Comment by crazygringo

Comment by crazygringo 3 days ago

If investors are buying homes to rent them out, then is this really a bad thing?

I know a lot of people who have struggled to find homes to rent when they need to move to a new city with a family for a shorter-term job like a year or two. All the homes available are for sale, none are to rent.

If it's to rent, it's not taking any living space off the market.

And with elevated mortgage rates, it could be smart for people to rent now rather than buy, waiting to buy until interest rates come down.

viraptor 3 days ago

Ideally you want a reasonable balance. And the prices low enough that paying off a mortgage is not too far away from paying the rent. But if 27% is pure corporate investment pushing up the prices - yes, it's bad.

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crazygringo 3 days ago

> But if 27% is pure corporate investment pushing up the prices - yes, it's bad.
But it's not "pure corporate". Quite the opposite. From the article:
> mom-and-pop investors, or those who own between 1 and 5 homes, account for 85% of all investor-owned residential properties, while those with between 6 and 10 properties account for another 5%.
I really don't see anything wrong with mom and pop buying a second or third home to rent out for extra income.
And I don't see anything inherently wrong with 27% either. If there aren't enough rental homes, then an increase in the share of investors is exactly what you need to achieve the "reasonable balance" you're talking about. And then there's nothing bad about it -- it's exactly what's best.

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- jfengel 3 days ago
  
  Having investment money inherently raises the price of rentals. There is a gap between how much the renters could conceivably pay and the minimum for which the house could be built and maintained. The actual price will be somewhere between the two. But if they are competing against investors, putting more money into the demand side, the price that renters actually pay is pushed towards their potential limit.
  That is not what's best; it just concentrates more money in the hands of the investors.
  
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  Manuel_D 3 days ago
  
  > There is a gap between how much the renters could conceivably pay and the minimum for which the house could be built and maintained. The actual price will be somewhere between the two.
  No, not necessarily. If there's enough competition for renters, then the homeowner may have to rent at a loss. Renting at a loss is still preferable to no collecting rent at all. Getting $90 on a $100 investment is bad, but better than getting $0 on a $100 investment.
  
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  crazygringo 3 days ago
  
  > Having investment money inherently raises the price of rentals.
  It's literally the opposite. More rental properties means more rental supply which means lower rental prices.
  > But if they are competing against investors, putting more money into the demand side, the price that renters actually pay is pushed towards their potential limit.
  You're confusing buy demand with rental demand.
  
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peab 3 days ago

yeah, having homes available to rent is pretty important

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Avicebron 3 days ago

rent is fine, as long as it's feasible to rent and buy a place later one, _just_rental_ at paycheck to paycheck pricing isn't solely viable either.

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dmbche 3 days ago

1. Isn't that a big if in itself?

2. Keeping houses off market and renting them for a profit is a bad thing as it is harvesting the money the renters could be putting to the side to buy a house AND hikes the price of houses, making it even harder for renters to become owners.

Can't your friend buy and then sell when they are ready to move?

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crazygringo 3 days ago

1. I mean, investors invest to make money. You make money by renting. Otherwise you're just throwing money away, which isn't what investors like to do.
2. In general, rent payments are less than mortgage payments for the same property (though this can vary in specific cases due to a number of factors). So the point is the renters get to save more money than they would with a mortgage.
And the problem with buying and selling is the realtor fee on both ends. You can't buy and sell a house every year or two. You'd go broke real quick.

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- haiku2077 3 days ago
  
  > In general, rent payments are less than mortgage payments for the same property (though this can vary in specific cases due to a number of factors).
  This didn't seem true to me - Anecdotally, my friends pay more in rent for apartments than I do for my mortgage on a single-family home in my area.
  Then I googled it, and turns out my city is one of the top five US cities with the highest ratio of renting vs owning cost, and indeed a place where it costs nearly twice as much to rent as it does to own.
  
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  crazygringo 3 days ago
  
  > and indeed a place where it costs nearly twice as much to rent as it does to own.
  Which is exactly where the supply and demand is out of whack. But fortunately, the more people buy places to rent out, the cheaper it becomes to rent.
  The renters in your area would love if investors bought a ton of properties and rented them out, increasing supply and therefore bringing down rates! And if rents are really 2x mortgage payments, then there should be tons of people lining up to do so, since it's basically just free money lying around. The invisible hand and everything.
  
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- dmbche 3 days ago
  
  1. Investors make money by doing other things than renting properties, do they? Even property investors are able to sell at a profit.
  2.Nearly half of renters in the USA are cost burdened (https://www.census.gov/newsroom/press-releases/2024/renter-h...).
  It is mental gymnastics to say that renters are saving by renting.
  And about realtor fees, that sure would affect my decision to move or not. Or to rent an appartment/condo, which is almost always possible, especially in urban centers.
  
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  crazygringo 3 days ago
  
  1. Not really? You make money by renting until you sell. What other things are you talking about?
  2. And lots of homeowners are cost-burdened too. What's your point? The US is an expensive place for everything. Mortgage rates are crazy expensive now too.
  It's not mental gymnastics to say you can save by renting. There are lots of online calculators where you can see the places in the US where it's cheaper to rent than to buy.
  And sometimes you have to move for a job, period. And families don't always want to rent an apartment, they want to rent a house with a backyard, you know?
  
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xur17 3 days ago

> Can't your friend buy and then sell when they are ready to move?
They can, but because of realtors these 2 transactions will end up costing 12% of the cost of the house.

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- dmbche 3 days ago
  
  Thanks!
  I've not had a job where I moved for the salary/advantages, but I imagine I would only do so if the conpensation made it so that 12% fee seemed negligeable.
  
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