patrick.net

That looks like a fairly decent unit. I don't know that area very well but it looks like it's well off the last sale price 12/29/06 for $400,000! Is that right? Hard to believe someone paid that for this small place.

A few questions. You said that the rents there for something comparable is $1,300 a month. Is that right? The dues seem high at $320 a month. What does that all include? I assume if you were renting the owner would be paying this $320 a month so you have to factor that in.

If you don't plan to stay in it more than a few years maybe to wait as you say you will probably want to move "a lot sooner than 5 years". I don't know what you mean by a lot sooner but if it's only a few years I'd say just rent. You have to factor in the hassle factor of maintenance and upkeep as well as the realtor fee when you sell so factor that all in.

If you were planning to stay longer term it doesn't seem bad. This doesn't look like a bad long term investment if they'd take a bit less.

Ah, I just saw the property tax last year was $3748 for 2010. (The year before it was $5237 based on the insane artificial bubble prices).

So you have to factor in just for HOA and property taxes you are paying $632 just in property taxes and HOA. Maybe there are more taxes/fees that I'm not thinking of. If rentals in comparable units are only $1,300 and you are planning on moving in a few years I can't see it making so much sense unless you think that the value will really appreciate in only a few short years. Again, different opinion if you're going to stay in long term. Factor in the realtor's fee when you sell of 6%.

You mentioned you might keep it and just rent it out. Just factor in property management fees. I'm not sure what property management fees are like in the area but I'd have to think at least 20%. Also, being a landlord isn't for everyone so really know what you are going into. I own several properties but I paid cash for them so I have no mortgage and have a good property management company. It can be good stable income if you have good renters but it can be a nightmare if you have bad tenants.

As a long term hold/investment I don't think prices will plummet too much further. They could drop a bit more but I know from alot of experience investing in real estate it's impossible to catch the absolute bottoms and almost impossible to catch the absolute peaks.

"I just wouldn’t necessarily be able to sell without taking a loss (5 years down the road - the earliest I would plan to sell, though I anticipate wanting to move sooner … to a house). Also, there’s always the chance that I can get an offer below asking accepted - there’s a lot of inventory here."

Seems priced right BUT it's in Richmond and you can't change that fact. There are nice places in Pt. Richmond and the hills near El Cerrito, but when you go to sell it's going to be an uphill battle to sell it because the perception of Richmond is horrible. Most buyers will run the other direction when their agent tells them they have a great little place in Richmond they would like to show them. It's like living in Vallejo, East Palo Alto, Oakland, etc. There are some very nice homes and pockets of nice areas in the hills, but it's still in Vallejo, Oakland Or East Palo Alto. You will have to fight the perception problem and who wants to tell people they live in Richmond?

use patricks calculator. It should give you a pretty good perspective on how financially sound is your decision.

http://patrick.net/housing/calculator.php

Of course you should consider future events in your life. If market drops further you will be tied down to the property basically. Are you planning to move? Wife, kids, jobs and opportunities? All of those future events are something to consider.

Looks like a good deal Matt. good luck...

Assuming SF ace is right about the property taxes, that's great -- if you get stuck with a $3500 / year tax bill, though, that's a problem.

If you plan on renting it out later, make sure you know what that means. For a single unit the amount of time you will have to invest in "learning the ropes" is probably not worth it (unless you plan to start accumulating more rental properties). There is more to the game than collecting a rent check every month. Are you ready for a 2:00 am phone call for a broken water heater? Are you ready for someone to skip out on you in the middle of a lease? Stained carpet, holes in the wall, filthy oven...?

Don't get me wrong, I think the rental game is great -- but it isn't for everyone. So, if your plan hinges on renting in the future, make sure you are ready for what you are getting in to. (and if it really is 20% to have someone else manage it for you, that's probably not a great proposition either)

Any chance of renting there yourself for awhile to form a first hand opinion?

Where else in the inner bay area can you get a condo like this for $120k. Not a rhetorical question, I would like to know for comparison purposes.

justme says

Where else in the inner bay area can you get a condo like this for $120k. Not a rhetorical question, I would like to know for comparison purposes.

Well that was why I was kinda thinking it might be a good investment of time to live there as a renter (on a month to month or maybe even day to day) lease. There is just no telling what the gotcha is, but there's probably one (or more than one).

justme says

Where else in the inner bay area can you get a condo like this for $120k. Not a rhetorical question, I would like to know for comparison purposes.

san bruno, milpitas, san jose. all over the east bay.

Marina Bay has been generally considered a desirable area to live in Richmond for easily the past 10 years. If you are happy being a landlord, go for it.

But you could also look at areas with a few less bells and whistles, like Adam's Point and Piedmont Ave in Oakland and also find a place in a similar price with similar rents, in an even more established area.

I think you should keep your eyes open, because there are lots of condo deals to be had all over the east bay with perhaps better appreciation potential.

swebb says

If you plan on renting it out later, make sure you know what that means. For a single unit the amount of time you will have to invest in “learning the ropes” is probably not worth it (unless you plan to start accumulating more rental properties). There is more to the game than collecting a rent check every month. Are you ready for a 2:00 am phone call for a broken water heater? Are you ready for someone to skip out on you in the middle of a lease? Stained carpet, holes in the wall, filthy oven…?
Don’t get me wrong, I think the rental game is great — but it isn’t for everyone. So, if your plan hinges on renting in the future, make sure you are ready for what you are getting in to. (and if it really is 20% to have someone else manage it for you, that’s probably not a great proposition either)

just to add.... or a renter who decides not to pay rent for 6 month because you can't evict him any sooner in California.

Don't do it!!! The schools are awful, and a fire at Chevron or two and no one is going to want to rent it! People I know who have allowed themselves into the illusion of "outside of the Richmond negative stigma" regret it, big time. You may think that you are not having kids anytime soon, but it can surprise you. Rent until you buy a place where you can send your potential kids to school, or where other people want their kids to go to school. Or until you get a vasectomy.

I thought I would add something to the rental side of the picture. My parents have been buying and renting real estate for 20+ years now. Currently I think they have 13-14 tenants (most are residential), and by and large they are good quality tenants who stay for a long time. They have done quite well at their venture, but it is not without trouble. I probably get an email every few months that goes something like this (this one came in this morning):

"I, the landlord give my tenant an absolutely pristine spit and polish apartment. Floors waxed, everything in working order. We do an initial walk through. Tenant finds no damages. Tenants signs statement that she is receiving the place in tip top "scrupulously clean" condition.

3 months later, tenant calls, says her window is broken. "How did it break?" She says "I think the wall vibrated and it caused the window to break." I said "So, you didn't break the window? The window broke all on it's own?" "Yes", she says, emphatically. I fix the window. 3 hours to do the repair. 4.5 hours in travel time.

She moves out.
Apartment is mopped, but not cleaned like I gave it to her.
smoke detector, off the wall, in two pieces, batteries askew, lying on counter.
2 screens punched out.
Excruciating gouges in hardwood floor in bedroom.
3 more scratches to hardwood floor in other areas.
grout in firplaces has been chipped away in a 4 inch area.
Several holes in bathroom wall, cannot be easily repaired unless repaint the wall.

I charge her for the damages. Sample charges for all of these items are listed on the check in sheet at move in time. Tenant signed this.
I did not charge anything for cleaning...I charged about $118 for the window - got a quote on it from a window repair company @ $200 - but I did the work myself. Other charges for screens and smoke detector are as listed on the check in form.

Anyway I am now a lying, cheating, unscupulous jerk. Her father called me and read me the riot act. I set out to defraud his daughter. I have no morals. I am only trying to keep her money. On and on and on. The thing is :-------- This is the kind of crap that I get ALL THE TIME from my tenants. I am always an asshole. The damages that they cause are ALWAYS MY FAULT. I am ALWAYS a cheater, trying to steal their money."

I understand that SF ace and others haven't run into problems like this, but I wanted to share a different perspective. For what it's worth, my brother has run in to the same problems with his tenants too.

To be clear, I'm not trying to scare anyone away from the rental game. I think it is a fantastic way to accumulate wealth -- I watched it happen as I grew up, and I'm watching it happen again with my brother...But, it's not for everyone.

^ there is an unstated fact here that is behind a lot of this LL - tenant friction.

Much of the LL's profit in the housing market is pure economic rent and thus arguably immoral, especially in the single-family market where the LL's activities are not creating new supply but rather mini-monopolizing existing supply.

This is reducing the supply available for would-be home-owners and, thanks to very favorable tax treatments our elected representatives have created (after all, they all play this game too) consists of an immense and longstanding economic injustice perpetrated by those with more money against those with less.

It is very ugly. If I had my way I'd tear your existing business model into pieces with targeted taxes.

Homes are for families, not investors. Everyone knows this underneath, which is why there is so much resentment about the "fantastic wealth accumulation" LLs get. It is simply legalized theft -- getting something for nothing.

Troy says

there is an unstated fact here that is behind a lot of this LL - tenant friction.

Much of the LL’s profit in the housing market is pure economic rent and thus arguably immoral, especially in the single-family market where the LL’s activities are not creating new supply but rather mini-monopolizing existing supply.

This is reducing the supply available for would-be home-owners and, thanks to very favorable tax treatments our elected representatives have created (after all, they all play this game too) consists of an immense and longstanding economic injustice perpetrated by those with more money against those with less.

It is very ugly. If I had my way I’d tear your existing business model into pieces with targeted taxes.

Homes are for families, not investors. Everyone knows this underneath, which is why there is so much resentment about the “fantastic wealth accumulation” LLs get. It is simply legalized theft — getting something for nothing.

WTF? HA HA! They are only providing the most basic human need. and not everyone is a breeder or wants a family. they still need to live somewhere between their long vacations and extra free time .
Ha HA!

Katy Perry says

They are only providing the most basic human need

What are they "providing"?

To identify a thief in any economic system one only needs to imagine how the system would operate in their absence.

Without LLs buying SFHs, MORE people would be able to buy their own homes.

The above poster's "I am ALWAYS a cheater, trying to steal their money" was entirely correct, at a level he wasn't really contemplating.

I myself didn't see this until 2002-2003, having discovered the arguments of Henry George. Before then, I, too, was confusing land with capital and landlording with capitalism.

When I was experiencing the horrible 2000-2001 bay area rental market, I remember sorta thinking that something was "off" in this system -- the LLs profiting so immensely but not having contributed any capital investment to reap these yields -- but was unable to put my finger on it.

http://homepage.ntlworld.com/janusg/coe/cofe00.htm

LLs are in fact the thieves in this system.

Don't get me wrong, if I had the capital I would be very interested in investment property, especially in Tokyo, where I think an easy market exists to help foreigners get set up and live in the big city.

But I do think that rents are VERY frangible at this juncture. The Republicans are doing all they can to save property values (opposing tax increases and expanded health care) but I don't think wage inflation is necessarily baked into this cake. Without wage inflation, a rising cost of living in hard goods has to be paid out of other consumption, and the ground rent we all pay is a simply massive part of most of our monthly budgets.

Whether or not this thesis is proven in the coming decades is the interesting bit. I dunno, really. It's pretty easy for the media to bamboozle people into accepting getting their own heads cut off. They did it 30 years ago with Reaganism and 10 with the housing bubble, and they'll no doubt try to do it again.

Troy says

Katy Perry says

They are only providing the most basic human need

What are they “providing”?
To identify a thief in any economic system one only needs to imagine how the system would operate in their absence.
Without LLs buying SFHs, MORE people would be able to buy their own homes.
The above poster’s “I am ALWAYS a cheater, trying to steal their money” was entirely correct, at a level he wasn’t really contemplating.
I myself didn’t see this until 2002-2003, having discovered the arguments of Henry George. Before then, I, too, was confusing land with capital and landlording with capitalism.
When I was experiencing the horrible 2000-2001 bay area rental market, I remember sorta thinking that something was “off” in this system — the LLs profiting so immensely but not having contributed any capital investment to reap these yields — but was unable to put my finger on it.
http://homepage.ntlworld.com/janusg/coe/cofe00.htm
LLs are in fact the thieves in this system.

A few thoughts, questions.

1. The quote "I am ALWAYS a cheater..." was not his own thoughts, but his way of conveying the attitude/viewpoint of the tenants. (from your comment I wasn't sure if this was clear or not).

2. What are they "providing"?
Well, he is providing a decent, safe, desirable place to live, with no significant capital investment, and no significant long-term commitment. (I have found this arrangement invaluable throughout my life as I have moved from place to place) Is he profiting from it? Of course, otherwise he wouldn't be able to keep it up for very long. He took hard earned money, bought a place that was in disrepair, and worked his ass to make it nice, livable, and profitable. Did he do it out of the kindness of his heart? Absolutely not. He did it for the same reasons that builders buy land and build the single family homes you refer to -- to make money.

3. It is simply legalized theft, getting something for nothing.
I'm not sure I understand the "nothing" part of your statement -- are you saying that the landlord makes no investment, brings no value to the table, risks nothing? Maybe that's the way it works in California, but from my first hand experience it doesn't take that form at all.

4. To identify a thief in any economic system one only needs to imagine how the system would operate in their absence.
I'm don't think I understand what you mean here. Without a landlord, prices would drop and I could buy the house myself -> landlord is a thief. Without a builder to buy a hose from, I would build it myself -> builder is a thief?

From your post it seems you are making a clear distinction between land and money, profiting between renting and capitalism. I am interested to understand your position on this, and I did start to read your link to neo-classical economics (it seemed to be more of a history of the effort to undermine Henry George than a concise summary of his views).

Maybe you are railing against US-style capitalism in general -- as many people around here seem to be doing, at least implicitly. If that's the case, I think it would be an interesting discussion, and maybe more to the point. But so far I am having a hard time understanding why you think renting property to someone is immoral.

Well, he is providing a decent, safe, desirable place to live

not really. This decent, safe, desirable place to live would exist on the market without the LL's presence.

He is only "providing" this because he was able to take it OFF the market in the first place.

This is similar to aliens appearing & taking all the oxygen out of the air and then "providing" it to us for pay.

This argument applies for SFH. The analysis of actual wealth-creation is different for MFH.

with no significant capital investment

Wear and tear on housing is really minimal. The reason so much "capital" is required to purchase a house is simply due to the NPV of their future rental income, not the actual capital expense of building the damn thing.

He took hard earned money

irrelevant. Slave owners spent hard-earned money on their capital investments in that area, too.

bought a place that was in disrepair, and worked his ass to make it nice, livable, and profitable.

Generally dubious and bordering on special pleading. People are generally capable of improving their own properties without this brilliant service of the LL doing it for them.

He did it for the same reasons that builders buy land and build the single family homes you refer to — to make money.

Builders have their own problems capturing rents but at least at the end of the day they've created real-world wealth, the housing stock.

LL's injustice is systematic and longstanding, and 30% of the economy or thereabouts. It is a large part what is keeping poor people poor and rich people rich.

Are you saying that the landlord makes no investment, brings no value to the table, risks nothing?

Investments per se are irrelevant, the analysis must always focus on what actual real-world WEALTH has been created. "Wealth" here being that which satisfies human needs and wants.

Risk is also immaterial, bank robbers take risks too.

Your very words above: "fantastic way to accumulate wealth" says it all. This wealth accumulation is coming from pocketing the economic rents that come from owning something that can be monopolized and that is in great demand -- land. And like nearly everything in our current system, for some strange reason we even tend to under-tax this economic banditry. Go figure.

So what "value" does a LL of SFHs "bring to the table"? If we shot all the SFH LLs tomorrow and gave the deeds to their tenants the world would be a much better place. This looks like SFH LLs are providing actual negative value here, just increasing the cost of living for everyone and exacting rents on those who can't buy into their monopoly game.

Without a builder to buy a house from, I would build it myself -> builder is a thief?

SFH LLs do not "provide" housing. They did not create the house. Their actions in the economic realm are entirely parasitical in nature, and their profits are even stupidly protected by Prop 13 in California.

Building is a form of wealth creation. In some areas they also deal in land speculation -- The Irvine Company comes to mind -- but overall home building is a pretty capitalist -- eg. better wealth-creation efficiency through sales volume -- endeavor and I have no problem with it.

Maybe you are railing against US-style capitalism in general

That's the rub. Capitalism is about the creation of wealth. LLs don't create wealth. They own it.

But so far I am having a hard time understanding why you think renting property to someone is immoral.

Land is fixed in supply. They stopped making it several thousand years ago. Profits in land belong to the community that has created the ground rent, not the speculator who captures it.

http://www.landvaluetax.org/current-affairs-comment/winston-churchill-said-it-all-better-then-we-can.html

http://geolib.com/essays/sullivan.dan/royallib.html
http://en.wikipedia.org/wiki/Geolibertarianism

are my go-to links to more fully get into the philosophy of the thing.

It's a multi-unit building, which evidently changes things for you. (I'm not sure why, yet)

Not really. This decent, safe, desirable place to live would exist on the market without the LL’s presence.
It wasn't inhabitable when he bought it. Leaking roof, plaster falling from the ceilings, non-working electrical and plumbing. The land was there, to be sure, and the bones of the building were there. So, I guess he didn't create any of that value -- but the improvements he made to the building are real, material improvements. The area really wasn't very desirable as a place to live when he bought. It has become one of the "hottest" areas in the city, due in part to the efforts of landlords bringing housing to the market. People want to live in the are because there are nice places to rent in the area -- to me that sounds like someone created something, and I tend to think it was the landlord.

Wear and tear on housing is really minimal. The reason so much “capital” is required to purchase a house is simply due to the NPV of their future rental income, not the actual capital expense of building the damn thing.

He probably paid $30k for it in the '80s, and put another $100k into it before it was inhabitable. Not to mention a lot of his own (and my) physical labor. Adding value, in my mind. (again, you may think this is different because it is MFH, but I don't yet see the distinction)

That’s the rub. Capitalism is about the creation of wealth. LLs don’t create wealth. They own it

I will read your links when I have time -- I find your position interesting, but I don't really understand it yet. On the surface it seems like you are saying that if you gain control of something that is in limited supply (the market isn't creating any more of it), and you charge someone to use it, that act is somehow bad. It's all about the control of the limited resource (land). No?

I'll have to think about it a lot more, but it seems like this logic would apply to MFH as well, and that it would apply to all sorts of other things...First, we ain't out of land yet...maybe desirable land, or improved land is in short supply, but last I checked we (the US) has a shit-ton of it. My other naive observation is that there are plenty of other things that are limited (steel, coal, gold) -- is it fair to say that the control of these resources is also bad? Is there something sacred about single family housing? Is there something nasty about renting something you own?

So what “value” does a LL of SFHs “bring to the table”? If we shot all the SFH LLs tomorrow and gave the deeds to their tenants the world would be a much better place.
I believe this is misguided. There might be some direct or indirect benefit of doing this, but I happen to think that landlords do bring value to the table. (again, I have enjoyed the benefit of renting many times in my life thanks to someone else who had more resources than I did, a longer term commitment to the area, or otherwise was in a better position to own a building than I was at the time (and somewhat lower house prices wouldn't have made a difference to me.))

Land is fixed in supply. They stopped making it several thousand years ago. Profits in land belong to the community that has created the ground rent, not the speculator who captures it.

So it's the speculation that bothers you most? I think I can understand that, at least emotionally, but I think we probably just disagree on whether or not a landlord can add value (create wealth?) -- I absolutely think they can and do. It's so plain to me (again, maybe naive?), but I moved to a new city and I was able to, with essentially "nothing down", rent a decent house in a nice area for cheaper monthly payments than I could buy for. And I only had to sign up for a 1 year lease. It has worked out great for me and I'm delighted to be a part of the deal.

Troy says

Katy Perry says

They are only providing the most basic human need

What are they “providing”?
To identify a thief in any economic system one only needs to imagine how the system would operate in their absence.
Without LLs buying SFHs, MORE people would be able to buy their own homes.
The above poster’s “I am ALWAYS a cheater, trying to steal their money” was entirely correct, at a level he wasn’t really contemplating.
I myself didn’t see this until 2002-2003, having discovered the arguments of Henry George. Before then, I, too, was confusing land with capital and landlording with capitalism.
When I was experiencing the horrible 2000-2001 bay area rental market, I remember sorta thinking that something was “off” in this system — the LLs profiting so immensely but not having contributed any capital investment to reap these yields — but was unable to put my finger on it.
http://homepage.ntlworld.com/janusg/coe/cofe00.htm
LLs are in fact the thieves in this system.

I agree with Troy in a sense that there is no benefit produced for society. They often do not provide any benefit, just make need more expensive to acquire. Just usury with land. It's one thing renting out your guest house, it's another buying up local areas creating a slow monopoly pricing up rent.

I base that on what I used to see on late night tv. some sleazy broker shows up on tv and tells people to take advantage of poor and distressed people in order to buy up their property at discount. I find that very sleazy.

I base that on what I used to see on late night tv. some sleazy broker shows up on tv and tells people to take advantage of poor and distressed people in order to buy up their property at discount. I find that very sleazy.

Yeah, I can see that as sleazy. I had the same reaction to it when I first heard about it. I'm not sure where I stand now, though -- at least in part because I have talked to some of people on the short end of the stick who saw it as a good thing, to a point. Basically they said: "Look, I was going to lose my house and get kicked out by the bank. This guy came along and let me save face, stay in the house, and give me a chance to get back on my feet." (my paraphrase, not their words). Again, I don't know where I fall on this issue, but I'm not sure it's any less "sleazy" than waiting for the market to crash, and buying from someone at a considerable loss.

So, I guess he didn’t create any of that value — but the improvements he made to the building are real, material improvements.

Sure. If is capital return were in only proportion to his capital improvements, there would be no economic theft here.

The area really wasn’t very desirable as a place to live when he bought. It has become one of the “hottest” areas in the city, due in part to the efforts of landlords bringing housing to the market.

Wow, behold the power of the landlord. is there anything they cannot do? Did they "bring" this housing on their backs, brick by brick? Or was it materialized via some black magic that we've now lost?

People want to live in the are because there are nice places to rent in the area

Craiglist ads generally list area amenities -- close to shopping, transit etc. The ground rent -- the value of a property -- entirely comes from what's OUTSIDE the parcel's property lines, not inside. The fixed improvements have value, but the LL's profit from providing this value is really outsized. This is how, like you said above, that real estate is a great way to amass a lot of money. It's basically a legalized racket.

People don't move into an area to hole up in their apartments with the blinds closed 24/7, reveling in the LL-applied carpet, paint, and Home Depot cabinetry. Your argument here is commonly heard from LLs, but is rather self-serving.

(again, you may think this is different because it is MFH, but I don’t yet see the distinction)

MFH is great for increasing density. When I was in Tokyo in the 1995-2000 my LL was someone who redeveloped his small plot of land in a very desirable area into 5 units back in '85, with him on the ground floor, his son on the 2nd, and 3 other tenants. This increased the wealth of the community and I had no problem paying the rent. Win-win for everyone.

Now, in the aggregate, and over time, I would like to see MFH move to condos, and not have LLs own everything, and to the extent LLs profit from naked site value and not the capital they've invested in the housing good itself it's this form of economic wealth-stealing as I see it.

There just needs to be a good mix, and a good opportunity to buy, so renters can break free of being rent-slaves to landlords should they desire to.

On the surface it seems like you are saying that if you gain control of something that is in limited supply (the market isn’t creating any more of it), and you charge someone to use it, that act is somehow bad. It’s all about the control of the limited resource (land). No?

The key word in your above is "gain control". If one is profiting from value which one did not create, in practical terms this economic rent should be taxed, since this form of income is the best suited to yield taxes.

Property in land titles is dealing in stolen goods IMO. "In order to prove a legal title to land, one must trace it back to the man who stole it" -- David Lloyd George. Land titles should only be leased, never sold, and the ground rent land yields should in theory taxed first and foremost in our system:

“In my opinion, the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago” -- Milton Friedman

Thomas Paine was one of the first to argue for this system, with his _Agrarian Justice_.

I’ll have to think about it a lot more, but it seems like this logic would apply to MFH as well

MFH is better in that it uses the land better, and we should not discourage it. A LVT would encourage LLS to devote more capital to HOUSING and less to LAND, since the LVT falls entirely on the land and not the fixed improvement.

Our Prop 13 system here in California is completely backwards. If a LL redevelops their property, we uptax them on the improvement. But if as long as corporate ownership doesn't change, we do not reassess taxes on their land holdings at all. Sheer idiocy.

and that it would apply to all sorts of other things…

yes, EM spectrum, airport landing slots, taxi medallions, commercial fishing permits . . . anything that yields rent not from the inherent capital value of the good itself, but externalities.

First, we ain’t out of land yet…

Part of the problem with the current system is that it demands sprawl. Churchill's speech from 1909 was describing this. We could do a lot better job building up instead of building out.

My other naive observation is that there are plenty of other things that are limited (steel, coal, gold) — is it fair to say that the control of these resources is also bad?

Natural resource extraction should also yield a severance tax, yes. Severance taxes are the secret of Norway's immense public wealth, and are what the Australians were fighting about last year; they came close, but lost the plot at the end. Maybe they'll try again.

Is there something sacred about single family housing?

yes, actually, there is. Being able to buy one's own place in this world is something of natural right -- it was part of the "American Dream" of the previous century and all the range land free for the taking in the 19th century motivated tens of millions of immigrants to come here.

Onwnership of land these days is one of the more naked ways the rich enslave the poor. The poor aren't forced to pay $1.50 for 10c worth of corn sugar and water at McD's, but they do, and that can't be helped since this is a free country.

However, the sheer amount of landlordism going on this country is staggering. Eg:

http://www.sacbee.com/2011/02/18/3412632/investors-cash-buyers-flock-to.html

34.3%! What. The. Fuck. So much for the American Dream. It's going to be for rent here on out, not for sale.

Is there something nasty about renting something you own?

Depends if you're profiting from value you've created or parasitically living off of the work of others. LLs as a class fall into the latter category.

but I moved to a new city and I was able to, with essentially “nothing down”, rent a decent house in a nice area for cheaper monthly payments than I could buy for

And then did you buy? People needing to rent a house for just a year are pretty rare birds that could be better served in the MFH market.

The MFH stock generally sucks in this country, it does not have to be this way. I'm perfectly happy with my MFH situation, but I do wish most of the rent I pay were going to the broke-ass state and not to the rich LLs. This place was built in the late 80s and about half of the current rent is simply increased site value due to all the high-paying jobs in the area. The LLs are really getting something for nothing here.

I've paid close to $100,000 for the privilege of living here but $2000 in refurbishments and this unit could go back on the market. Lot of rent collected here.

Troy says

Much of the LL’s profit in the housing market is pure economic rent and thus arguably immoral
p>It is very ugly. If I had my way I’d tear your existing business model into pieces with targeted taxes.

It is only a matter of time when there will be more renter voters than LL voters. Particularly in California where the LL demographic tends to have a small number of children but the renter demographic of working class tend to have larger litters which will grow up to be in the exploited class of voters.

EDIT: much of what I had typed got lost, below is what remains.

yes, actually, there is. Being able to buy one’s own place in this world is something of natural right — it was part of the “American Dream” of the previous century and all the range land free for the taking in the 19th century motivated tens of millions of immigrants to come here.

I'm not entirely sure why, but that hit me pretty flat.

Onwnership of land these days is one of the more naked ways the rich enslave the poor. The poor aren’t forced to pay $1.50 for 10c worth of corn sugar and water at McD’s, but they do.

Is paying through the nose for a coke another example of how the rich enslave the poor, or a result of the rich owning land? They don't seem causally linked or very similar to me.

34.3%! What. The. Fuck. So much for the American Dream. It’s going to be for rent here on out, not for sale.

I appreciate the color, but I don't agree with your assessment. If I think about the 18 years that I have been out of the nest, I have lived in 6 different places, and aside from the time in college, I was never in one place for more than 3 years. So for me, at least, I haven't really had a situation where I should buy a place -- renting, in fact, was a key part of enabling me to move around with such frequency and ease. I may be ready to buy now, and own for the rest of my productive life...So for 1/3 of my homeowner-possible life I needed a place to rent, and about 1/3 of the properties out there are owned by people who rent them. That, for me, works out nicely.

People needing to rent a house for just a year are pretty rare birds that could be better served in the MFH market.
...
The MFH stock generally sucks in this country, it does not have to be this way.

Better served? No thanks. :)

but that hit me pretty flat.

yeah, well, people don't understand the importance of land economics to the overall well-being of an economy.

Georgists are often accused of living in the 19th or even 18th centuries when most of the wealth had to come from the land. We just say land is still a critical part of the economy, to live even partially away from the land requires adopting either an ocean-going or lighter-than-air mode of residence.

The 19th century had the great benefit of tons of open, productive land essentially free for the taking once you paid the railroad man for transit. This was an immense social and economic boon that put the US on the map as a world power, but once all the good land was taken, social stresses began to form, which resulted in the various "Gilded Age" labor crises and associated social upheavals.

This was answered by first the Populist movement and then the Progressive Movement, the latter which incorporated many Georgist and egalitarian ideas.

We say the US is a meritocracy, an egalitarian place were hard work and honesty is rewarded. Yet we have this 20-30% of the economy that is totally riddled with rent-seeking. It is an ugly thing.

Is paying through the nose for a coke another example of how the rich enslave the poor, or a result of the rich owning land?

Where I was trying to go with that was the poor and powerless face a lot of quasi-monopoly-enforced economic rents in their daily life. Some they are free to avoid, like paying the brand tax for Pepsi/Coke products.

But absent an antigravity machine, it is impossible for the lower class to avoid the location monopoly of the landowners. Even if they can afford to buy, prices for SFHs are kept inflated by the activities of the investors in this sector.

So for 1/3 of my homeowner-possible life I needed a place to rent, and about 1/3 of the properties out there are owned by people who rent them. That, for me, works out nicely.

This is not how it works in practice for many millions of families who do not have the economic liberty to just bounce out of the underclass over time.

The bottom line is that in California half the population is paying 30% of more of their household income on rent.

This rent is largely independent of all the amazing improvements and wizard-like management ability the LL provides, rather it is simply a function of the supply-demand curve -- land will always be priced at the point of unaffordability as long as more people want to live here than there is housing stock.

Land is the source and sink of all wealth. All the wealth accumulated via landlordism has come from the actual productive members of society. I don't expect to change your mind on this since appeals to abstracts won't carry water when there's money on the table to be taken.

Just tryin' to open some minds on the internet, and blow off my great frustration about how screwed-up things are now, and how they do not have to be this way, if we (collectively) only had a brain.

I try to keep my mind open, and I find some of the ideas appealing. You have moved the needle, but you are right that we aren't likely to end up on the same page. I certainly don't think it is all as simple as you present it to be. I also find it hard to relate your theoretical arguments and extreme/marginal real world examples to my personal experience (where the improvements are worth more than the land itself, where the landlord does add value). I also think your rigid adherence to the party line undermines your message more than it supports it. Your insistence that the landlord doesn't add value (is incapable of adding value?) is hard to look past given my experiences. I acknowledge that it's not always so rosy, that there are slumlords, that there are people who are being held down -- but there is a continuum...more than one bucket to put a landlord in.

swebb says

more than one bucket to put a landlord in.

Sure. Every LL in my personal renting experience has been great:

1) 2nd-3rd year of college: 90yo lady who bought in a West LA neighborhood in the 20s rented out the back bedroom/bath with separate entrance for $90/week. She was sharing her property, increasing the supply of housing the neighborhood was providing.

2) 4th year -- roomed in a condo near campus which the housemate's parents had bought ($180,000) for him to run. The 3 other people were basically paying the mortgage, win-win for everyone.

3) 5th year -- moved to nice garden apartment in West LA -- $700/mo rent-controlled (I think). wish I was still there. Mgmt co sucked but the place was nice

4) Japan -- rented a 3rd floor apartment from the LL who lived on the 1F, his son was on the 2F, and there were 2 other tenants paying the rent. Worked for him, worked for me.

5) Santa Cruz -- roomed with a childhood friend for $700/mo. Win-win.

6) Sunnyvale -- another garden apartment. Nice enough.

All this rental stock above is evidence of the housing market basically working well.

I might like to see more rent being taxed, since with both the garden apartment cases the housing stock was going on 30 years old, leaving a pretty large producer surplus to the LL thanks to wage inflation and whatnot. All economic rents are a good source of tax revenue.

Your insistence that the landlord doesn’t add value (is incapable of adding value?)

I just really draw the line at single family housing (and condos). Investors buying up this stock and then saying how great the service they're providing to their tenants is just utter self-serving bull. They didn't cause this housing stock to be created and without their presence in the market there would be more happy owners. Paint, carpet, and cabinetry isn't exactly arcane sciences, millions of home owners put the time and effort into improving their own properties.

Investors do make a market for home sellers but this could be taken over by city government via a land bank or something.

The best thing we could do to make housing more affordable would be to end the mortgage interest subsidy for both OO and NOO, and also start taxing rents (based on parcel taxes) to "encourage" investors in low-density housing to put their money into more actual "capitalist" endeavors (creating NEW goods and services, not just buying existing stock) and thus less naked parasitical rent-seeking.