4 ms·

Genuine question: how so? I'm not familiar with the economics of this.

• embedding-shape 4mo ago
  The general feedback loop is "have lots of money === easier to make more money", and doing so via passive approaches like "own property, rent it out" basically spirals out of control to a few owning a lot, unless you try to restrict it somehow. Add in that "vacation rentals" is hugely interesting for real estate owners as you get so much more per owned property, and suddenly local residents are even harder hit by property not being available even for long-term rent anymore. Final drop being that the real estate owner doesn't even live, work or spend their money in the country of the property itself, and suddenly it's basically all downside for the country and the people living there.
  • nradov 4mo ago
    The notion of earning "passive income" as a landlord is a total fantasy. The reality is that it takes a lot of work. Otherwise tenants, vendors, and property managers will wreck the assets and rob you blind.
    • embedding-shape 4mo ago
      > The reality is that it takes a lot of work. You can outsource pretty much the entire thing, and just be a name on a paper, and receive money in your bank account, that's as close to "passive income" as you can get. Lots of people do this today, pretty common for landlords to do so in Spain for example, and I'm sure all around the world.
      • alistairSH 4mo ago
        100% this. My parents had a beach house for a while. It was rented May-Sept every year. They'd visit for a week in each shoulder season, spend half the time doing major cleaning/fixing, and left the day-to-day during rental season to a management company (same one that managed bookings for the house). It wasn't 100% passive, but it was about as close as you can get as a retired upper-middle-class couple.
        • broken-kebab 4mo ago
          >100% this >wasn't 100% passive Apparently it's not passive, then. It's a seasonal job essentially.
          • alistairSH 4mo ago
            Sure but not “a lot of work” as nradov suggested above. And they could have outsourced that as well, but at some point it made sense to do some light maintenance while they were on-site.
      • everforward 4mo ago
        I tried this once and it wasn’t great. It was a single home, and in a college neighborhood (house was cheap, ergo rent was low). The rent paid the mortgage, but that was about it. Repairs were more or less out of pocket. I gave it up because I didn’t live locally and got raked over the coals on repairs a couple times. I finally quit because the property managers had an “emergency repairs” clause where they could do repairs without my approval and bill me. One of the renters clogged the toilet at 11pm on a Saturday, moron decided to call the property management because I guess plungers are confusing, they decided that was an emergency, and I got a $700 bill to send a plumber out at midnight to plunge a toilet. Like not even a roto rooter or something, just a generic grocery store plunger. Became clear I was either a) going to have to be much more involved, or b) accept that the returns are basically just equity in the house on a 15 year mortgage, minus overpriced repairs.
        • alistairSH 4mo ago
          Oh yeah, the management companies bill insane amounts. The beach house I mentioned in the sibling sub-thread - they'd bill $100 to change a lightbulb, stuff like that. It only made sense as a medium-term investment - buy with cash, maintain for a decade (and maybe you're cashflow positive for part of that), then sell for a profit (hopefully). Similarly, local to me, renting a house really only makes sense if you bought cheap (which for us normies means we bought it years ago, so the mortgage is cheap vs current rents).
          • everforward 4mo ago
            The returns just don’t really make sense for me, but I’m not a CPA. The returns don’t seem substantially better than an index fund, it’s a headache to deal with, and if housing actually becomes affordable then you’re upside down (and the govt might air drop cash on upside down mortgages, probably not if you’re already paid off). Not my forte though and I hand-waved the hell out of that math, maybe I’m way off. Just feels like a ton of capital to tie up for mediocre returns. A beach house makes some more sense because you get the utility of being able to use it, which is worth something if you like to vacation to the same place.
      • broken-kebab 4mo ago
        >You can outsource pretty much the entire thing This is probably the fantasy part. Quality of maintenance, honest, doesn't take all the money - you can pick only 2 of these for your property operator. Actually, you have to be lucky to get 2. If it works great and you aren't involved in solving constantly incoming troubles, you're earning peanuts.
        • embedding-shape 4mo ago
          > This is probably the fantasy part. It really isn't, some of people I know personally are literally doing exactly that. These "management companies" basically does everything for you, if you haven't heard about them since before, go look them up, I'm sure there is at least one active in your own area.
          • broken-kebab 4mo ago
            My close relative does it, and it's exactly like I wrote above: if it doesn't take your time, money mostly go to other people. There's a comment from everforward which gives a glimpse into reality.
            • embedding-shape 4mo ago
              > which gives a glimpse into reality. Fun :| Impossible that different people have different experiences? Not claiming you're wrong, the world is a pretty big place after all.
              • broken-kebab 4mo ago
                Agree. However, this is the main argument for yeti living somewhere. And property passive income is indeed very yeti-like, there's always somebody heard something, but with closer inspection it's either not that passive, or not that income-y. Or maybe it's like resonance particles: happens, but too unstable to be registered. There are plenty of forces both political, and economical working against it, after all.
              • 4mo ago
  • junon 4mo ago
    https://news.ycombinator.com/item?id=48541141 https://news.ycombinator.com/item?id=48541141
    • embedding-shape 4mo ago
      Did you miss the last part? > suddenly it's basically all downside for the country and the people living there
      • junon 4mo ago
        For the target country, i.e. the country with the rental. The comment I'm responding to implied it's also bad for the extractor's own home country, and I was asking how that could be if the money is being injected into their local economy.
• toss1 4mo ago
  The short answer is this an exemplar of the distinction between generating income by producing vs generating income by rent-seeking. Producing something, goods, services, useful information, etc. is a net plus for society, adding value for both the producer and the consumer, making the society overall richer. Rent-seeking is purely extractive - it extracts value from the consumer, and in the cases where the extractor is outside of the society, e.g., a foreigner or oligarch-type, it extracts value from the society, leaving the society poorer.
  • junon 4mo ago
    I understand why it's not great for the target country. I'm asking why GP said it was bad for the home country.
    • margalabargala 4mo ago
      It's bad for wherever the person happens to be operating.
      • junon 4mo ago
        Which is the target country. Not what I'm asking about.
        • margalabargala 4mo ago
          The implication is that the person in question is also extracting rents from their home country in addition. They're already bad for their home country, they additionally become bad for the target country as well.
  • nradov 4mo ago
    Efficient capital allocation is a net positive for society.
    • toss1 4mo ago
• ecshafer 4mo ago
  Rent extraction is bad, since it hurts productivity. Ill admit I am an unabashed Georgist, but the book Progress and Poverty by Henry George is pretty accessible. But basically this: Capital and Capitalists are good, they have money, then lend it for ownership, this creates innovation. Labor is good, you need workers, they work, they produce, its good. But Rent (extracting value from land, patents, etc.) is just a negative drain, labor has to pay rent, capital has to pay rent, but they don't really innovate and grow the economy.
  • junon 4mo ago
    But what about their home country?