Ethics of rentals

[PMJL34]

I'm sure this has been discussed before and I'm sure I'll strike a nerve or two, but I have no ill intentions and am genuinely curious.

How does this community feel about the ethics of owning rentals? As in buying a vital/necessary commodity that others can't in order to make a personal profit. 

My personal opinion is that it's most likely unethical to own more than a primary in a city/town where there are extreme home shortages. With that said, I'm a living hypocrite because I own a rental.   

My personal opinion is that there should also be a cap on number of homes one person can own. I don't have an exact number, but let's just say 10 should be more than plenty (and yes i'm aware that many posters here own 100s maybe 1000s). Not trying to call anyone out, just sharing my personal opinion. 

Thoughts?

[nereo]

 My opinion is it’s unethical to treat your tenants like they aren’t people, or trying to swindle them out of money (ie not refunding deposits without a great reason) or not acknowledge that your rental is in fact their home. And of course you should follow the laws.

Beyond that I don’t see it as unethical to own one or a hundred doors. The market dictates the price, and fair landlords don’t drive the prices up (lack of supply and huge demand do).

ETA I’d argue that buying up large properties as second/third/forth homes in expensive areas and NOT renting them is far less ethical.

[Omy]

I have two rentals that I'm renting out below market value. In both cases, the tenants wanted to rent instead of buy. They don't have down payments to buy a house, and they don't want to deal with repairs and maintenance. I haven't raised rent for either.  I will raise it to market value when the tenants move out. (And might make small raises once the pandemic is over). I'm quick to address issues and do my best to be accommodating to tenant requests. Both tenants are appreciative and pay on time.

I don't feel the slightest bit unethical. If anything, I'm getting the shorter end of the stick - and that doesn't bother me because we're doing well and would like to continue to have good relationships with our tenants.

[FINate]

Some people can't buy a home, others simply don't want to own a home. Landlords provide a vital and necessary service, and those in the market for rental housing are better off when more rentals are available. Cities where landlords are selling rentals to owner-occupants are much worse for renters.

Be an ethical landlord, maintain properties for health and safety, and support new high-density housing. The plight of renters will not improve unless/until landlords have to compete for tenants.

[trollwithamustache]

there are typically a shortage of homes in areas were the city doesn't allow homes to be built.

[srad]

My personal opinion is that it's most likely unethical to own more than a primary in a city/town where there are extreme home shortages. With that said, I'm a living hypocrite because I own a rental.   

Thoughts?

Buying rentals is not unethical at all imo.  The biggest problem for housing isnt landlords owning 5, 10, 1000 units, its the flat out lack of housing supply. You add one million units to San Francisco I guarantee prices will start to fall. 

Let me ask you this, when you were out of college and just starting out did you buy a house?  I sure didn't, I shacked up with 5 other people in a house that we rented.  I rented until i got married and we saved up enough money for the down payment.   Also,  midway through my working career I pulled a 2 year stint in NY.  I knew I was only going to stay there a while so are you suggesting I should of purchased a home for those 2 years? That wasn't going to happen have you seen NY's prices? I needed a nice place to stay and the person who provided me that was a landlord.  Which is exactly what I do with my units, I provide people a clean, safe and mostly affordable place to stay.  I play by all the rules, I return security deposits, I fix things when they breaks, I don't jack up the rents each year (I do raise them each year though). Quite frankly the biggest reason I get on why my tenants leave is because they purchased their own place.  So the cycle that I went through, college, rent with roommates, get married, buy a house is still out there.

Now are you are suggesting rentals should only be owned by the government?  Because as we have seen and are currently seeing, government can make some bad calls which can make things much more expensive than they need be.

[iris lily]

…Now are you are suggesting rentals should only be owned by the government?  Because as we have seen and are currently seeing, government can make some bad calls which can make things much more expensive than they need be.

Yep.

I live in an urban core a block and a half from a  large public housing complex. I remember decades ago when we were renovating our house we had about $80,000 into it in materials and some labor (DH was doing most of the labor)and it was barely habitable at that point but we were living in it.

The feds down the street were also renovating those public housing units and it was reported that the average unit had $80,000 in it. I never could understand how that could be reality Since the units were a third the size of our house. But  by the time you factor in  government graft and corruption, Yes I guess it does cost the government that much to do stuff.

[Villanelle]

As someone who lives in a rental, and who also has a home that I rent out as a landlord, I think this is silly.

There are plenty of reasons people want to live in a rental rather than buy a place.  How is it unethical that someone meets that need?  Even if somehow fewer people owning and offering rentals drove down buying prices, it would also drive up rental prices.  How is that better?  I would certainly be worse off in that scenario.

The place we own is currently rented by three roommates.  So presumably, being forced into buying wouldn't be practical or helpful for them.  It would likely make their lives far more expensive.  (BTW, these are three working professionals, not college aged.  They have very solid credit and income, so presumably renting with friends is a conscious choice they are making because it best suits their lifestyles, whether that's financial, social, shared housework, or something else.)

Also, this is a very HCOL city (SoCAL) with significant housing issues. 

We move every few years (military family) and have no desire to buy on that timeline, especially when we have no say in when we move so we could easily end up needing to sell in a very terrible market.   Our current location is also in a also a VHCOL area with significant housing issues. I'm thankful to have a rental. 

I'm not sure how providing a service I want and need, and sparing me having to buy and sell every few years, is in any way "unethical".  Weird.  The entire concept seems sort of myopic, as though what is right and best for one person is right and best for everyone and should be encouraged.  If it is best for *me* to own, then we need to make it easier/cheaper/faster/better for everyone to own, even if it makes the alternative more difficult.  And that's nonsensical and seems to lack a certain wider world-view.

It's unethical to treat your tenants badly, to not keep the house up to decent standards, to try to keep as much of their security deposit as possible.  But to offer a service/product for which there is high demand?  I don't see how that is unethical.

[clarkfan1979]

I'm sure this has been discussed before and I'm sure I'll strike a nerve or two, but I have no ill intentions and am genuinely curious.

How does this community feel about the ethics of owning rentals? As in buying a vital/necessary commodity that others can't in order to make a personal profit. 

My personal opinion is that it's most likely unethical to own more than a primary in a city/town where there are extreme home shortages. With that said, I'm a living hypocrite because I own a rental.   

My personal opinion is that there should also be a cap on number of homes one person can own. I don't have an exact number, but let's just say 10 should be more than plenty (and yes i'm aware that many posters here own 100s maybe 1000s). Not trying to call anyone out, just sharing my personal opinion. 

Thoughts?

For most of my rentals (not all), my tenants make more money than me, which is 90K/year (including rents). My current tenants for my Kauai rental are a semi-retired couple selling timeshares for Marriott. Their net worth is around 2-3 million and they have 800+ credit scores. Before that, I rented to an ER doctor with an income of 400K. Before that it was a retired couple that splits time between Kauai and Napa Valley, CA. They own a house in Napa Valley with a vineyard and have grape income.

Out of my current 4 groups of tenants, only one group makes less money than me. They are a group of college students from Texas that attend CSU Fort Collins and pay the out of state tuition of $31,600/year. Their parents are co-signers and wealthy. One tenant is doing construction management because their parents own a "few" rentals.   

Some people do not want to own because it's a temporary thing. They are thankful that they have the option to rent. If they were forced to buy, they would lose money because when they sell in 1-2 years, the transaction costs (10%) are higher than the appreciation. 

[srad]

After my initial response I gave this a bit more thought and I think I get what you are asking. 

I currently have one tenant who has been struggling to pay their rent over the last year.  Single mom with 2 kids.  We talked the other day and she said her paycheck was $400(ish) and would put as much as she could towards the rent.  I got 185 of that.  Here's the thing, I don't need any of her rent.  I could have her and half my tenants live for free and my lifestyle wouldn't change at all. 

So there is your dilemma, I am doing well in life and I am collecting money from a single mom of two who is struggling right now.   Now on the flip side, if this was after I purchased my first rental 15 years ago, and that one tenant didn't pay, I would be struggling as well.  Then who's side would you, the media or our politicians be on? The struggling landlord or struggling tenant?  Optically its much easer to be on the struggling tenants side if the landlord is already successful. 

Simple answer to this housing btw, aside from more housing is to greatly expand the housing voucher system.  Keep housing private in the hands of people who care about their property and then we all get to help out (via taxes) the less fortunate.  Housing is way more efficient in the private sector... Until government can prove to me they can be efficient, that's where I stand. 

[PMJL34]

I appreciate everyone's responses thus far. This is a forum full of rental property owners and I see a couple of themes I wanted to reply to.

1. Yes, rentals absolutely meet a need. No, not everyone wants to own. However, I think this is overblown. There is a much higher need/desire for people to own, but can't afford it and have to rent than people who can buy, but choose to rent. The latter population is miniscule imo without any scientific backing.
2. Yes, being kind to the tenants and keeping the place comfortable is the best we can do if we do choose to own rentals.
3. No, I do not want government in charge of housing.
4. Yes, owning multiple homes and keeping them vacant ala Carmel, CA is probably the most unethical example in this scenario.

Here's my thoughts:
1. Blaming the government that they limit the # of housing (while absolutely true) does not give us a get out of jail card to buy as many as we can afford.  All cities have X number of houses and if an individual happens to have 6, then the number of available houses in the city is X - 6. I am really surprised that no one is against a limit on the number of rentals one can/should own. What if one person owned 70+% of homes in your city? Even if we assume that this person charged fair rent and kept the units nice....how is that helpful to anyone? You can't convince me that 70% of the city's population wants to rent.
2. At least in my area, there is no denying that individuals buying houses (especially SFHs) as investment properties drives up the house prices.
3. Again, the reality is that there are limited number of homes that people are competing for. And these homes are not optional like a diamond necklace or the newest iphone (as in everyone needs a home to live). If we were talking about buying 1million+ necklaces/iphones and re-selling it at a higher price...whatever. it's not something we need. I guess I view air, water, food in a similar vein as housing in that it is something that (in a perfect world) should be actively made affordable/readily available instead of the way it is (at least in VHCOL areas).

Again, I'm just sharing my thoughts.

[FINate]

There's a big difference between a person owning 6 homes in a city vs 70% of the market. The former is not an issue since the owner doesn't set the price, instead they discover it. Whereas the latter has price setting power due to what is essentially a monopoly. There's a reason we already have laws regulating monopolies.

And yes, each rental unit is one less for prospective buyers. But at the same time it adds to the rental stock, which puts downward pressure on rents. Lower rent is good for renters, but it also makes it less attractive to convert existing owner-occupied to rentals. What really matters is the total housing supply. Add enough supply and rents will be affordable, and purchasing a home will be affordable - the two are not mutually exclusive.

The only reason we're having this discussion is because government (mostly of the local type) has engineering a housing shortage, largely to appease homeowners who have a vested interest in their property values increasing while also preserving their preferred neighborhood characteristics. The ethical dilemma isn't landlords vs. tenants, but instead those who own residential property (including the large number of homeowners) vs those who don't.

[Jon Bon]

Just like it's unethical to grow more food than you can eat?

I can't afford to buy acres of land and raise my own vegetable's and meat.

To me this conversation is pretty dang silly. Landlords compete with other landlords. Generally we can't screw tenants over and get away with it for long. We can't set rents above market. That is how it is supposed to work. We provide a good/service for our customers, its an even exchange, no one if forced to rent from me. I am not forced to rent to anyone else.

Are there horrible terrible landlords? You bet there are, but most are just trying to be a good person and get a modest return.

[MudPuppy]

@Jon Bon i don’t think that’s a great comparison. Sounds more like a real estate developer more than a landlord.

[Jon Bon]

@Jon Bon i don’t think that’s a great comparison. Sounds more like a real estate developer more than a landlord.

Sure there is some hyperbole in there, but no one gets mad at farmers (or big farming corporations) for selling a product that everyone needs to survive.
Now what I think the OP is saying is that he thinks buying single family homes as a speculative investment (not renting it out and removing it from available housing stock) is unethical.

Me? I just think its generally dumb to make an appreciation play like that. I also don't think enough people do that to make a noticeable difference in the availability of houses (2008 makes more sense). What I think the OP is concerned about the price of houses, and is incorrectly stating that rentals make SFH more expensive which I disagree with.

If you want to lay blame about the price of houses in VHCOL places well I leave you this graph:

[MudPuppy]

I still don’t think you understand. The OP is asking if renting is ethical because the supply of housing is (kind of) finite. There are very real concerns raised in some areas where a standard home is just not in the reach of many home buyers because they can’t compete with those companies either in amount or in financing. The problem is “slower” with smaller LL, but you can’t just dismiss that it is a bit of hinderance.

[FINate]

I still don’t think you understand. The OP is asking if renting is ethical because the supply of housing is (kind of) finite. There are very real concerns raised in some areas where a standard home is just not in the reach of many home buyers because they can’t compete with those companies either in amount or in financing. The problem is “slower” with smaller LL, but you can’t just dismiss that it is a bit of hinderance.

What's a "standard" home?

[MudPuppy]

Basic entry-level model for whatever area you are in. In my area, that’s 2-3 bedrooms and 1000-1800sqft detached.

[Jon Bon]

I still don’t think you understand. The OP is asking if renting is ethical because the supply of housing is (kind of) finite. There are very real concerns raised in some areas where a standard home is just not in the reach of many home buyers because they can’t compete with those companies either in amount or in financing. The problem is “slower” with smaller LL, but you can’t just dismiss that it is a bit of hinderance.

Perhaps I don't

What is your, and the OPs concern?

The price of houses? Landlords have existed for what 1000's of years? They need a return, they cant just buy houses and keep them on the sidelines for years. Are there companies that are buying thousands of houses and leaving them empty long term? I don't think anyone has that kind of money and that kind of stupid. Zillow might be an example but they bought them to flip them, not some sort of grand master plan to corner the housing market (which is illegal)

Prices have exploded in the past 12 years due to the actions of the fed/us government. Sure home building starts are down and that is part of it, as is NIMBYism, but I think the 10+ trillion put into the economy as well as the lowest interest rates ever seen have an outsized impact.

Do rentals drive up prices of SFH? Maybe in the short term? But it feels unlikely to be lasting. The price of a house (rental or purchase) depends heavily on total housing stock. If we build to many rentals SFH prices will go up and the economy (builders developers etc) will respond until an equilibrium is reached. If I buy 10 or 100 or 1000 rentals is not going to change the housing stock at all. Those houses were filled with poeple before I bought them and will be filled with people after I sell them. Sure I could go out and buy 10,000 SFH and turn them all into rentals. That would probably have a small effect, but the fact I would rapidly go bankrupt would likely offset any changes in the total housing market. Are you seeing large numbers of SFH get turned into rentals? Generally SFH's make terrible rentals.

Yes if price is the issue, prices are going crazy and have been for years. That is for sure effecting affordability for tons of people looking to buy their first home. This is a problem and should be addressed, But I fail to see how that is the fault of landlords and even speculators. I draw a pretty straight line to interest rates and the feds QE programs for the runup of house prices.

[FINate]

Basic entry-level model for whatever area you are in. In my area, that’s 2-3 bedrooms and 1000-1800sqft detached.

Detached SFHs are significantly more finite than multi-family. I get that Americans in particular prefer SFH with a yard over dense multi-family. But we need to de-conflate wants vs. needs. Housing is an essential human right, and society has a moral obligation to house people. Yet this doesn't extend to a preferences for a SFH. Investors competing with other home buyers for scarce SFH isn't a problem unless there are no other options because it's nearly impossible to build anything else.

[srad]

I draw a pretty straight line to interest rates and the feds QE programs for the runup of house prices.

This is what's running up everything.    You take a helicopter carrying 3 trillion dollars and dump if over America what do you expect is going to happen? Things aren't all of a sudden going to be cheaper.

As for us LL's, there's not enough of us to really move the needle.  Take Memphis for example, I don't remember what the percentage of owner vs investor owned homes are but it's way more than a normal HCOLA.  Look at Zillow see how many single family homes are for rent, and compare that to any HCOLA's anywhere.  And housing prices in Memphis are very affordable, many homes are sub 150k.

I don't see any blackstone type company buying up thousands of single family homes in San Francisco, but I wouldn't be surprised to see them buying homes in Memphis. 

[GuitarStv]

I don't think there's anything ethically wrong with being a landlord.

I do believe that it's possible for a landlord to behave unethically though.



Most of the discussion in this thread talking about 'ethics of being a landlord' seems focused on the ethics of certain housing policy decisions.  I see these as only tangentially related to being a landlord.

[MudPuppy]

I don’t think being a landlord is inherently unethical, but you really can’t see where there’s any nuance? You genuinely believe unless it’s a black stone type company then it’s impossible for it to be unethical?

[Paul der Krake]

Shitty housing markets are a policy choice. Either you have enough housing stock to keep prices in check, or you don't. Everything else, from absentee landlords to airbnb to gentrification to whatever activists feel like yelling about today, is a side-show.

You should be mad at the elected officials.

[GuitarStv]

I don’t think being a landlord is inherently unethical, but you really can’t see where there’s any nuance? You genuinely believe unless it’s a black stone type company then it’s impossible for it to be unethical?

The way I see it, in a capitalist system like we have the actions of the market are only kept in check by government forces.  Capitalism is designed to devalue moral choices, and government regulation is designed to enforce them.

Let's say there's a clearly immoral regulation - only people with blonde hair are legally allowed to rent homes.

If I'm blonde and refuse to buy a second house to rent because I'm taking a moral stance . . . another blonde person will just buy that house and rent it.  The net impact of my moral choice is zero.  But that second person who has bought the house might act immorally to redheads who want to rent . . . where I would be perfectly fair.  So your moral stance may actually cause a worse situation for the people you're trying to support morally.

It would make more sense to lobby hard to change the immoral government rule than to opt out of the system.  The moral problem is with the rule, not the act of landlording.

[MudPuppy]

I don’t necessarily disagree with any points you are making, @Paul der Krake @GuitarStv. I can be mad at policy/officials/capitalism and also try to be mindful of harm reduction in my daily choices.

I was addressing the silly comparison to farming and the implications that this is an open and shut subject. I think OP was inviting discussion, and I think it’s a worthwhile one.

[therethere]

Being a landlord isn't any more unethical than any other for-profit business. But it's not unnoticeable. And it is creating a larger divide between haves and have nots. If you can't admit that is occurring on some level then I don't know what to tell you.

I read a story that 20% of the homes in my area were bought by investors in 2021. A lot of my friends who have made out on appreciation on their house, refi'ed then used the money to buy a second house and continue to rent the first. How can you say that having 2, 3, 4, 5+ houses when you only "need" one isn't decreasing the amount of housing stock available? My block is nearly 1/4 Airbnb's renting for 1.5x a long term rate. All of these things may not the only factor, or even majority factor in unaffordability, but each stacks up and adds to it.

[srad]

No I'm not saying unless its a blackstone type company it will be unethical.  I'm saying it takes a blackstone type company to begin to move the needle of affordability.  I can't buy 1000 single family homes in a neighborhood, but a blackstone company can.

I also could be considered part of the problem for affordable housing.  I look for rundown properties (this also means rent is very low), I fix them up and then I get market rate.  Great example of this.  A duplex I bought a few years ago, one side was vacant the other the tenant had been there since 2005, their rent was $500, market rate at that time was 1k, I fixed the other side up and rented it for 1k.  4 years later that tenant who was paying $500 is now paying $920.  He is still getting a good deal since market is 1200 now, but I removed one unit that was dirt cheap, and when this person leaves i'll remove another.  His rent will be over 1k next year..  Is that unethical? 

Keep in mind, I also spent a few thousand fixing that existing tenants place, the former LL did NOTHING to that unit, it was bad. So bad the tenant was not even using one bedroom because of the mold.  I fixed it, raised their rent now the tenant and his family uses both bedrooms, but its also no longer a $500 rental....

 

[srad]

A lot of my friends who have made out on appreciation on their house, refi'ed then used the money to buy a second house and continue to rent the first. How can you say that having 2, 3, 4, 5+ houses when you only "need" one isn't decreasing the amount of housing stock available? Sure it's not the only factor but it is definitely adding to the equation.

And why is this happening?  Because money is dirt cheap right now they can afford to purchase these homes.  With the current interest rates, home are at incredibly affordable levels.

And again, those 2,3,4,5+ houses are still housing someone. If they were being held vacant that would be an issue.

[GuitarStv]

Are we still on the same forum where people commonly recommend not buying a house and renting forever, as generally a house is a bad investment from a financial perspective?

[therethere]

A lot of my friends who have made out on appreciation on their house, refi'ed then used the money to buy a second house and continue to rent the first. How can you say that having 2, 3, 4, 5+ houses when you only "need" one isn't decreasing the amount of housing stock available? Sure it's not the only factor but it is definitely adding to the equation.

And why is this happening?  Because money is dirt cheap right now they can afford to purchase these homes.  With the current interest rates, home are at incredibly affordable levels.

And again, those 2,3,4,5+ houses are still housing someone. If they were being held vacant that would be an issue.

"Housing someone", without giving any acknowledgement of cost, is a silly metric in my opinion.

I mean, I'm not homeless because I am able to make enough to pay rent. If my rent goes up $200 or even $500 I'm going to cough up the extra or figure it out, not start camping on the streets. Because I don't really have much choice. But it's increasingly harder for me to buy due to house prices and rentals.

The whole concept of getting ahead means someone else is falling behind. Again, I didn't say that means it is unethical. I just don't accept the claims that the actions of those on top aren't affecting those underneath them.

[Jon Bon]

Being a landlord isn't any more unethical than any other for-profit business. But it's not unnoticeable. And it is creating a larger divide between haves and have nots. If you can't admit that is occurring on some level then I don't know what to tell you.

I read a story that 20% of the homes in my area were bought by investors in 2021. A lot of my friends who have made out on appreciation on their house, refi'ed then used the money to buy a second house and continue to rent the first. How can you say that having 2, 3, 4, 5+ houses when you only "need" one isn't decreasing the amount of housing stock available? My block is nearly 1/4 Airbnb's renting for 1.5x a long term rate. All of these things may not the only factor, or even majority factor in unaffordability, but each stacks up and adds to it.

Ah ok yeah I think the Airbnb thing is a bit of a different story. On some level yes they do remove inventory from housing stock. So on that subject debate away.

However in my hypothetical town 10 houses owned by owner occupants is the same as 5 owned by owner occupants and 5 being rented out by mom and pop or some soulless corporation. The amount of housing stock remains the same, population housed is the same.

Now if Airbnb or someone tries to buy up all say 4 of the houses in my hypothetical town and then either rents them to no one, or uses them as VK rentals at 2x the going rate. Sure I could see how someone thinks it is unethical. But that is not "owning rentals" at least how I think of the term.

[srad]

Are we still on the same forum where people commonly recommend not buying a house and renting forever, as generally a house is a bad investment from a financial perspective?

This is the best answer yet.

[MudPuppy]

Are we still on the same forum where people commonly recommend not buying a house and renting forever, as generally a house is a bad investment from a financial perspective?

Speaking for myself, my mortgage is half of what I would pay in rent in this same town. My area is experiencing a lot of influx from out of state, though.

[Jon Bon]

I don’t necessarily disagree with any points you are making, @Paul der Krake @GuitarStv. I can be mad at policy/officials/capitalism and also try to be mindful of harm reduction in my daily choices.

I was addressing the silly comparison to farming and the implications that this is an open and shut subject. I think OP was inviting discussion, and I think it’s a worthwhile one.

If I try to buy up all the wheat and raise the price of bread yes that would be unethical.

If I try to buy up all the houses in St. Louis and drive up the price of housing yes it would be unethical.

My question: Is anyone doing either of these things?

Not to my knowledge? Also pretty sure both would be illegal.

[soulpatchmike]

My question if renters really wanted to purchase, where were they in 2009-2012 when housing was dropping like a stone and houses were selling at 1994-97 pricing?

Economics are cyclical and this is not issue is not new.  People follow the trends.  Right now people are feeling flush and want to purchase, but can't.  10 years ago people were feeling broke and couldn't purchase and there was a glut of supply.  It is not the property investors' problem if they have the intestinal fortitude to buy when no one else wants it.  This gives them the right to the upside when everyone wants what they have.  Supply will increase and pricing will adjust at some time in the future and the tenants that want to buy now will not be willing to buy when something is available they can afford because it looks like the prices are going down, not up...

[MudPuppy]

My question if renters really wanted to purchase, where were they in 2009-2012 when housing was dropping like a stone and houses were selling at 1994-97 pricing?

Well, in large part they were not in a financial position to buy even if it’s just that they were young. I graduated college in that time frame and between student debt, my relatively short credit history, and lack of means for downpayment, I was not able to buy.

[Villanelle]

There are still so many assumptions.  Again, some people just don't want to buy.  It's not that they aren't in a position to afford it, or weren't in a position when prices were lower, or anything else.

My spouse and I could easily have bought the house we are currently renting.  It would have been a stupid financial move since we'd almost certainly be selling (or renting for a massive loss) in 3 years when we are required to move.  But we certainly could have bought.  We didn't want to.  *We didn't want to buy!* It made faaaaaar more financial sense for use to rent--likely to the tune of tens of thousands of dollars over the course of our three year lease.

How is my landlord being unethical by allowing us to save money and have less headache and risk?  And how I am being unethical as a landlord if I rent my place to 3 frugal young professionals who want to live together because it's a better fit for them, for whatever reason?   Why is that something that should be disincentivized or made more expensive and less available?

I would absolutely support a stiff tax (locally and federally) on vacant properties, to include vacation homes.  I'd imagine a tiered system.  Perhaps if one home isn't anyone's residence, you pay a small fee that is a % of the value.  For 2-4 homes, you pay a larger%, and for 5+, it is an even larger%.  Maybe for any place that is empty more than 3 months per year (to allow for vacancies and turnover), with one exemption per 10? years for active construction/renovation.  That would help get those properties back into the market (either rental or sale) and drive down prices.  But it would still allow the perfectly viable and ethical option of rental for people for whom it is a better fit, for whatever reason.  *That* could create moderate but meaningful change, while still keeping options open so people can choose the housing situation that works best for them.

[PMJL34]

Thanks again everyone for their input. I feel everyone is sharing valuable points and remaining on topic so it's greatly appreciated.

I'm not sure I buy the blackrock bad/mom and pop good argument regarding moving the needle.

I'm trying to come up with an analogy...littering is bad. Me throwing something onto the side walk won't really do damage in the same way a corporation dumps things into our air/water/etc but they are both not good and contribute to littering our world. Neither one of us should be littering. Same with food waste/water use/etc. etc. I feel we all have an impact whether it's big or small.

I'm also not sure I agree with "housing someone" statement either.  I personally feel that a rental housing someone is drastically different from an owner occupied home.

I completely agree that governments/policies drastically contribute to housing shortages. However, I don't like blaming the government too much. SF,NY, or really any major city has limited space for housing. Even Tokyo which has extremely dense housing is still extremely expensive downtown. And there is clearly significant demand for owner occupied housing in all of these places, but it's unattainable to the overwhelming majority of residents. So for me to not only have a primary, but also a rental (where I contribute to higher prices + make a profit off of people who cannot afford to buy) does sometimes feel a little....wrong.

Just food for thought.   

[FINate]

Clearly I don't agree with your premise that being a landlord is inherently bad. Putting that aside, if you feel being a landlord is wrong (even if just on a smaller scale) why don't you just sell the property?

[joenorm]

What is the alternative to some people being landlords?

[srad]

You also realize living in a VHCOLA is a choice, not a right, right?

If you can't afford a city why would you stay?  Just move 1.5 hours away and make it in a more affordable town.  There is a reason why a city is expensive, its because there is a huge demand for it.  Supply and Demand, then you throw in crappy government policy, NIMBYs and city councils you get what you get.  Housing in high demand areas is expensive and it isn't going to get any better anytime soon.   

I live where I live because I can afford it.  There is no way would I try to buy a 2+ million dollar condo in NYC.  I'll continue to visit NYC vs live there.  NYC is an amazing place btw, I love going there! 

[Villanelle]

Thanks again everyone for their input. I feel everyone is sharing valuable points and remaining on topic so it's greatly appreciated.

I'm not sure I buy the blackrock bad/mom and pop good argument regarding moving the needle.

I'm trying to come up with an analogy...littering is bad. Me throwing something onto the side walk won't really do damage in the same way a corporation dumps things into our air/water/etc but they are both not good and contribute to littering our world. Neither one of us should be littering. Same with food waste/water use/etc. etc. I feel we all have an impact whether it's big or small.

I'm also not sure I agree with "housing someone" statement either.  I personally feel that a rental housing someone is drastically different from an owner occupied home.

I completely agree that governments/policies drastically contribute to housing shortages. However, I don't like blaming the government too much. SF,NY, or really any major city has limited space for housing. Even Tokyo which has extremely dense housing is still extremely expensive downtown. And there is clearly significant demand for owner occupied housing in all of these places, but it's unattainable to the overwhelming majority of residents. So for me to not only have a primary, but also a rental (where I contribute to higher prices + make a profit off of people who cannot afford to buy) does sometimes feel a little....wrong.

Just food for thought.

Again, this is an entirely incorrect assumption.  Many renters--like myself and my tenants--are not people who can't afford to buy.  You clearly have a bias that is telling you that nearly everyone wants to buy and that it is a superior choice, when that is simply not universally or anywhere near universally true.

Fewer rentals would drive up rental costs, making it more expensive for those people who WANT to rent, or even those who really can't afford to buy (not just barely can't afford, which might be shifted is buying prices drop a bit).  I'm not sure how that is an ethical victory--making one option for housing less expensive at the cost of making another more expensive.

That said if you think it is unethical to own a rental property and you continue to do it, you may want to look at that and ask yourself why. 

[PMJL34]

Just for the record...

On a scale of unethical with 1-100 and 1 being j-walking and 100 being brutal murder out of hate. I'd say it's like a 2-5. I'm not saying we should be prosecuted for owning rentals or that we need to sell asap. That's not at all what I'm saying.

Joenorm and FInate, I agree I don't have an answer/solution to your very valid questions. I think the best statement I can make is, "maybe rentals shouldn't be very profitable/monetized when there is a very high housing need in a city." As much as I complain about tenants in my city having so much power/tenant friendly policies, just maybe, it needs to be this way and possibly even more? After all, we are talking about people's livelihood/housing. FInate, rentals is also how I plan to achieve FIRE so yeah, there's that whole thing too. Joenorm, maybe there should be a limit on the number of rentals one can own?  I think more than number or restrictions, making it harder to profit from rentals could solve the issue?? I honestly don't know the answer.

srad, I completely agree with your statement. How do you feel if a MCOL area all of a sudden became VHCOL? I don't know either. I also have a soft spot for someone who has resided in an area for generations. I mean they don't have a "right" to live where their family grew up, but perhaps some type of incentive to keep them around? And if we are talking about fantasies, yeah, affordable housing for lower income folks (service workers, labor, even teachers, police etc.) would be nice lol.

Villanelle, you keep repeating yourself. I already addressed it. You are the exemption...a small minority. You are military family who rents. It makes perfect sense. I know there is a need for rentals for folks like you. But there is a much much higher need for housing for the rest of the country who want to buy but can't. 

For the record, I feel there are many many things that I do day to day that is unethical. It is what it is. Rentals is just one that I felt was worth a discussion for this forum.

[Wolfpack Mustachian]

The prevailing narrative i see as being pushed is that buying is the pinnacle of achievements. I think you're over estimating how many people want to buy,  but even if you're not,  just because they want to buy doesn't mean it makes the best financial sense for them to buy. Not saying they shouldn't buy just because it's not the best financial sense for them to buy (none of my business),  but it's a mark against the argument that it's unethical to rent because you're depriving people of houses that want to buy.

[Paul der Krake]

But there is a much much higher need for housing for the rest of the country who want to buy but can't. 

If that were true, why has the ownership rate remained roughly the same since the 1960s?



There is nothing new under the sun. If you back to the founding of the Republic, land speculators were already there.

[FINate]

Joenorm and FInate, I agree I don't have an answer/solution to your very valid questions. I think the best statement I can make is, "maybe rentals shouldn't be very profitable/monetized when there is a very high housing need in a city." As much as I complain about tenants in my city having so much power/tenant friendly policies, just maybe, it needs to be this way and possibly even more? After all, we are talking about people's livelihood/housing. FInate, rentals is also how I plan to achieve FIRE so yeah, there's that whole thing too. Joenorm, maybe there should be a limit on the number of rentals one can own?  I think more than number or restrictions, making it harder to profit from rentals could solve the issue?? I honestly don't know the answer.

For me, this is one of those "follow the science" things. Consensus among economists from the Right and the Left is that rent controls reduce both the quality and quantity of housing. It benefits present renters at the expense of future renters. Make rentals artificially less profitable and there will be fewer as the equity in rentals is more valuable invested elsewhere, which usually means cashing out by selling to owner-occupied.

The solution is to build a lot more housing everywhere. US cities need to grow up, I mean that literally and figuratively. Our density is low by world standards. The NYC metro is better than most, but even it should increase density. San Francisco is laughable. Europe figured this out hundreds of years ago: Build walkable cities of mid-rise multi-family housing near mass transit. Cut the permitting and review process, make it easier and cheaper and more predictable to build dense housing. Take away the tools NIMBYs use to stop new housing.

[srad]

San Francisco is laughable.

I've mentioned this before on this forum, but a friend of mine took a job at Apple he landed a rent controlled apartment across from the Golden State Bridge Park.  It was literally the only building over 4 stories tall, views as far as you could see...  I've visited several them times. The thing that stood out the most for me was the only thing missing from this view was cranes.  I saw zero cranes.  Nothing was being built there, nothing...  NIMBY - its bad, real bad in SF.

https://www.youtube.com/watch?v=ExgxwKnH8y4

If you have 15 minutes and want a case study to why housing in SF is so unaffordable, check out this video. spoiler alert, a laundry mat was denied being turned into housing due to a myriad of reasons: children need sunlight, he wanted to allocate a certain percentage of units for affordable housing, advocates wanted it all allocated, POC may of had an office there once. there were some other goodies in there as well.  You should really watch it.  its good....  I hear he has finally been approved and ended up selling it to a developer for a ton, so it all ended up well for him, but there could of been several dozen's of families living in that spot for years now. 

[Metalcat]

I'm looking at buying a duplex in a city where the vast majority of residents are poor and can't buy. Real estate there is so cheap because there are too few eligible buyers, and rents are relatively high, because there's not enough rental supply.

So ethically, I would be adding two affordable rental units to a market where people struggle to find affordable rental places to live.

I *could* buy it, convert it to a single home, make it pretty, and flip it to the higher income buying population, but that would be *less* ethical AND make me less money.

Rentals aren't inherently bad in any way shape or form. The more rentals there are, the more affordable renting is for the people who need to.

As someone who was a renter until very recently, this is something I personally value. So no, I will never feel unethical providing a reliable, safe rental as a responsible, responsive landlord.

[maizefolk]

San Francisco is laughable.

I've mentioned this before on this forum, but a friend of mine took a job at Apple he landed a rent controlled apartment across from the Golden State Bridge Park.  It was literally the only building over 4 stories tall, views as far as you could see...  I've visited several them times. The thing that stood out the most for me was the only thing missing from this view was cranes.  I saw zero cranes.  Nothing was being built there, nothing...  NIMBY - its bad, real bad in SF.

https://www.youtube.com/watch?v=ExgxwKnH8y4

If you have 15 minutes and want a case study to why housing in SF is so unaffordable, check out this video. spoiler alert, a laundry mat was denied being turned into housing due to a myriad of reasons: children need sunlight, he wanted to allocate a certain percentage of units for affordable housing, advocates wanted it all allocated, POC may of had an office there once. there were some other goodies in there as well.  You should really watch it.  its good....  I hear he has finally been approved and ended up selling it to a developer for a ton, so it all ended up well for him, but there could of been several dozen's of families living in that spot for years now.

The percent allocation for affordable housing in bay area cities seems to function a lot like rent control generally: it's great for the specific people who get those units but, by driving up the cost and complexity of building anything overall unit availability and affordability suffers.

Fixing zoning laws would be such an obvious win for affordability, quality of life, reduced environmental impact, economic development, and probably half a dozen other reasons I'm not thinking of at the moment.

Yet at the same time, short of stripping zoning rules away from local governments entirely (as California is slowly starting to do), it doesn't seem to ever be politically viable at the local level.