huge impact on the cost of maintenance.
ChrisLomont 4y ago
>Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old? Nope, pointing out that in order to keep the house rentable, the landlord has in put money into over all those years, which the OP left out. A house that has had no money spent on for 30 years would not be rentable, right? So depreciation is not a free ride.
- lovich 4y ago
  Why would it not be rentable? That’s an assumption that doesn’t stand on its face when you look at the unmaintained crackhouses landlords will rent easily because demand is so high for housing.
  - ChrisLomont 4y ago
    Are you claiming zero money was spent on those properties for 30 years? I don't think that claim would stand on it's face. Over 30 years all sorts of things would break, pipes, leaks, batteries corroding and leaking out, animals move in, windows broken, doors removed.... Detroit ruins show what zero money put into a building for 30 years looks like - gutted shells. Show me an ad for a rentable place that has had zero money spent on the building for any maintenance for 30 years and I'll believe you.
    - lovich 4y ago
      Does >0 money spent equal 100% deprecation over 30 years? If the landlord spends a single penny in paint does that make up for getting an asset that’s considered zero value but still gets to be sold for hundreds of thousands?
saiya-jin 4y ago
I'd say the truth is somewhere in between. It is really, really not that great unless you have some superbly well located shiny great apartment in Manhattan or some other center center which gets 100% short term rental ie airbnb. But then this is multi-million $$ property. Long term rentals - the gains are minimal given how much capital is completely locked in that property and not doing anything else. If you are lucky, you have long term nice tenants and stuff generally doesn't break (ie heating/wash machine bursting and flooding everything, including 5 apartments below). If unlucky, 1 bad accident that needs to be fixed asap will wipe out any income you have for given month, if not more. Utterly random example - I got locked out (if thats the proper term) last sunday evening, went for a walk and big weird key wasn't turning in our old very massive (15cm thick & heavy) doors that look like they could handle a nuclear blast. Called some emergency services for this and they opened it, but showed me the lock basically disintegrated and I was lucky they didn't have to drill huge hole in those doors to get in and pay tripple the cost. The cost for new lock in those doors with all work? 2400 Swiss francs (cca 2500$), and that was work week rate of one of the cheaper agencies doing this, albeit in Geneva, one of the most expensive places to live. For a freaking lock that is just old design, fitting some 50 years old doors. Guess who pays that? Well me but I will get 100% reimbursement from agency who will get it from owner. Properties are great if you inherit them and suddenly have a nice passive income (and management worries). Or if you are lucky with timing and in 10 years they jump 3x with value. Thats over now. I wouldn't invest in properties now unless its for primary residence and then a lot of emotions and other concerns come into equation, but financially its not great.
- fwip 4y ago
  $2500 isn't that far off of the monthly rent for a single apartment in a lot of American cities. Sure, your old door might need a new lock after 30+ years (although given it was 15cm thick I'll bet it was much older than that).
Ajedi32 4y ago
If it's worth $0 then by definition you couldn't sell the property for more than $0, let alone charge a monthly rent higher than that. Obviously that wouldn't actually happen in real life, which I think is the GP's point.
djbebs 4y ago
Are you aware of the concept of risk? The amortization schedules are what they are for a reason, even if not all houses only last 30 years, the average is what matters here. Any number of things can result in houses being destroyed and become worthless prior to that time, including damage from earthquakes, fires. Additionally poor initial building standards, or changing building standards, or new regulatory barriers can make certain properties become not just worthless, but have an active cost to their owners and therefore have negative value.

Emma_Goldman 4y ago

>"Did they become silly rich? Or did they quit because it is a major problem to actually make it very profitable versus other uses of capital and time? I'm a decently saavy investor (in many things), and have watched multiple friends start up rental properties, only to stop once it became clear that tenants destroy things, costs to maintain properties are volatile and astronomical, the work required is significant, and so on." I'm sorry but this flies in the face of my experience. Most landlords I have met buy properties and then outsource their administration to property management companies. I have never seen or spoken to my last three landlords, none of whom lived anywhere near the same city as the property. Landlordism is parasitic in the literal sense of the word. Landlords get rent and capital appreciation for doing nothing but possessing an ownership title. The propertyless pay the propertied a premium to live. In light of both those observations, I would say any enrichment in this case is "silly", and that landlords don't tend to do much - or any - work. >"If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing." This is a non sequitur. If X is profitable and the market knows X is profitable then it should, in theory, be attracting exactly the amount of capital it merits already. In the UK, where I live, the rental sector has exploded, jumping from 2.8 million households in 2007 to 4.5 million in 2017. [1] [1] https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukprivaterentedsector/2018 https://www.ons.gov.uk/economy/inflationandpriceindices/arti...

ChrisLomont 4y ago
And there was a housing crash in there and decent growth in population over that time. Next, instead of picking a window wrapping the biggest housing bust in a century, pick various decades and see how normal volatility behaves - and you might find this variability not uncommon. In fact, from your own source, Figure 1 - the percent of rented properties is, well, nearly constant over the entire window (31% rented in 2007, 37% rented in 2017). And somewhere in there mortgage laws got significantly tighter - no need for pesky investors to be the cause of less mortgages. So go figure, right? Lots of reasons and complexity in there.
- Emma_Goldman 4y ago

commandlinefan 4y ago

> once it became clear that tenants destroy things Or/and just refuse to pay rent for years while you try to evict them.

fwip 4y ago
Then you're not trying very hard. https://rentprep.com/evictions/when-can-i-evict-a-tenant-for-nonpayment/ https://rentprep.com/evictions/when-can-i-evict-a-tenant-for...
- ChrisLomont 4y ago
  That's a list of how long until the landlord can file an eviction, not how long an eviction takes. "Thus, the eviction process can take from five weeks to three months, assuming there are no delays. If there are delays, the process can take as much as a year." [1] https://www.findlaw.com/realestate/landlord-tenant-law/how-long-does-the-eviction-process-take.html https://www.findlaw.com/realestate/landlord-tenant-law/how-l...
  - fwip 4y ago
    True. When the normal case is 1-3 months, and the high-percentile is "up to a year", it seems a little misleading to use the plural "years."

cheriot 4y ago

> And are losing value on the property, which is the point of depreciation. The house depreciates while the land appreciates. In the US for the last 50 years has been net appreciation for most homes. > If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing. Hedge funds have been buying houses at scale since the great recession. > Historically, housing has performed quite similar to the stock market for returns Which increases faster than incomes. Hence the way each generation has a declining rate of home ownership.

djbebs 4y ago
Why do you believe land appreciates?
- cheriot 4y ago
  A house without a major renovation will slowly depreciate yet housing prices in mid to major cities continue rising.
- adgjlsfhk1 4y ago
  read some Adam Smith. land appreciates as long as population increases because you can't make more of it.
  - djbebs 4y ago
    There's a limited number of atoms in the universe, under that argument everything appreciates.
ChrisLomont 4y ago
>Hedge funds have been buying houses at scale since the great recession. Zillow tried that and lost over a billion dollars - I'd expect lots of those purchases are not the money makers you think they are. >Which increases faster than incomes. Not for the same size houses - the median house now is many times the size of a median house from 1950, and a few times the size of a median house from 1970. If you buy the same house previous generations bought, you'd find prices relatively the same. >Hence the way each generation has a declining rate of home ownership. That's not what historical data shows [1,2], going all the way back to 1900. Each generation has had higher ownership rates at equal points in life than each previous one, except perhaps a recent one due to the 2008 crash, but they're catching back up again. Certainly there is no way you can claim each generation declines and see the same data FRED and Census post. For example, FRED shows that Q2, 2022, at 65.8% is higher than all of history except the decade before the crash, and it is trending up again. [1] https://fred.stlouisfed.org/series/RHORUSQ156N https://fred.stlouisfed.org/series/RHORUSQ156N [2] https://www2.census.gov/programs-surveys/decennial/tables/time-series/coh-owner/owner-tab.txt https://www2.census.gov/programs-surveys/decennial/tables/ti...

bps4484 4y ago

"An no one will now rent, since your building has an effective value of $0 since it has become crap." This isn't true. You will have put money into the property to keep its value up, also writing off all of those expenses, so that you can still rent it out.

ChrisLomont 4y ago
>You will have put money into the property to keep its value up You're ignoring what was written: if the building has value 0, then it is not maintained to keep the value up. Of you kept the value up, then it would not have an effective price of 0. Of course most people put money into properties exactly to keep value up. >also writing off all of those expenses Writing off expenses does not make them free - you are still paying for them - out of otherwise profit. It just means you get taxed on net profit instead of taxed on property gross income. But you are still losing money. Writing off expenses is not some free money giveaway. The point was to illustrate that OP ignored costs involved for landlords in the thought experiment.
- bps4484 4y ago
  oh it's certainly not free money (queue the seinfeld episode of kramer telling jerry to "write it off") but the discussion is about taxes or lacktherof. In no other investment that I know of are you allowed this double write-off: you can write off both the investment as it depreciates and the costs to make sure it doesn't depreciate.