this post was submitted on 03 Jul 2024
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Housing Bubble 2: Return of the Ugly
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It's the truth, did you earn the money you're using to fix things, or did the tenant?
The landlord is being paid for assuming the risk.
It's no different than paying to rent anything else. You can't afford to buy a whole as 50k car when you visit a country, but you'll pay to rent a car for a week.
You can't afford to buy a whole ass house, but you do wanna rent one short term.
Not just in terms of raw cash to buy it, but also affording all the financial risk if things go sideways.
The renter has decided "yeah I can't afford if the engine shits the bed on a 50k car", if their rented cars engine shits the bed, the company they rent from handles it.
In return you pay a fee to temporarily use the item, without taking on that risk.
This is fairly basic stuff, but people seem to have missed these lessons in school I guess.
They're being paid because they own the property and along with other landlords constrain supply by both having rentals and warehousing empty units.
You're not absorbing risk, you're tenants collectively are along with supporting you and your entire family's lifestyle.
The only way you'd be absorbing risk is of you gave tenants equity they built up whole paying your mortgage.
You clearly don't understand how risk works then.
If the house floods in a disaster, do you think tenants are liable for that at all?
No. They can just walk away and go find a new home.
Do you think you can so easily do that of its a house you have 15 years of mortgage left on?
SMH
I agree with you on most points, landlords are inherently being paid for assuming risk. I believe what is unfair about the situation is that some of the risk they are supposed to assume is actually carried by government programs. The tenants are paying taxes that the landlord benefits from as a form of insurance (risk mitigation) while the tenant does not. This is a form of wealth redistribution in which the landlords benefit.
A prime example is flood, just like you said. FEMA has historically stepped in to mitigate that financial risk. The tenants' taxes essentially pay for "federal flood insurance" for the landlord.
The state doesn't pay if the flood comes from a pipe bursting
You clearly don't understand how profits work. Renting is profitable so all this risk you speak of paid for by the tenant along with the outsized profits landlords enjoy.