> If I see a distressed home for sale in my neighborhood and decide to buy it, fix it up, and rent it out

Buying something to rent it out is clearly investing.

Buying something to fix it and re-sell it is usually also seen as investing.

Buying something to use it (live in it) could also be an investment but usually isn't seen as such because it's assumed that you only live in one place.

If its my primary residence, then it's a place to live.

If it appreciates, cool. I can make more money when I move somewhere else and use that to leverage my next house WHICH I LIVE IN.. If it goes down, bummer, but I can still use that to leverage my next house WHICH I LIVE IN.

I bought the house to live there, not as a financial instrument. The financial thing is secondary.

Oh so you'll always sell your house for the same price you bought it for and never do anything wild like take out a home equity loan?

Did I not say that the primary thing should be TO LIVE IN?

If the market goes up or down, I cant do shit about that.

But you pick on the fact that I'm talking about a primary (and in my case, sole) residence, and this article is talking about parasites that buy hundreds or thousands of homes to then turn back around and gatekeep living spaces.

Id say tax those vultures out of a company. They do nothing good, and cause boundless suffering.

You're responding to a thread asking who is and who isn't an investor. Are you agreeing that you're an investor but that's ok because you also live in your house? Or are you saying your not an investor because you live in your house?

Seems everyone that bought a home for anything other than living in it. In the article they even mention:

> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.

So most of the percentage increase is done by mom-and-pop investors rather than groups like Blackrock, Vanguard, etc. With that said the article definitely tries to paint the picture that all of these investors are institutional ones, and burying that important lede.

I get the hate against institutional investors going in and buying up entire neighborhoods. But the sentiment that we should just abolish landlords is rather dumb IMO. There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.

>I get the hate against institutional investors going in and buying up entire neighborhoods. But the sentiment that we should just abolish landlords is rather dumb IMO. There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.

As opposed to... being able to afford the rent with the same added costs? Take my area for example: rent in my neighborhood has increased to $2000/month. My mortgage remains at $1500/month (taxes, insurance, HOA included). What added costs amount to $500 extra/month? It's not water, sewage, trash, electricity, or gas! Those costs exist for renters just as much as owners. It's not basic maintenance... that has not cost me anywhere near $6000/year. So what are the added costs that landlords are "saving" renters from?

> So what are the added costs that landlords are "saving" renters from?

Utilities will generally cost a bit more. But the real killers with home ownership tend to be large expenses that come due all at once. Roof needs to be replaced, AC unit needs to be replaced, major appliance replacement, foundation problems, any number of expensive things can and will come up.

I already addressed this: all these costs are already factored into the monthly rent.

In my case I had to replace the dishwasher. I wanted a quiet one, so it ran about $1200. I bought it on credit and got 0% financing. So my housing price increases by $100 for the next year.

Now if I were renting? $2000/month. The landlord gets the absolute cheapest dishwasher they can find. It maybe runs them $300. So the landlord would be saving me ... $-475.

Paying $5700 extra a year to avoid a $300 added cost makes no sense. Paying $6000 a year in perpetuity for a one-time expense that lasts the next 20 years also makes no sense.

The point is that the tenant is not being protected from any added costs, they are paying way above market value for them.

> But the real killers with home ownership tend to be large expenses that come due all at once.

All these expenses (plus a profit margin) are built into the rent, of course.

Two ways the owner handles them: Either they have enough money saved that they can absorb the spikes in cost, or, they contract some maintenance plan they have to pay every month but smooths out the costs to avoid surprises.

> There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.

Having recently bought a home, I think there isn't so much of a gap and in many cases the gap is inverted: it's cheaper to buy than to rent.

Key phrase here being “recently bought.” Get back to us after you’ve had to replace the roof, had a water main burst, or something of that nature that requires you to cough up $10K+ all at once. The mortgage is the _minimum_ monthly payment, not the maximum.

> Get back to us after you’ve had to replace the roof, had a water main burst, or something of that nature that requires you to cough up $10K+ all at once.

Only $10k? I've planned for and budgeted for repairs and additions averaging 20% of the loan for the lifetime of the house. It's still cheaper to buy than to rent even with 20% on top of PITI.

It's cheaper because I'm paying myself when I pay my mortgage: if I decide to sell then a lot of that mortgage is now returned to me. You will never pay yourself the same way by renting.

If I don't sell then 20% on top of PITI is what I was paying in rent anyway.

> Get back to us after you’ve had to replace the roof, had a water main burst, or something of that nature

By that time their fixed mortgage will be far below local rent, so the money they save vs. renting every month will easily cover those repair costs.

Homeowners insurance covers a lot of that stuff

GP is pointing to the economy of scale that comes with apartments in denser urban and surrounding areas. there’s a floor price for home ownership.

You are, just as much, competing against someone who wants to buy that home for themselves thus raising the price of it.

So what? That person who wants it for themselves is competing against all the renters that would like to rent the home that OP fixes up, but who aren't privileged enough to be able to put together a down payment to buy a house. So that aspirational home buyer is driving up the price for renters. Should we be angry at the home buyer as well then?

It's not like OP is going to buy the home and let it sit vacant.

OP buying reduces the hosing supply for owners and raises the price to become an owner pushing more people out of the "privileged" owners bracket. At the same time doing it to the most accessible to own property and making money in the process.

Likewise, the person who buys the house and lives in it takes it off the market for renters, thereby increasing costs to the "unprivileged" renters bracket.

indeed. this is why rent control, when coupled with artificial supply constraints, is a net negative

If you see a distressed home for sale and decide to buy it, fix it up, and rent it out, you are an investor.

> this article seems to put me in the same category as institutional investors

as they should.

The details of what constitutes an investor are unclear. It's possible they made the mistake of labeling purchases by trusts as investor purposes when many individuals buy houses directly into their trusts for estate planning purposes. I've seen that error made in these analyses, either inadvertently or deliberately for purposes of embellishing the problem.

Are you not an investor in that situation? The person who wants to own a house to actually live in is the only one not being an investor.

I think the concern is local investors keep the money in the local economy, whereas 'foreign' investors are extracting value from the local community.

I think the concern is that rents are being controlled (and increased) by investors unfairly. There is always a market for rental properties (who wants to own when they know they will move in less than a couple years?); but there is concern that investors wield too much power.

I think this is only possible when large scale investors 'corner the market' by buying up a large percentage of homes in a given area. They can then control the rents because there is little competition.

On the other hand, if nearly every rental home is owned by a separate investor then each owner is competing with all the other small investors for tenants. They have competition and might be forced to keep the rents lower.

I disagree, landlords are price takers. There is not much I can do to drive my rents up if no one wants to pay it. If my rents are below market, I can get them up to market. But pushing it beyond that is competitive based on location and how nice the unit is.

Honesty the best thing I can do is to build more units on the land I own. That is challenging though so it takes time and capital.

You can thank single family home zoning and how difficult the city makes it to build for the rising rents. The landlords I know are very pro building. 14 units is more income than 4.

Imagine going one step further and having each home owned by a separate owner, not just each second home.

Rents are being affected by every investor, including those that own only two houses. Perhaps more explicitly by large companies with hundreds or thousands of properties, perhaps not. I've certainly spent enough time on threads in which people who own only a single rental property in addition to their own home compare notes on how to raise rents for more income in their pockets.

> rents are being controlled (and increased) by investors (unfairly).

With all of the regulations, risks, and high interest rates forced on landlords, I am wondering what you mean by "unfairly"? One bad tenant in Seattle, could mean months without income and even massive property damaged with no ability to recover damages.

As a small time landlord (I rent a few rooms in my primary residence), I feel that the rent I can charge is way below the risks of a bad tenant.

Small-scale investors are not necessarily local. It's anecdata, but I know quite a few Seattle-area folks who bought rental houses in LCOL/MCOL areas over the last several years because the local market was too expensive. They still pay property taxes, though, and most property managers are local-ish.

How are foreigners giving money to local construction companies and others in the community "extracting value"? Those foreign investors are capitalizing the community.

And they're taking out much more via rent.

If the owner of the property lives in the community, the rent that is being paid to that owner is much more likely to be circulated locally. If the rent goes to a foreign company, it's removed entirely.

Upkeep and maintenance would also occur regardless of who the owner of the property is, so it's not like they're creating "new jobs" because it's foreignly owned.

If the extraction of rent over the long term is an issue, do you also consider the extraction of mortgage interest by out-of-state entities to be a similar problem? This is how investments work, people inject money in now, in the hopes of returns later; the hope is that in the meantime, the locals benefit, and are able to create the foundations of longer-term success.

I agree interest rates extract value, but that doesn't mean that its ok for rent to leave the local economy too.

And the small investor can’t usually impact the housing or rental market on their own

Correct. Landlords are reprehensible, including small ones.

There is huge value in subdividing land and building, creating housing for people who cannot afford to buy and build. You're stuck in a suburbia mindset.

Not everyone can afford a SFH, there isn't enough land. Not everyone can afford to build. Not everyone wants to have massive switching costs when they need to move.

I think most people who are against the rentier economy would agree that there is great value in all of those things, but that they shouldn't be a for-profit enterprise. One way to obtain that value without landlords is for the state to buy land, subdivide it, and build dense housing units available to citizens who live in them at a reasonable, or even subsidized, cost.

My issue with this solution is we do not even allow private entities to build dense housing. So we are breaking a market and then saying the state is the solution. I interact with the government regularly and I do not have faith in their capabilities to get anything done.

There's a difference between building housing and being a landlord.

I disagree. Someone is funding the construction in the same way that someone is paying for the land and keeping it subdivided (rental units) and available.

Tenants are more than welcome to form LLCs and collectively purchase land and build or buy existing housing. This is called Tenant in Common. Maybe that is a business (non profit) idea for you, make TiC easier.

I rent an apartment, and am pretty happy with the arrangement. Obviously I wish I was paying less, but at the end of the day, I chose to live here, and enjoy the flexibility it allows me. (For a few thousand dollars and a moving truck, I can move across the country on a whim. I can go on vacation for months at a time by just locking my door and walking away. My landlord is responsible if any major repairs are necessary.)

My point here is that a blanket statement such as "landlords bad" doesn't match the experience of everyone out there.

>Only people who have good enough credit for a mortgage and can afford to buy deserve a place to live

Sounds worse when you put it that way though.

There are more than two options.

Yes, let's ban rentals altogether.