Kicking: Sure I am "taking advantage" if you will when real estate appreciates. (By the way, in my area we peaked a 1 1/2-2 years ago.) Nonetheless, I don't buy for appreciation. Remember, make your profit going in. I either make my profit by reselling as in the example I gave, or by holding and renting as in all of the properties I currently hold. I did say it takes knowledge. I wouldn't expect that someone with no knowledge to jump out to rehab a property. There are many pitfalls. But again, there are ways to obtain the knowledge, many excellent books and courses to take. I'm not going through how I solve the problems with this property...but this part of the knowledge I talked about. If you can't solve the problems you don't buy. Pretty straightforward. And of course there are some hassles in landlording. It's not for everyone. Moral dilemna? Not in my mind. In my mind it's real simple...the tenant pays or he leaves. About what you would expect from any business isn't it? I don't call that a moral dilemma. Do I raise rents when given the opportunity? Of course. This is one of the disadvantages of renting. But if I raise them too high I lose the tenant...so I have to stay competitive. If the tenant doesn't want his payments to increase over time he has a simple remedy...he can buy a house. Can't have your cake and eat it too. But certainly not a moral dilemma. OldTrader
This is what I am saying if rents are going up in general you will raise rent as well as much as you can probably. You say people have the alternative to buy. In pricey areas most people can no longer afford to buy a home. This is not a business like any other, rent is the biggest expense for most people, they are stuck with a job a family in the area and can't do anything about it and by raising rates to stay in line with the insane "market" you are taking advantage of them and contributing to make society worse not better. That is why I am in favor of rent control, I am a free marketer but when it comes to housing things are different. In continental Europe it's difficult to raise rent and housing has remained affordable whereas everywhere there is no rent control, UK, US etc. the market has reached insane levels .
Oldtrader said a key point. If your area that you wish to purchase real estate in nets out mortgage payments the same as rents...then if you find value after repairs then its easier than a run away market that is out of balance with rents... Michael B. P.S. Down payment is a cost too....so its just not a financing point, Oldtrader brought out
well a lot of doctors are just running a business I hope for your own sake that you are aware of that
Yes, I am aware of that. Earlier in my career I ran the Business office for one. He spent tens of thousands on his education and continuing education. Malpractice insurance is more per year than most traders make here in ET.
Kicking: If you are in favor of rent control you are anything but a "free marketer". Socialist, yes. Communist, yes. Free marketer? Give me a break. I can recall the "People's Republic of Santa Monica, California", where a form of rent control existed at one time. (I don't know if it still does or not). Rents were held arbitrarily low relative to surrounding areas, such that there were few, if any vacancies ever. But if one did come up, there was a healthy black market which required a large cash payment to obtain these arbitrarily low rents. These cash payments were in essence a payoff to the current tenant, thus bypassing the law. Not to mention landlords with no incentive to continue to improve their properties due to an inability to set a proper rent. Rent control taken to it's logical conclusion results in a lack of rental housing, since the profit motive is removed for the landlord. In addition, the criminal elements always crop up surrounding these types of controls....and there are many examples of the same. Let's face it, rent only rises to a level where the existing properties are full, where vacancies can easily be rented. Landlords don't exist to take care of you and/or your friends when you cannot afford to buy a property. People have always afforded to buy...they do it by working and saving. For those that can't seem to work and save, they rent. If the rents are high, they take two jobs so that they can afford. But trust me, no landlord ever sets a rent in isolation...they set it in response to the market itself at a level where they can easily rent the property. The day that I even get a hint that rent control is coming to my area will be the day I sell all my rentals, so that my tenants will no longer be able to rent anything at all from me, at any price. OldTrader
Regarding the topic of this thread, I'd say that comparing real estate to the stock market in many ways is a lot like comparing apples to oranges; two totally different asset classes each with their own distinct qualities. One thing for sure, given the enormous tax advantages of owning rental property, I think every trader earning a high income would be a FOOL not to own some (OWN, not necessarily MANAGE). Anyone else concur or disagree?
RE investments have unique tax implications. I definitely would never remove it from my investment portfolio. A good quote to remember - which in Southern California anyway is still very true but may not be over the next 5-10 years - was from Bob Hope. He often said that he made more money by accident on real estate in southern california than he ever made from show business. At the end of his life most people put his net worth at something like 150 - 300 million, most of it from real estate investments....
OldTrader the fact is wherever landlords are precluded to do just about anything they want housing is more likely to remain relatively affordable. I lived in today's most expensive SoCal's community where I shared an apartment in a working class neighbourhood. The rent since I left in 2002 has gone up more than 25% and I hear new owners plan to raise it another 15% as soon as they can. This is simply outrageous. I have known landlords who hardly ever raise rents sometimes because they want to offer accomodation at a cost they estimate to be fair, sometimes because apparently they didn't care about the money. But the way you sound you must part of the greedy landlords.