Watch “I am a New York City landlord and I'm Homeless.” on YouTube(youtube.com)
youtube.com
Watch “I am a New York City landlord and I'm Homeless.” on YouTube
https://www.youtube.com/watch?v=Y7pbAnaHxXg
49 comments
Can I just reply to your first line? I'm in the middle of the US. We have plenty of jobs here and poverty is less severe than on the coasts.
I would like to purchase a house. 10 years ago, I could have gotten the size of house I want in the area I want for $125k. Now I'm looking at $200k-250k for the exact same house. Wages have not risen proportionally in that time.
You say it's discouraging to investment in real estate, but in my situation, investment in real estate is what has left me in a position where it will cost me $75-125k more to purchase a house compared to 10 years ago. More houses are being built, but that hasn't helped to reduce the average cost of a home.
I guess my question is in what way in this situation is investment in real estate a positive thing for the average person? Yes, more homes are being built, but the 100 year old homes in my area are somehow still all I can afford. To be honest, I'm not sure I can even afford them. We have radon to deal with here on top of all the maintenance and inconveniences that come with a 100 year old house.
I would like to purchase a house. 10 years ago, I could have gotten the size of house I want in the area I want for $125k. Now I'm looking at $200k-250k for the exact same house. Wages have not risen proportionally in that time.
You say it's discouraging to investment in real estate, but in my situation, investment in real estate is what has left me in a position where it will cost me $75-125k more to purchase a house compared to 10 years ago. More houses are being built, but that hasn't helped to reduce the average cost of a home.
I guess my question is in what way in this situation is investment in real estate a positive thing for the average person? Yes, more homes are being built, but the 100 year old homes in my area are somehow still all I can afford. To be honest, I'm not sure I can even afford them. We have radon to deal with here on top of all the maintenance and inconveniences that come with a 100 year old house.
>>I guess my question is in what way in this situation is investment in real estate a positive thing for the average person?
A higher volume of investment into real estate will increase the value of land, so land-consuming real estate like Single Family Houses will go up in price.
In contrast, the cost of units in very dense developments, like high rises, will be dominated by building costs, not land prices, so their price would mostly stay constant as real estate investment increases, if all other factors were controlled for, and assuming no major market-freedom-inhibiting distortions of the construction industry via government regulations or organized crime.
Anyway, what goes down in price with rising supply is not the cost of buying real estate. It's the cost of renting it. If a real estate market has regulations that discourage investment, and suddenly those were repealed, and the market saw a flurry of construction, you'd also expect the purchase price of units in dense developments (where land is a minor cost input) to come down, as units available for purchase become less scarce, and that scarcity premium disappears.
A higher volume of investment into real estate will increase the value of land, so land-consuming real estate like Single Family Houses will go up in price.
In contrast, the cost of units in very dense developments, like high rises, will be dominated by building costs, not land prices, so their price would mostly stay constant as real estate investment increases, if all other factors were controlled for, and assuming no major market-freedom-inhibiting distortions of the construction industry via government regulations or organized crime.
Anyway, what goes down in price with rising supply is not the cost of buying real estate. It's the cost of renting it. If a real estate market has regulations that discourage investment, and suddenly those were repealed, and the market saw a flurry of construction, you'd also expect the purchase price of units in dense developments (where land is a minor cost input) to come down, as units available for purchase become less scarce, and that scarcity premium disappears.
I and most people my age in my area are trying to purchase our living space. When you rent, you don't have to pay for maintenance, but you also don't get any return from the money you put into it. It's a fee you pay for a place to sleep, rather than an investment. There being more rental space in my area isn't beneficial to me or most people in my generation and socioeconomic class. It's beneficial to those who own the rental homes. You'd think the price of rent would at least go down with all these new apartment buildings coming in, but it's risen much faster than inflation even for my no frills, poorly maintained apartment.
Of course the eviction moratorium is being gamed
I feel like when renter friendly laws get passed people think of fat-cat, tophat-wearing Manhattan landlords and don't really consider that the same exploitable laws also apply to an immigrant in Queens who needs rental income from the first floor unit to afford their mortgage.
Perhaps the state (or the city) can have some sort of program like tax relief for low-income landlords who were affected by this.
This story seems like someone who is extremely over leveraged:
- two properties (neither owned outright)
- tesla
I'm saying this as someone who is about to be 5x leveraged on a 2 fam property in NYC. What kind of leverage does this guy have 10x? 12x? More?
In NYC, CONED is not shutting off gas for non payment due to covid: https://www.coned.com/en/about-us/media-center/news/coronavi...
If the gas was off prior to covid, I guess you could find yourself in a catch-22, where you'd need to bring the account current before they turned it on, but then they aren't shutting it off at this point. It's unclear if he fought the fine with the city.
If this gets to court, I'm pretty sure he would have a cut and dry case that he as the landlord did not breach habitability (the gas worked) and that it was tenant misconduct (failure to pay the bill) that caused the gas to be shut off (https://www.nysenate.gov/legislation/laws/RPP/235-B) Now, I have no clue what kind of ruling the judge would make, but yeah.
Additionally, the covid laws that are protecting from eviction are also enabling mortgage forbearance: https://www.dfs.ny.gov/consumers/coronavirus/mortgage
I haven't had to go through that process, so I'm not sure how many people are denied, but the wording on this page makes it seem like you have a few options (including complaining to the state -- like his tenant did for the gas bill) before you are out of luck.
I feel for this guy, and as someone who intends to rent to a tenant in NYC this is scary, but I feel like my guy got way over leveraged, and because of it, this bad actor has hung him out to dry. There are a few pieces of this story that feel like they are left out to garner sympathy, which may or may not be warranted.
- why is he not getting or eligible for mortgage forbearance?
- why is he so over leveraged?
- why didn't he negotiate with his tenant about the relocation fee? (get the tenant to sign a paper, give the 10k (or less) as a rent credit on back-owed rent, get them out.)
------ Hilariously, I had a similar situation happen to me as a roommate -- One of the roommates I lived with stopped paying rent, wanted to AirBnB their room, and sleep on the couch, while using the AirBnB money to pay rent. They were few months behind on their portion of the rent, we worked with the landord, and the landlord agreed to credit back rent to get them out. Covid makes this more complex, but those with mortgages should be getting some protection based on the way the law is written. If he's not able to I think thats the real story and much more interesting.
- two properties (neither owned outright)
- tesla
I'm saying this as someone who is about to be 5x leveraged on a 2 fam property in NYC. What kind of leverage does this guy have 10x? 12x? More?
In NYC, CONED is not shutting off gas for non payment due to covid: https://www.coned.com/en/about-us/media-center/news/coronavi...
If the gas was off prior to covid, I guess you could find yourself in a catch-22, where you'd need to bring the account current before they turned it on, but then they aren't shutting it off at this point. It's unclear if he fought the fine with the city.
If this gets to court, I'm pretty sure he would have a cut and dry case that he as the landlord did not breach habitability (the gas worked) and that it was tenant misconduct (failure to pay the bill) that caused the gas to be shut off (https://www.nysenate.gov/legislation/laws/RPP/235-B) Now, I have no clue what kind of ruling the judge would make, but yeah.
Additionally, the covid laws that are protecting from eviction are also enabling mortgage forbearance: https://www.dfs.ny.gov/consumers/coronavirus/mortgage
I haven't had to go through that process, so I'm not sure how many people are denied, but the wording on this page makes it seem like you have a few options (including complaining to the state -- like his tenant did for the gas bill) before you are out of luck.
I feel for this guy, and as someone who intends to rent to a tenant in NYC this is scary, but I feel like my guy got way over leveraged, and because of it, this bad actor has hung him out to dry. There are a few pieces of this story that feel like they are left out to garner sympathy, which may or may not be warranted.
- why is he not getting or eligible for mortgage forbearance?
- why is he so over leveraged?
- why didn't he negotiate with his tenant about the relocation fee? (get the tenant to sign a paper, give the 10k (or less) as a rent credit on back-owed rent, get them out.)
------ Hilariously, I had a similar situation happen to me as a roommate -- One of the roommates I lived with stopped paying rent, wanted to AirBnB their room, and sleep on the couch, while using the AirBnB money to pay rent. They were few months behind on their portion of the rent, we worked with the landord, and the landlord agreed to credit back rent to get them out. Covid makes this more complex, but those with mortgages should be getting some protection based on the way the law is written. If he's not able to I think thats the real story and much more interesting.
The leverage doesn't have to be high - the only reasonable conclusion you could make is that the owner doesn't have a lot of cash savings outside of his properties and likely doesn't make that much money from his job (in relation to the losses incurred). Alternatively, he may just be cheap and also trying to make a point. Even if he owns his properties outright, tax and maintenance aren't free and not everyone can afford to lose money from their income-yielding properties.
The bigger problem is lack of understanding of basic economics. The investments into real estate made by those fat cat landlords are good for housing affordability, because they increase the stock of livable housing. The motives and stature of the investor are orthogonal to the effects of their investment.
From the point of view of the greater economy it's not helpful to have people buy property (and thus increase property prices by creating demand) to just rent it back out.
It's only helpful if they are helping increase the quantity of housing or somehow providing some other kind of service.
Simply using rent to pay the mortgage is really not something that we as a people benefit from. It would be better for everyone if that immigrant in Queens invested their savings into something else that would provide value.
It's only helpful if they are helping increase the quantity of housing or somehow providing some other kind of service.
Simply using rent to pay the mortgage is really not something that we as a people benefit from. It would be better for everyone if that immigrant in Queens invested their savings into something else that would provide value.
This doesn't make any sense. A lot of people either don't want to buy due to their own personal circumstances or can't afford to buy. People buying places and renting out increases the supply of rentals, which makes it easier for those folks to rent.
There are a lot of ways to provide rentals that don't contribute to systemic risk, such as adding housing supply and renting that out or renting out a property you already own.
In the aggregate, there are more renters that want to buy but can't than people that want to rent but have to buy instead. No problem is being solved, and risk is added.
In the aggregate, there are more renters that want to buy but can't than people that want to rent but have to buy instead. No problem is being solved, and risk is added.
You're still not making any sense. How does this contribute to systemic risk? How does "adding housing supply" change anything with respect to systemic risk? And this person was renting out a place they already own.
This is all gibberish - economically, if a marginal landlord buying a property then renting out contributes to the increase in real estate price due to creating additional demand then they equally contribute to the decrease in rent by creating additional supply.
This is all gibberish - economically, if a marginal landlord buying a property then renting out contributes to the increase in real estate price due to creating additional demand then they equally contribute to the decrease in rent by creating additional supply.
There are two issues in your reasoning.
First, you're assuming that they own the place outright. That wasn't the case for the immigrant in the top level comment.
Second, you're making the bizarre implicit assumption that the market for buying housing and renting it are fully independent, which couldn't be further from the truth. Increasing real estate prices contributes to an increase in demand for rent, as less people can afford to buy housing and must rent, until there are no more would-be homeowners that can't afford a house and must rent.
Those units are getting sold, one way or another. They're either getting sold to a landlord or a homeowner, so until there aren't enough units for rent for people that don't want to buy, and we are very far from that, it being sold a landlord means one less homeowner.
By the way, this is a huge issue in New York City - landlords that have a mortgage, like the one the OP had mentioned, can't afford to lower rents because that would break their mortgage agreements and force them to renegotiate it which they can't afford, so they would rather keep vacancies than rent at lower market rates.
Otherwise, if someone adds actual housing supply then it can be worth increased systemic risk. If they aren't, there is no upside to the downside.
First, you're assuming that they own the place outright. That wasn't the case for the immigrant in the top level comment.
Second, you're making the bizarre implicit assumption that the market for buying housing and renting it are fully independent, which couldn't be further from the truth. Increasing real estate prices contributes to an increase in demand for rent, as less people can afford to buy housing and must rent, until there are no more would-be homeowners that can't afford a house and must rent.
Those units are getting sold, one way or another. They're either getting sold to a landlord or a homeowner, so until there aren't enough units for rent for people that don't want to buy, and we are very far from that, it being sold a landlord means one less homeowner.
By the way, this is a huge issue in New York City - landlords that have a mortgage, like the one the OP had mentioned, can't afford to lower rents because that would break their mortgage agreements and force them to renegotiate it which they can't afford, so they would rather keep vacancies than rent at lower market rates.
Otherwise, if someone adds actual housing supply then it can be worth increased systemic risk. If they aren't, there is no upside to the downside.
Also, some concrete thoughts on the economics here:
1. Investors of this kind (those who buy relatively modest housing units to rent out) are far more sensitive about prices (because the price has to be justified by what they can charge in rent) than buyers who plan to live, who do not have a clear anchor. Therefore, they contribute to price stability - they will tend to buy in bad markets and sell in hot markets.
2. Transaction costs are extremely high in real estate and for most people that are able to choose between buying and renting, by far the most important factor isn't affordability but how long they plan to live in a give place. Actual home buyers tend to choose buying over renting precisely when prices are high and when they do so, they tend to buy larger and more expensive units than they would otherwise rent because they take into account future needs. This leads to increased demand as you turn marginal renters into homeowners.
3. People that are able to choose between renting and buying are typically well-off and making things slightly more affordable to entice them to buy isn't a social good.
4. People that are unable to afford buying units and are forced to rent are the poorer ones in comparison. These people benefit the most from a housing unit being turned into a rental because unlike the previous class, they do not have the flexibility to choose between renting and buying.
1. Investors of this kind (those who buy relatively modest housing units to rent out) are far more sensitive about prices (because the price has to be justified by what they can charge in rent) than buyers who plan to live, who do not have a clear anchor. Therefore, they contribute to price stability - they will tend to buy in bad markets and sell in hot markets.
2. Transaction costs are extremely high in real estate and for most people that are able to choose between buying and renting, by far the most important factor isn't affordability but how long they plan to live in a give place. Actual home buyers tend to choose buying over renting precisely when prices are high and when they do so, they tend to buy larger and more expensive units than they would otherwise rent because they take into account future needs. This leads to increased demand as you turn marginal renters into homeowners.
3. People that are able to choose between renting and buying are typically well-off and making things slightly more affordable to entice them to buy isn't a social good.
4. People that are unable to afford buying units and are forced to rent are the poorer ones in comparison. These people benefit the most from a housing unit being turned into a rental because unlike the previous class, they do not have the flexibility to choose between renting and buying.
Nothing you're saying makes any sense:
1. This isn't an example of systemic risk - I suggest you look up the phrase since you keep mentioning this.
2. Lowering rent has nothing to do with mortgage agreements - I have no idea what you'd think one has anything to do with the other. And no this isn't a huge issue in NYC. Sure, you're going to have a hard time refinancing an investment property that's not yielding much in rent, but you're going to have an even harder time if it's vacant. Rent is a price - most landlords are going to try to charge what they can given the market - this generally has nothing to do with how the property is financed.
3. If the markets for rentals and buying are related, that still doesn't change the fact that buying a place to rent out is demand-neutral in aggregate. Sure, there's one less housing unit to buy, but it also takes a renter out of the market. So if the markets are intertwined, then reduced rental demand -> reduced rent -> reduced housing price. The only thing that reduces demand for housing is moving out of the city.
1. This isn't an example of systemic risk - I suggest you look up the phrase since you keep mentioning this.
2. Lowering rent has nothing to do with mortgage agreements - I have no idea what you'd think one has anything to do with the other. And no this isn't a huge issue in NYC. Sure, you're going to have a hard time refinancing an investment property that's not yielding much in rent, but you're going to have an even harder time if it's vacant. Rent is a price - most landlords are going to try to charge what they can given the market - this generally has nothing to do with how the property is financed.
3. If the markets for rentals and buying are related, that still doesn't change the fact that buying a place to rent out is demand-neutral in aggregate. Sure, there's one less housing unit to buy, but it also takes a renter out of the market. So if the markets are intertwined, then reduced rental demand -> reduced rent -> reduced housing price. The only thing that reduces demand for housing is moving out of the city.
I’m a renter. I like being a renter. If nobody owned properties to rent who would I rent from?
There are a lot of people to rent from that don't use that money to directly pay their mortgage.
How does that relate to your assertion that people buying a place and renting it out do not add any value?
There are a lot of places to rent out that are already outright owned, and there are a lot of places where buildings can be built to be rented out, thus increasing supply.
People getting a mortgage and renting out the mortgage adds systemic risk without increasing supply, it doesn't provide any service that isn't provided otherwise.
People getting a mortgage and renting out the mortgage adds systemic risk without increasing supply, it doesn't provide any service that isn't provided otherwise.
If a building is built to be rented out, does the builder typically rent out the place? No, it will be someone who buys the building, typically with large amounts of borrowed money, who will then rent out the place. Builders build (often also with borrowed money) because they can then sell the building to someone who can buy. This is all part of the economy.
And you're certainly misusing the term "systemic risk" here - a small-time landlord borrowing money to buy a rental does not in any sense contribute to any kind of systemic risk. They are taking on personal risk in the hope of generating a return on their investment.
And you're certainly misusing the term "systemic risk" here - a small-time landlord borrowing money to buy a rental does not in any sense contribute to any kind of systemic risk. They are taking on personal risk in the hope of generating a return on their investment.
The case that was mentioned in the OP is of someone who is renting out only one floor that they bought.
Besides, the main cost in building in NYC is land prices - in the long term the builder isn't worse off by decreased land prices, and neither are renters, while people who want to buy a house are much ahead.
Besides, the main cost in building in NYC is land prices - in the long term the builder isn't worse off by decreased land prices, and neither are renters, while people who want to buy a house are much ahead.
I have no idea what your point is.
You could make the same point for just about everything. Starting a restaurant doesn't help anyone because you're just buying food ingredients, labor and real estate and turning that input into food and anyone can do that so you're not increasing the supply of food. Investing money in the stock market certainly doesn't help anyone since you're just buying existing securities that were already issued. The economy as a whole is full of things that aren't that important independently that you could make a convoluted argument against, even those things often add up to a functioning economy with a robust system for price discovery.
You could make the same point for just about everything. Starting a restaurant doesn't help anyone because you're just buying food ingredients, labor and real estate and turning that input into food and anyone can do that so you're not increasing the supply of food. Investing money in the stock market certainly doesn't help anyone since you're just buying existing securities that were already issued. The economy as a whole is full of things that aren't that important independently that you could make a convoluted argument against, even those things often add up to a functioning economy with a robust system for price discovery.
In Vienna, you could rent from a city-owned enterprise.
Why does Vienna provide this service if it adds no value?
Vienna built a bunch of social housing under social-democratic rule to decrease rents, and unlike most other cities, they opened it to a relatively wide income bracket. The value added, if you want to call it that, is _less_ money is spent on rents in the city. Supposedly, a majority of units in Vienna still falls under social-housing restrictions, though I don't have the time to dig deeper now and so I can't tell you what proportion is directly owned by a public enterprise and what proportion is housing co-ops (a somewhat popular model in Europe).
That problem can by solved by selling the equity and charging a fee for property maintenance.
A moratorium with no accountability was asking for this to happen.
If what this guy is saying is true, that is clearly terrible. There are however thousands of people who aren't gaming the eviction moratorium and need the protections provided by it.
Also just an aside here to say that both the NY DOB and NY landlords are shockingly terrible in pretty much all possible ways.
Also just an aside here to say that both the NY DOB and NY landlords are shockingly terrible in pretty much all possible ways.
There should be a process to it and the case should be evaluated not granted by default. Renter should be unemployed and not have money in their account or something like that otherwise we end up with people saving on rent just because they’re douches and that at the expense of someone struggling to pay their mortgage. A lot of people don’t afford a whole mortgage and get a 2 unit house and rent one floor. Some cheaters have an income but manage to get the landlord to let them stay in their propery for months to years for free.
So again, this should be evaluated on a case by case basis and people who lie and cheat severely penalized so this behavior is not rewarded. Some people abuse all these laws that are supposed to help people and there is never a consequence for this abuse. Are these laws fair? I think there is room for improvement here
So again, this should be evaluated on a case by case basis and people who lie and cheat severely penalized so this behavior is not rewarded. Some people abuse all these laws that are supposed to help people and there is never a consequence for this abuse. Are these laws fair? I think there is room for improvement here
The NY DOB is a textbook case of regulatory capture by the construction and real estate industries. I
You cant evict, but its still your property so you should be able to move in. Cops cant throw you out because you have nowhere else to stay, and there is eviction moratorium. Bonus points for moving in with couple of obnoxious friends.
Btw Sunny is hardly hurting, he has successful renovation business in NY.
Btw Sunny is hardly hurting, he has successful renovation business in NY.
He can't move in because he can't evict the tenant, because of the eviction moratorium.
No, GP means move in adjacent to the squatter.
Then what does he mean by "it's still your property"?
He means you can move in to your own property if you have nowhere else to live. You might not be able to kick someone out, but on the same note nobody can kick you out. You and a group of loud gym bros that moved in with you.
Isn't moving into an already occupied unit trespassing?
Its Your own property, and even if someone decides its trespassing they cant throw you out due to _NY eviction moratorium_
A landlord entering their tenant's property without permission is legally considered trespassing.
aaand? 1 they cant evict anyone in NY right now. 2 its not a tenants property after the lease got broken.
It's an eviction moratorium not a lease moratorium. The lease contract is still valid.
Lease is already broken due to tenant not paying rent, but that is beside the point. Lease issues would be a separate legal matter if it came to that, but nobody can kick you out of your own property.
I never understood this line of reasoning. Where do you draw the line between “hurting” and “not hurting”? Surely you must make it quantitative, and if so how do you justify your numbers?
So this bad tennant wants to sublet and make money from this propery while they are not paying anything in rent. Something’s gone terribly wrong here. Shouldnt the sublet money go directly to the landlord?
Bad tenant is breaking the law. Laws are often difficult to enforce.
Well these laws are made difficult to enforce by design. In NYC and SF you can pretty easily squat for 2 years before facing any real penalty for non-payment of rent.
In other countries that'll work for one month before you come home to changed locks.
In other countries that'll work for one month before you come home to changed locks.
As a renter in NYC I expect to pay for this for years to come as landlords have to price in periodic expropriation risk.
Society absolutely had the right (and perhaps moral obligation) to prevent harms like evictions of the vulnerable in a crisis. There is always a tension in law drafting between maximum protection (in which case yes you will have more edge cases abuses by grifters) and maximum targeting which will bury everyone in legal/bureaucratic process and probably harm some of the deserving.
What is almost always bad policy is to place all the expenses of a societal goal randomly on one class like landlords which is the easy way for society to get something without paying for it.
Society absolutely had the right (and perhaps moral obligation) to prevent harms like evictions of the vulnerable in a crisis. There is always a tension in law drafting between maximum protection (in which case yes you will have more edge cases abuses by grifters) and maximum targeting which will bury everyone in legal/bureaucratic process and probably harm some of the deserving.
What is almost always bad policy is to place all the expenses of a societal goal randomly on one class like landlords which is the easy way for society to get something without paying for it.
Along the same vein, these are a couple mentions of how rent control constrained New York City housing supply expansion in this article on the effects of rent control:
https://www.econlib.org/library/Enc/RentControl.html
>>New York State legislators defend the War Emergency Tenant Protection Act—also known as rent control—as a way of protecting tenants from war-related housing shortages. The war referred to in the law is not the 2003 war in Iraq, however, or the Vietnam War; it is World War II. That is when rent control started in New York City. Of course, war has very little to do with apartment shortages. On the contrary, the shortage is created by rent control, the supposed solution.
**
>>Also, the decades-long boom in the New York City housing market is not in rent-controlled or rent-stabilized units, but in condominiums and cooperative housing. But these two forms of housing ownership grew important as a way of getting around rent control.
One study estimates that if just three US cities; New York, San Francisco and San Jose, had maintained their land-use rights at the median level for US cities since 1964, US income would have been higher $3,685 by 2009:
https://eml.berkeley.edu/~moretti/growth.pdf