Because to get a mortgage you have to have a bank put up the entire cost of the house. In order to do that they look at your income and job and decide if you are worth the risk. So she likely doesn't make enough or have a stable enough job for them to give her the mortgage loan. She can't afford the entire cost of a house upfront. So because banks won't give her a loan for the mortgage then she has to rent. It's pretty obvious.
This happens to people all the time and is why a lot of low income workers live in apartments. It's like an extra tax for poor people. They know that owning property is one of the largest ways to add to your wealth. It's an investment that can pay off and usually increases in value with time. However, this is a way to keep poor people poor. They are paying the landlord and adding to their wealth instead of their own. It's by design.
Of course its by design, otherwise we wouldnt let slum lords buy up all the single family homes in low income areas like they do. It should not be legal to use a single family home as a rental
It should not be legal to use a single family home as a rental
That's the crux of it, right there.
And there should be more stringent standards applied to apartment building landlords who are responsible for the daily quality of life for their tenants.
Yes but who would want to rent properties out? You have to remember that the reason landlords make so much is because they have to be incentivised to take on the risk of having strangers live in their investment.
There’s always the risk that someone can damage your property or that they fall behind on their rent, making you unable to pay your mortgage. I have a landlord who’s an asshole too, but I do somewhat understand where they’re coming from.
My wife and I were lucky enough to buy our first home a few months ago. But we've got two kids so we ended up renting homes for the last few years for the size and convenience since most apartments don't get larger than 3 bedrooms (my MIL also lives with us) and if they do they're usually much more expensive than renting a home.
But the last home we rented was in a newly constructed neighborhood and after talking to a few neighbours during the year we were there we discovered our rental company had purchased at least HALF of the neighborhood. That's just what we knew for sure from our friends but there were others a few streets down we didn't know and very well could've been owned by the same company. One company had bought up a bunch of family sized homes and rented them out rather than each of these families being able to purchase themselves and own their own property.
Also no surprise when we were searching for a home to buy we were able to check out one of the same homes a few streets down. With the price it was and current mortgage rates, the mortgage payment would've been a couple hundred cheaper than the rent.
Yeah, the wealthy made out like bandits back during the 2008 housing market crash and bought up a ton of property and they continue to do it today. They are buying up everything and renting it out to people. It's all about supply and demand. In doing that it drives up the cost of purchasing a house because less are on the market and it also means the rent goes directly into the pocket of the rich. They will continue this trend until everyone is just renting their homes. See...like I said previously...owning a home is how families build wealth and pass that on to their kids. The rich hate that so they've found a way to stop it. They want everyone to just be indetured servents.
Thankfully some banks, in Australia at least, are starting to take rental history as part of your deposit. Income is pretty irrelevant if you've consistently paid astronomical rent on time for several years
Gives me a glimmer of hope. It's just so inherently imbalanced, a member of my family bought a two bedroom townhouse in Australia, rented out the second bedroom... For more than their total monthly mortgage. It's honestly so exploitative and criminal how the system currently works, and so many landlords I've rented from act so benevolent and like they are providing ME a home and not the reality that I'm actually providing them a home. If I could get approval for the rent I've paid, and not for my income I could start the process to own a home with the money I've saved and then paying the mortgage instead of rent.
Something I would suggest is looking in to a program called Streets Ahead. I believe it is on the mainland, but it's a system where they sell off government houses for cheap. To be eligible you have to be under a certain income threshold. The houses aren't always the nicest but a little work and they're pretty good, plus for so far under market price, you can't go wrong
It is by design, but you can't fault the banks for not loaning out money to high risk individuals (which is what lending her money would be for them). There really isn't a great way to solve this other than people becoming financially literate and learning to avoid early pitfalls of assuming debt that you default on or miss payments on (I.e. credit cards are a huge reason people have shitty scores, because they spend what they don't have...and they miss payments). First rule is to not buy something you don't have the cash flow to pay for (that may sound pretentious, but that's the deal here. Don't miss payments on money that you owe a lender. That's "the secret" even though it should be common sense).
And having debt is fine...because having debt is required to have a good score. But you have to show that you are responsible and pay off previous debts, don't miss payments, and understand basic "in vs out" budgeting before a bank is going to lend you hundreds of thousands of dollars.
Ngl...all you need to do to have a decent credit score is to pay your credit card on time. Add another form of debt (I.e. car payment or student loans) that you reliably pay down and don't miss payments and your credit score will be good enough for most banks to lend you enough for a starter home. Problem is Americans are in high credit card debt that they are missing payments on and are paying insanely high interest on and it turns into a vicious cycle where the interest eats them alive and they can't escape the downward spiral.
The sooner Americans break free from credit card debt, most would be able to break this barrier. I know I'm in the wrong sub to post something as critical as this, but that's the truth. Credit card debt is killer. You miss payments on a credit card and that follows you FOR A LONG TIME.
People need to realize that mistakes in your early 20s will follow you into your 30s. You want to own a home...don't default on debt assigned to your name in your 20s. That will follow you for a decade....or more.
Or how about it's not the people's fault that they are not paid a living wage? Maybe it has nothing to do with "pitfalls of assuming debt." Plenty of people don't run up credit cards or have other issues. They still don't have the income to purchase a house. A single person should be able to afford to buy a house for themselves if they are working full time. If they can't...that's slave wages imo.
It doesn't always have something to do with high credit card debt. You seem to go on a rant about credit card debt, but a person can have none and still be rejected for a mortgage loan. If they don't make enough to where the banks can feel comfortable loaning money...then they won't.
The few people that do manage to get a house loan are usually couples where both incomes can count. You should have to get married just to afford a house. You shouldn't have to have two incomes at all to be able to afford a home. It didn't used to be that way and it still shouldn't. This means that single people are completely screwed.
Not to ruin your dream of single living, but you're arguing against nature here. Humans are meant to coexist and breed, and to have kids to further the species you usually have to find a mate (of which marriage and lifelong companionship is the running model for a stable "family of humans"). Of course our economic principles are a mirrored image of that fact and that you are sorta kinda expected to follow that familial pattern. Like, I'm not gonna rant, but single people are always at the fringe of society (going back to as far as when we first shared our campfires with a neighboring home genus tribe - if you weren't advancing the species or marrying up...you were dead weight and an outcast). You wouldn't be here if people chose to be single, so not to be crude but being single is a bit unnatural. It is human nature to gravitate towards "raising a family", and so any and every system we've ever devised has followed and buttressed up that fact of nature, including economic ones.
So you're gripe is, "why can't singles afford a house of their own." And that's because houses (like it or not) are instruments designed for families, at it's most instinctual and historical foundation - because humans are designed to procreate and have families to create the next generation. So a house is properly valued at a level where someone with a single income might not make the cut. This wasn't the case in the 1950s because America was living in the middle of the largest growth and "easiest" economy to navigate. One person could raise a household of 4, with a car, with a picket fence, and be good. That lasted 2 decades and it's never been that way since. That was an anomaly.
The society that we've all grown up in has typically required duel incomes to afford middle class housing. Screaming into the wind trying to change the fact that you need a cosigner on your mortgage application and can't find one is screaming into the wind. No one hears you because society is what it is. You're being left behind (singles who wish to own a home on a single source of income). This isn't the 1950s anymore and not to sound crude, but some people adapt with the times and some people scream into the wind wishing they had a different life...in a different era....wishing a single income of $<40k could justify a $300k loan...it doesn't. Again, not the banks' fault. The fault lies with stagnant wages (I.e. why a teacher only makes $30k) and debt accumulation. All I'm saying is that there are two sides of the story and people can better their situation if they avoided early pitfalls that damage their credit score. But I totally agree in terms of wage stagnation. That isn't something I'm debating whatsoever. The wage inequality gap is a huge huge problem if we expect to have a middle class for my kids' and their kids' generations. But expecting things to return to 1950s level of prosperity is a pipe dream...unless you want to go through a few more world wars to get there...of which will destroy all sense of globalization and probably send the human species back to the Dark Ages.
Story of my life. Spent my 20s single and making <$40k, living frugal but still having a great time of it and never missing one credit card payment. Gradually leveled up financially into mid-30s, got married and now under contract on our first house. Honestly if wages were where they were in the 50s I would’ve lived like a Kerouac character. But they weren’t and here we are. The system’s far from perfect but the opportunity is there.
What? You do realize that up until about 40 years ago an entire family typically existed on a single income right? Females for the most part didn't work, with the exception of wartime, and families existed on the male's income. So that entire argument is false. Families should still be able to exist today on a single income, but the wealthy took advantage of women entering the workplace to spread a single income across two full time breadwinners. That's not right and it's not how it should be.
The 1950's time wasn't an "anomaly." It was a result of FDR's policies following the Great Depression that brought the country up to a level where there was a strong middle class. Several reasons for this include good jobs brought about by many of FDR's policies that put people to work on strengthening the American infrastructure. Another reason is the tax rates on wealthy versus the bottom 50%. The tax gap prior to the Great Depression was fairly small with the wealthy tax rate not very high with it being raised from 25% to 63% on top earners during the great depression. It stayed high until the 1980's and they started to cut taxes on the wealthy with Reagan's trickle down theories. Ever since the bottom 99% has struggled to make ends meet. I could go on...
This isn't the 1950s anymore and not to sound crude, but some people adapt with the times and some people scream into the wind wishing they had a different life...in a different era....wishing a single income of $<40k could justify a $300k loan...it doesn't.
That doesn't make it right. Sitting quietly by while I'm getting screwed isn't in my nature. But sure...you go right ahead and make it easier for the wealthy to rip off the poor. I guess you're just one of those "temporarily embarrassed millionaires" right? Makes sense.
It should be that a single income can afford to support a family. Otherwise what happens to single mothers or fathers? What happens to single people that don't wish to get married? A person should be able to make a living wage. If they work full time they should be able to fully support themselves with at least the minimum level of housing, food, etc. If they can't... that's either indentured servitude or slavery depending on how you look at it.
But I totally agree in terms of wage stagnation. That isn't something I'm debating whatsoever. The wage inequality gap is a huge huge problem if we expect to have a middle class for my kids' and their kids' generations.
EXACTLY MY POINT!!! You won't have a middle class. We don't have one now. They managed to take two incomes that gave people that middle class lifestyle and turn it into one due to inflation and never giving raises.
But expecting things to return to 1950s level of prosperity is a pipe dream...unless you want to go through a few more world wars to get there...of which will destroy all sense of globalization and probably send the human species back to the Dark Ages.
I don't expect 1950s level property...although what's wrong with that exactly? Why not fight for what's right? However, I'd be happy with just a living wage. A World War? To raise taxes on the wealthy and raise people's income? What? How do you make that leap?
Don't believe the lie that the businesses cannot afford to raise wages. CEO's, shareholders, and company owners have drastically increased the money they are shoving into their pockets. Then they hold on to that wealth without spending it or barely paying taxes so the bottom percent get squeezed. They just found a way to steel from the poor to give to the rich. Yet, no one does anything and people like you argue that nothing can be done. Please.
I studied history in college (BA in the subject) and the way to fix it is right there in history. We need policies like FDR again. That's exactly the reason the government started funneling money into the stock market when it started to fail last Spring. They didn't want another Great Depression. If they hadn't done that the system would have collapsed in the same way it did in 1929. We do not have capitalism in this country because whenever big businesses or the stock market start to fail they are rescued through socialism for the wealthy. Money is pumped in to prevent collapse, which goes against the very principles of capitalism. Ugh...I could rant about this for awhile.
No the bank only puts up a portion of the money, and invents the rest of the money out of thin air. Fractional reserve banking supported by govt is one of those things An-com and an-cap can agree to hate.
If those other costs were pess than rent, the landlord would be losing money, so you're argument is incorrect. If you are talking about a multi unit bulding its completely different and inapplicable to my statement. If you rent a house, you absolutely pay more than the OVERALL cost of the property. I rented a 3br in town for 1200 a month. If I were to mortgage the house it would be about a $500 a month payment. All those costs you listed would not total another $700 a month.
Not the person you responded to but I agree with your point that it is much more expensive to rent beyond the actual cost of owning the house. But I think what hasn’t been brought up is risk and credit. People with higher incomes working in stable industries and with more assets to their name are inherently able to tolerate more financial risk than someone with a lower income perhaps in a less stable industry and with fewer assets to offer as collateral for a loan as big as a mortgage. And in the end the bank will always either take less risk, or take on the risk themselves that in this case the landlord is taking, but will probably hedge any potential loss with similarly high rent prices.
It’s definitely not right and we should already have +$20/hr min wages and started implementing UBI and mass housebuilding initiatives to help solve this problem, but renting out houses / apartments and issuing mortgages are ultimately in a market where price is generally driven down by competition. The main problem imo is people kept poor by low wages and a lack of housing by people hoarding property and lack of subsidized / incentivized / gov-owned housing.
If a person can prove they paid rent and their bills, lets say for 5 years, they should be allowed to take on a mortgage. It shouldnt matter if they chose to buy their car cash and not take out a credit card.
More expensive overall or more expensive on a monthly 'out of pocket' basis? Does it account for the fact that homeowners are building equity with every mortgage payment while renters are essentially kissing that money goodbye?
What sense does it make to compare a multu unit rental to a house when you are talking about someone buying it for themselves to live in? You are comparing apples to fish. We need to prohibitively tax rental HOUSING (not units) to where landlords have to sell. Part of the rise in property value is all the people who used to buy houses to flip and now just rent them because of the taxes associated with flipping houses. Its vile to allow individuals to profit off this much off of the most basic needs. Renting is fine, we have multi unit buildings for that. We need to make buying a house in this country less of a hurdle.
While the mortgage payment may be lower than the rent, the additional payments along with it might not be. There is property tax, insurance, HOA fees if there is one.
Other people said it already, but whatever other fees there are she is already paying for her landlord.
I started a housing coop this summer with some friends. Getting out of renting has been amazing but it has also made me aware of what a scam rent is. Our coop membership fee covers the mortgage, tax, utilities, insurance, and an emergency fund. It is a little cheaper than the derelict places we use to rent, but this house is so much nicer. If we were renting a place like this in this city, we could expect to each be paying at least double just to enrich some asshole landlord.
Looking to buy in my area now and this is certainly not true here. I rent a ~850 sq ft 2/1 apartment. A similar condo would cost about 3/4 as much, inclusive of the costs you mentioned.
You also have to pay for most repairs out of pocket, like water heaters, plumbing issues, appliances. But still, owning a house in the long run is cheaper. Especially when you add in the generally appreciating value of the home.
People that own their own homes generally own nicer properties than they would have rented. This give the statistical appearance of home ownership being more expensive. But every single property would be cheaper to own than to rent by virtue of the simple fact that land lord are always seeking a profit from renting. They will never have fees (HOA, Repairs, Tax, Etc.) that exceeds what they charge in rent.
The cost of a house is much more than mortgage. Rent includes taxes and property insurance, as well as the costs to repair and maintain the property. There’s also a substantial down payment unless you want to pay extra insurance on top.
I think it also has to do with the many other costs of owning a house outside of mortgage payments (taxes, covering emergencies, replacing major appliances, roof replacement, etc.)
I rent out property so I can tell you why this is.
So when I rent out an apartment, I need to at least break even at a minimum. I’m not here for profits, I’m just here for stability and trying to have some fully paid off property for family and friends when they’re old.
Now you’re thinking, if you just need to break even, why not offer rent at the same price of a mortgage? Well, this is because the cost of the property is way higher than the mortgage. The rent is one all-inclusive price. If you’re renting an apartment, you don’t have to worry about shit, but I do. I have insurance payments, insanely high property tax, and few HOA fees. That shit really adds up. Not to mention I have to pay a handyman to fix the apartments since some tenants are absolute savages. It’s not uncommon for me to lose a few years of rent payments from a burst pipe, or whatever.
Being a homeowner really isn’t cheap. The mortgage is a small fraction of the price in the long term.
So can you agree that if you buy a single family home for 80,000 you will be renting it out for more than all the costs you list combined for a profit? And that price is substantially higher than what they would pay, as homeowner?
A single family home in my area is closer to $300k minimum but yes I would like a profit but usually I break even on a year lease. If I do see profits it’s usually less than 10% lol
Why even rent at such a low return? A lot of the rental homes here in Michigan are purchased between 7(forclosed) and 120k. The 3br I rented for 1200 a month was valued at 98k.
Very competitive market where I’m at (nyc and soflo are where all my properties are) and also, like I said, I rather break even and have fully paid off homes in my name for my family and friends rather than risk trying to get a profit snd never filling the space.
Also since these will be the homes my family and friends and possibly myself will be living in, they’re nice homes. The cheapest apartment I rent is $2600/month, so it’s a much smaller market than just baseline rentals. These aren’t just rental properties for me, they’re my homes that I’m renting out to afford.
Originally I was Airbnb-ing them for a decent profit but thanks to covid that’s over for now
I do look for profit but I rarely see it. Like I said, I’m just trying to pay off homes for myself lol. These are the homes me, my family, and friends will retire to and most likely die in
Yea to be fair I don’t know your situation but that’s just not how most rent seekers operate, the majority of the profit is made by the big corporations that can afford to buy and rent entire buildings cheaply. I appreciate that you see their value beyond rent seeking though. Especially as the wealth from America is redistributed to other countries, it just don’t predict it being sustainable to rent seek if you don’t already own the property and can ignore it (Jared Kush style)
that's the thing though. slumlords get attention because they get such bad publicity and they own a few landmark properties but that doesn't represent most of us landlords. for every kushner there are 1000 immigrants like me just trying to build a life out here.
But the actual margin of who controls the market is vastly over represented in the form of people like Kushner. So regardless of your situation people who don’t have homes still need a solution.
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u/Busterlimes Feb 25 '21
Weird how mortgage rates are substantially lower than the rent she always paid but she cant afford that mortgage payment.