Danby,
Was a landlord involved in the construction of the condo you rent?
You may not like the answers to the questions that you ask. But answers have been given, and in good faith.
You on the other hand have dodged my one yes/no question multiple times. In good faith, please answer.
I found the shittiest 60K property I could find in some random area on the market. Since minimum house cost is $400K where I live I had to go far out. I am assuming we can rent it for $800 for arguments sake. In reality that 60K property I found rents for no more than $700 a month.
50K mortgage I threw in.
Taxes / insurance / school taxes / property management and mortgage came to $560/month on a 25 year 3.2% interest rate.
This doesnât even include maintenance and capital reserves.
Either your friend is lying to you, or you are making up numbers. You canât assume everyone is as naive as you are.
I feel like you are framing your question in the wrong way. As phrased, âby workersâ is a literal answer to your question of âhow does housing get builtâ. Itâs a very unsatisfying answer from your perspective. Itâs like asking a libertarian who will build roads and being told âby workersâ. But it is an answer. That you donât recognize it and ask a follow-up question is a failure on your part.
What you want to know is how does a decision to build housing get made. Pretty clearly, the workers just donât spontaneously decide to build a house.
I donât think the numbers matter much in that example.
He bought the house 5 years ago. He put $15k down with closing costs, so his mortgage is about 30k. The house has appreciated from $45k, to what is now $80-100k.(REITs are buying these up like vultures) It rents for $800/mo. Iâve known him for 25 years. We trust each other enough that we actually have a joint bank account(for business reasons). I advised him on this purchase.
So simple question, simple answer time:
The Landlord has never been to Arkansas, the property manager does all of management work, and all the money that goes towards Mortgage, Tax, Insurance, Maint, etc all comes from the money that renter pays. All my friend does is cash checks. Unnecessary middleman? You decideâŚ
They do in some places and situations. If a person were free to build a permanent structure on public land given reasonable restrictions on not impeding on others and following some simple building codes, people would be doing it.
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Necessary middleman. Just like a grocery store is necessary middleman.
My landlord bought the condo for $700K. It doesnât get built without his money.
Iâve got bad news for you about grocery stores
The house was already built before my friend was even born, lol.
Do you think the first tenant would have qualified for a $45k loan?
Bringing the subject of Section 8 up againâŚthe same money could have been used to help people buy property with 30% of their income. Probably less money. Section 8 rents are often pretty high.
Besides forking over $700K to the builder? Thatâs quite an expensive involvement?
Builder doesnât build unless he can clear the 70% pre-sale threshold.
Your landlord was the developer of the condo project?
So your landlord bought before the project was built? Are all the units in the project rentals?
OK, if you insist.
About 2000, to the east of me, there was a 1920s era ~500 sqft 2 br , 1ba single floor shack, and a 1950s era ~200 sqft garage w/studio above behind. East of that was an empty lot. A ~3000 sqft was constructed on these two lots.
- The first thing that happened is they demo-ed the existing buildings.
- Then they compacted the ground.
- Then they dug a hole for the foundation. The above three things brought about a little neighborly friction, as they trashed my landscaping across the imaginary line in the sand.
- About this time, a truly wonderful thing happened⌠The Missile moved down from The Valley in LA to what then became known as Missile Beach.
- Next they poured the foundation.
- By this time The Missile had become a regular visitor to the work site, and was officially welcomed by both the construction superintendent, and the owners and future residents (who i already knew well).
- Next came the framing. About this time, a helper (and a drinking buddy) on the crew had went missing, and was presumed to have been deported.
- The next day, having recently been given the boot from the now bankrupt Charlotte Russe, ending my short career in womanâs clothing, I went down to the local to drink lunch.
- Sitting next to me was the construction superintendent. He said: âI think my helper got sent back to Irelandâ. I said, âNaw, Iâll guarantee your helper shows up for work tomorrowâ. He said: âHow do you know?â. I said: âYouâre looking at himâ.
- This was the best commute Iâve ever had, as my bedroom window was literrally only three feet from the work site, and when the superintendent was ready for me to report to work, heâd just knock on it.
- Then we completed the framing.
- Then we did the roof, drywall, stucco, fixtures, etc.
- Then we did the landscaping and fencing. Which again caused a little neighborly friction, as the superintendent said dig a trench and build a fence here⌠and I said no, because the trench would have undermine my existing grade, and the fence would have encroached upon my side of the invisible line in the sand.
Moral of the story: The Missile was such a cool dog, that she actually got me a job. That, and a house was built without any landlord involvement what-so-ever.
Yeah it does actually.
We literally spent hours discussing how we can get housing to be rented without anyone earning a profit every month.
I literally find out my landlord does exactly that. And most landlords are breaking even monthly buying these buildings.
Good question, not sure if the first tenant would have qualified for a $45k loan. Apparently, they had enough income to pay rent that covered all of the Landlords expenses though. He told me he had never had more challenges getting a loan processed than his experiences in Arkansas. Itâs an old-boy network out there apparently.
Most of the bigger players in this space, everyone from REITâs down to our other friendâs family that owns ~150 of these SFRs are able to buy for cash, close quickly, and then bundle them into commercial paper(may not be the right word, but some kind of financial instrument) that gets them cash back and essentially creates an annuity for trust fund kids.
Itâs layers upon layers of rent seeking.
But youâre supposed to feel cheated due to the landlord earning equity on your dime.
No, he was one of the 200 condo buyers. He bought it off plans.
