Rolling US Economy Into The Shitbin Thread

You... do, though? Problem is having the capital to purchase. There are rentseekers a'plenty in the USA.

― Nhex, Wednesday, July 29, 2020 4:13 PM (twenty-five minutes ago) bookmarkflaglink

Typical ROI is nothing like what is described in that scenario.

if she paid any interest in the mortgage and the $5500 is property tax, could be that she has something like $700,000 in this investment property. So the return is like 10%. But then she can probably make hundreds of thousands more when she sells the property later. There's really so much unknown here.

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

Maybe not typical but I don't think it's uncommon either. I spent years doing maintenance and handyman shit for people who owned du/tri/quadplexes - the only way they didn't own outright was if they'd taken equity to buy more property.

Any way you cut it, she's a leech on society of course.

DJI
Posted: 29 July 2020 at 21:39:13
Seems to me if you cancel rents for people, you should also freeze mortgage payments for the landlords. Seems simpler than trying to determine who is worthy of the relief.

yes this is it. it’s not complicated. is there a mortgage “holiday” in the us at all? in the uk there is until end of october i think (was extended from july)

the fourplex in that tweet is either not representative if the landlord owns it outright or else he's leaving out the mortgage his landlord pays, which I'm sure is a lot more than $5500/year. Depending on when he bought it, how much he paid and the terms of his mortgage, the landlord could be breaking even, could be clearing $10k a year, or could be clearing $40k a year, or really almost any other possibility. If landlords could make that kind of profit on investments ($5500/year outlay and $64,000/year in profit) you'd see a lot more people becoming landlords.

― longtime caller, first time listener (man alive), Wednesday, July 29, 2020 4:43 PM (one hour ago) bookmarkflaglink

california tax code dude.

If landlords could make that kind of profit on investments ($5500/year outlay and $64,000/year in profit) you'd see a lot more people becoming landlords.

haha what?

"if hedge fund really can make billions (which i highly doubt!) you'd see a lot more people starting hedge funds."

if the argument for bailing out landlords is that if we don't then wider society will suffer, then here is an industry i would bail out before landlords.

https://www.washingtonpost.com/opinions/child-care-centers-have-already-been-reopening-the-results-are-troubling/2020/07/13/3ce91a00-c53b-11ea-b037-f9711f89ee46_story.html

Some 40 percent of the child-care providers that existed pre-pandemic expect to close permanently unless they get additional public assistance soon, according to a National Association for the Education of Young Children survey of more than 5,000 child-care providers released on Monday.

I guess that's possible. IDK how it works in LA -- there are places that reassess the second a property changes hands and places that don't.

― longtime caller, first time listener (man alive), Wednesday, July 29, 2020 2:38 PM (eleven minutes ago)

it depends on the terms of the transfer -- you see this in California (because of Prop 13, which people keep valiantly trying to repeal and failing because there are still enough Reagan-era conservatives in this state) a bunch where property is transferred to family members and are not reassessed.

In terms of this hypothetical fourplex, the landlord is probably paying for water, garbage service, and potentially some of the electric bill on the common areas -- that's probably another couple thousand. There is insurance -- add at least $1k to that. They probably also (at least they are supposed to) pay City business tax on the rental -- different cities tax rental property way more than other types of business income. We don't know about the mortgage or maintenance costs. It is possible that the landlord has some mortgage/debt on the property from capital improvements made that isn't acquisition debt. Considering this is the LA area, the fourplex is potentially a soft-story building that could require/have required a retrofit that isn't/wasn't cheap.

i don't think the implication of that tweet is that the landlord is that it's $70k - $5.5k of pure profit.

the point is that the rhetoric around "mom and pop landlords" used to tug at the hearstrings is bullshit.

my City Councilperson uses that rhetoric all the fucking time tbh -- there is also (at least here) a racial component because the "mom and pop landlords" of District 3 represent a bulwark against the whitening of the district.

Yeah same down here.

I’ll try to dig up the stats but I feel like I remember reading that a majority of LA politicians and the California state assembly are landlords, which is 1) how they end up thinking of landlords as people who are mostly “regular people” doing it as a side hustle 2) also why they are super into transferring wealth to property owners at every opportunity, even if it means us being like 47 in the nation for fundings public education, because it personally benefits them.

there was a lot of discussion on this accounting professionals group I'm in about whether landlords qualified for PPP loans. It was fairly simple in the case of individuals, but a lot of real estate is held in Partnerships or S-Corps and those are more complicated.

btw

Man allegedly decapitated landlord with samurai sword over rent dispute https://t.co/jFALU3HsUM pic.twitter.com/jMLUhrAH8u

— New York Post (@nypost) July 29, 2020

ah yes! that memetic content!

damn, all those bridge points gone to waste

lol "master points"

I got to say, there seems to have been a handful of samurai sword killings in the past few years.

I guess the classics never really go away.

In the early 2000s our (mom sans pop) landlord kept our security deposit when we moved out and after a year or three of telling us she was having problems and would get us the money, we finally took her to small claims court. She never showed, so we got a default judgment and luckily got a lien on the property. We then had to wait another year or two until her property was sold and were able to enforce the lien (with interest). If she had just returned our calls and been straight with us, we would have been more than happy to work out a payment plan (yeah right).

don't want this to get buried because it is otm and has been previously discussed in some recent thread

DJI
Posted: 29 July 2020 at 21:39:13
Seems to me if you cancel rents for people, you should also freeze mortgage payments for the landlords. Seems simpler than trying to determine who is worthy of the relief.

yes this is it. it’s not complicated. is there a mortgage “holiday” in the us at all? in the uk there is until end of october i think (was extended from july)

― Li'l Brexit (Tracer Hand), Wednesday, July 29, 2020 2:46 PM

but bitter sad LOLs at the idea of the US doing anything as sensible as a "mortgage holiday", easier to dump 28 million people out on the streets

I feel like people were talking about pausing the mortgages at the very beginning and it seems like a good idea and then... that talk just stopped somehow.

"it's going to be over soon, there's no point!"

mortgage stuff was left to the banks -- some banks have made arrangements with borrowers -- again, the mortgage issue isn't the sole factor in re preventing evictions of tenants unable to pay rent.

on a macro level there is the issue of banks having enough cash/reserves to legally make loans -- which we saw with the first wave of PPP loans.

if I was inclined to doompost, which I am not, I would be much more concerned about evictions than secret police or whatever

you're not??

tell that to 2016 simon

fuck that guy

word

;)

https://www.whitehouse.gov/articles/us-economy-remains-resilient-despite-historic-contraction-in-second-quarter/

interest rates near zero means that those with assets can buy up distressed assets as rapidly as possible. the relentless consolidation of wealth finds no obstacle in a mere global pandemic.

pandemic is accelerating every bad feedback loop

having a "bad economy" is impossible right now because there's no such thing as an "economy", there are only the interests of rich people

and hundreds of thousands of GoFundMes ....

https://www.bloomberg.com/amp/news/articles/2020-03-26/why-landlords-might-need-a-coronavirus-bailout

i break it down as:

- "Mom-and-pop investors — those who own two to four rental units" lmao
- they're highly leveraged in a risky business and i have no sympathy for them
- but as a matter of policy, with the short term health of the rental market in mind, it makes sense to cancel mortgages at the same time as cancelling rent (and i haven't seen any serious suggestions otherwise btw)

good policy is often not dependent on who deserves sympathy most imo

In fact many of the flaws in American policy can be traced to excessive parsing of who deserves sympathy.

sure. they don't deserve sympathy but no one is suggesting they don't get mortgage forgiveness afaict.

idk -- maybe my personal experience is just knowing only outliers here, but of the people I know who own two to four rental units, it's less that they own them because they said "hey i want an investment! I am going to buy residential real estate because I saw an ad about it!" and more like the units were places they used to live or a parent used to live, and instead of selling it, they held onto it. ... I guess structurally it's the same, it just seems less douchey the way I put it ... idk lol

they're highly leveraged in a risky business and i have no sympathy for them

how do you define "risky" here? Or is the key phrase for you "highly leveraged"?

Most landlords, after all, are not cold, unthinking corporate entities. They’re overwhelmingly individuals and small business owners.

Seems totally possible many of them are cold, unthinking individuals and small business owners.

That said -- I truly don't see why we shouldn't simultaneously halt their eviction powers and pause their mortgage obligations. The pain of all this should be distributed as widely as possible via the tax power and not just fall on those people unlucky enough to be directly affected. Or so it seems to me.

So there are two things at play here:
one is the debt (mortgage) owed by the landlord -- which, I think I mentioned upthread -- tends to be a long-term debt that could be refinanced, such that landlords won't be looking at the balloon payments the same way things are set up for the tenants who are unable to pay rent, but would be liable for all the back rent once the moratorium expires.

The other thing is the lost income from the rent the tenants owe. So a bailout concept isn't just covering the costs of the property (including the mortgage debt), it's making up for the fact that the landlords were counting on profits from the rental units that they are currently not receiving.

The pain of all this should be distributed as widely as possible via the tax power and not just fall on those people unlucky enough to be directly affected.

This makes excellent sense to me, but we live in a nation where a very large percentage of the inhabitants simply expect to live their lives as they always do in the middle of some of the worst hotspots in a global pandemic, who find wearing a face mask in public enclosed spaces to be an intolerable inconvenience, and they do not care much for this idea. All they want from taxes is to be taxed less and less, so long as this doesn't inconvenience them in any way at all.

I think from a policy perspective, we should assume that there are plenty of cold, unthinking parties involved who have assholish instincts, and policy should be crafted to prevent those assholish instincts from evicting people who lost their jobs due to Covid.

I am fine with having the government pay landlords the lost income and cover mortgage obligations, but they should be required to retain the tenants at their previous rent (plus nominal cost of living increases) in order to receive the funds. ... Now this is a real bureaucratic problem, because of private property rights, for one, and also the fact the IRS sent stimulus checks to dead people ... dealing with getting and processing and correctly analyzing data of tenant rolls could be a real disaster.

how do you define "risky" here? Or is the key phrase for you "highly leveraged"?

― sarahell, Monday, August 3, 2020 12:06 PM (fifty-four minutes ago) bookmarkflaglink

it's risky because, assuming they have a mortgage, they have high, fixed costs relative to the income, the income is an all or nothing thing (it doesn't go up or down a couple of % each day like retail). the upside is enormous, as discussed on this thread, and extremely bad outcomes are rare. but extremely bad outcome = rare does not mean it's not risky.