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I live on a sleepy street that's half dense housing and half single family homes. Density will likely take over more than half of the street some day because th

by oooyay 2y ago

I live on a sleepy street that's half dense housing and half single family homes. Density will likely take over more than half of the street some day because the city has been relegating more dense housing to the working class areas of the city, which is where I happen to live. [1] Of those single family homes there is one that was owner-occupied for a year when we moved in. Since, it's been locked up and has had no renters. The couple that own it own several properties across my city, which I came to know as I got to know one of the owners while they lived here. It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. My owner-occupied mortgage costs me somewhere around $2600/m, I can't fathom paying two with one at a higher interest rate. Apparently this situation is common around my city. On the other hand, and a bit non-sequitur, is two homes will likely become dense housing. They're foreclosures of properties that were inhabited by meth addicts. The whole property from the building to the soil will need to be removed for various reasons. At auction the properties were purchased for the average sale price of a home of that size that had no pre-existing issues. It won't be the kind of housing people need though, if I'm a betting man; my city has plenty of SROs (single room occupancy) but they're at the wrong price point. They're now called "lofts" and "studios" with a price tag to match. What will be lost is two 50+ year old homes, and likely the ability of our street to tolerate the traffic it was designed for as another issue is the city not investing in road-building and maintenance on our street. 1: https://prp.fm/biz503-portland-building-density/ https://prp.fm/biz503-portland-building-density/

lr1970 2y ago
> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. In the USA it is happening all the time because, surprisingly, landlords have little skin in the the game. LLC is the name of the game. Each investment property is "owned" by its own LLC that bares 100% of risks and liabilities associated with the property and shields the landlord from the creditors. The property is financed entirely through commercial loans from the banks or other lenders. If the property does not generate enough profits for the landlord they quietly take all the liquid assets out of the LLC and stop paying their loan and property taxes. It takes long time (often years) for banks and local governments to start legal proceedings against the said LLC. During this period of time the property is sitting there boarded up. Finally the LLC files chapter 7 -- liquidation and all its assets, close to zero at that time, are given to the creditors. You may ask why the banks give loans to such high risk entities? First of all, if the property is bringing profits the loans are being paid of and it is the majority of the cases. Secondly, if the loan fails the banks do not have much skin in the game either. They slice and dice the loans and package them into "real estate investment vehicles". Then they sell the packages similarly to how they did it before the financial crisis of 2008. The terms and abbreviations are different now but the gist of it is still the same. EDIT: typos
- erickf1 2y ago
  Landlords have 100% risk. Look what happened to California, when the state said tenants did not have to pay rent. Same for Washington, NY, IL, etc... The vast majority of people with rental properties are just regular people trying to make a living.
  - carlosjobim 2y ago
    The majority are not regular people trying to make a living. They are old people trying and succeeding in getting rich by doing nothing.
    - djbusby 2y ago
      Where can we find stats on this? Lots of claims in this thread feel good but don't point to number-sources. I do know a few retirees who rent-out the home they raised their family in and live in a new primary. But my town also has some developers who build and rent.
      - carlosjobim 2y ago
        Look at national stats of wealth distribution by age. Most of that wealth is real estate.
    - swagasaurus-rex 2y ago
      My landlords have basically frozen rent since 2010. I pay half of what the people in the houses around me do. I'm very thankful to have landlords that aren't greedy.
      - carlosjobim 2y ago
        In that timespan you have probably paid off their mortgage. They still have the entire property and you still have nothing. Who should be grateful?
jandrewrogers 2y ago
> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. This may easier to explain than you might expect. Anecdotally, the people I know in a similar position own all those properties free and clear, there is no mortgage. Consequently, the carrying costs of that empty house are quite low and easily afforded. Also if the mortgage is very old. I know someone with a single-family home in Silicon Valley they don't live in with a mortgage of ~$1000 per month; you can imagine how low the property tax bill must be. While I am sure there are people with several rental properties mortgaged to the hilt, I don't think it is that common.
woodpanel 2y ago
I think the answer to your perplexity lies somewhere buried here: > The couple that own it own several properties across my city Without knowing which city you’re talking about I can assure you this is rather common. The moment a property becomes just one out of many (assets) in your portfolio your necessity to let becomes a mere annoyance. Many of the housing market imperfections could be at play here, but it certainly doesn’t help that renters are increasingly unable to afford to become first time buyers.
- ryandrake 2y ago
  >> The couple that own it own several properties across my city There always seems to be this common thread running through these discussions, but few want to address it. It's just build build build, moar moar moar. The problem isn't that there aren't enough homes. The problem is that so many homes are owned by so few people/entities and are often vacant. We shouldn't allow people (often foreign investors or private equity firms) to buy a home, leave it vacant, and sit on it as an investment as if it were a bar of gold or something.
  - mhb 2y ago
    Increasing the supply by building will make the value of their investment go down and encourage them to rent or sell to someone who will.
mindslight 2y ago
> how someone can float a mortgage, much less an investment mortgage, without a renter. They probably have an owner-occupied residential mortgage that the bank (/note purchaser) hasn't called them on. Declaring that you're residing in one unit (either falsely or temporarily) seems to be a pretty popular technique for buying rental real estate. If the mortgage was taken out during the past two decades of ZIRP, then the rate is still fixed at something very low and most of that monthly payment they're "floating" is effectively just going towards the principle as a mandatory savings account.
underlipton 2y ago
>and likely the ability of our street to tolerate the traffic it was designed for as another issue is the city not investing in road-building and maintenance on our street. To be fair, the vast majority of cities need to be investing in non-car transit more than auto infrastructure. Yes, probably even Portland.

by oooyay 2y ago

lr1970 2y ago

> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. In the USA it is happening all the time because, surprisingly, landlords have little skin in the the game. LLC is the name of the game. Each investment property is "owned" by its own LLC that bares 100% of risks and liabilities associated with the property and shields the landlord from the creditors. The property is financed entirely through commercial loans from the banks or other lenders. If the property does not generate enough profits for the landlord they quietly take all the liquid assets out of the LLC and stop paying their loan and property taxes. It takes long time (often years) for banks and local governments to start legal proceedings against the said LLC. During this period of time the property is sitting there boarded up. Finally the LLC files chapter 7 -- liquidation and all its assets, close to zero at that time, are given to the creditors. You may ask why the banks give loans to such high risk entities? First of all, if the property is bringing profits the loans are being paid of and it is the majority of the cases. Secondly, if the loan fails the banks do not have much skin in the game either. They slice and dice the loans and package them into "real estate investment vehicles". Then they sell the packages similarly to how they did it before the financial crisis of 2008. The terms and abbreviations are different now but the gist of it is still the same. EDIT: typos

erickf1 2y ago
Landlords have 100% risk. Look what happened to California, when the state said tenants did not have to pay rent. Same for Washington, NY, IL, etc... The vast majority of people with rental properties are just regular people trying to make a living.
- carlosjobim 2y ago
  The majority are not regular people trying to make a living. They are old people trying and succeeding in getting rich by doing nothing.
  - djbusby 2y ago
    Where can we find stats on this? Lots of claims in this thread feel good but don't point to number-sources. I do know a few retirees who rent-out the home they raised their family in and live in a new primary. But my town also has some developers who build and rent.
    - carlosjobim 2y ago
      Look at national stats of wealth distribution by age. Most of that wealth is real estate.
  - swagasaurus-rex 2y ago
    My landlords have basically frozen rent since 2010. I pay half of what the people in the houses around me do. I'm very thankful to have landlords that aren't greedy.
    - carlosjobim 2y ago
      In that timespan you have probably paid off their mortgage. They still have the entire property and you still have nothing. Who should be grateful?

jandrewrogers 2y ago

> It perplexes me, and the rest of our neighborhood, how someone can float a mortgage, much less an investment mortgage, without a renter. This may easier to explain than you might expect. Anecdotally, the people I know in a similar position own all those properties free and clear, there is no mortgage. Consequently, the carrying costs of that empty house are quite low and easily afforded. Also if the mortgage is very old. I know someone with a single-family home in Silicon Valley they don't live in with a mortgage of ~$1000 per month; you can imagine how low the property tax bill must be. While I am sure there are people with several rental properties mortgaged to the hilt, I don't think it is that common.

woodpanel 2y ago

I think the answer to your perplexity lies somewhere buried here: > The couple that own it own several properties across my city Without knowing which city you’re talking about I can assure you this is rather common. The moment a property becomes just one out of many (assets) in your portfolio your necessity to let becomes a mere annoyance. Many of the housing market imperfections could be at play here, but it certainly doesn’t help that renters are increasingly unable to afford to become first time buyers.

ryandrake 2y ago
>> The couple that own it own several properties across my city There always seems to be this common thread running through these discussions, but few want to address it. It's just build build build, moar moar moar. The problem isn't that there aren't enough homes. The problem is that so many homes are owned by so few people/entities and are often vacant. We shouldn't allow people (often foreign investors or private equity firms) to buy a home, leave it vacant, and sit on it as an investment as if it were a bar of gold or something.
- mhb 2y ago
  Increasing the supply by building will make the value of their investment go down and encourage them to rent or sell to someone who will.

mindslight 2y ago

> how someone can float a mortgage, much less an investment mortgage, without a renter. They probably have an owner-occupied residential mortgage that the bank (/note purchaser) hasn't called them on. Declaring that you're residing in one unit (either falsely or temporarily) seems to be a pretty popular technique for buying rental real estate. If the mortgage was taken out during the past two decades of ZIRP, then the rate is still fixed at something very low and most of that monthly payment they're "floating" is effectively just going towards the principle as a mandatory savings account.

underlipton 2y ago

>and likely the ability of our street to tolerate the traffic it was designed for as another issue is the city not investing in road-building and maintenance on our street. To be fair, the vast majority of cities need to be investing in non-car transit more than auto infrastructure. Yes, probably even Portland.