Tucked in the article is a little known truth: most of the investments in Real Estate are small and mid size players, not guys like Buffet or Blackrock.
I’m one of those. I was lucky enough to buy two homes, and I rent one out. My sister is very similar. She owns two homes through unusual circumstances, and rents one out as well.
If you want to try and take my extra home away from me, you’re going to need a small army to do so. I wish you luck with that.
It always rankles me when people complain about the “big guys” getting this-break or that-benefit, but can do the same for themselves as well.
Especially so, someone who is an independent contractor and can write off equipment and expenses that the standard taxpayer cannot, and do so to the point that they actually end up qualifying for low income tax credits. “Donald Trump paid no taxes, blah-blah-blah…” (And you didn’t either.)
So what if Mega-Land-Corp bought up 40 houses in your town? You have a rental too, plus your own home, and the value of yours went up with the market along with theirs. And the first-time buyer also saw his property go up.
A rising tide floats all boats.
It has always been that way over the long haul.
When someone tells me they cannot afford to get into their own home, my advice is to by a 4-unit and occupy one of them. Rent the other 3. Within a few years the rents on the 3 will expand to cover all the expenses. You live rent-free, and under those conditions it doesn’t take long to save enough for a single-family down payment. Then you keep the 4-unit as a cash cow and live in your own single-family (which, eventually, even that mortgage payment gets covered by the rental income.) You don’t need to be BlackRock to do it.
Absolutely. I chose 4-plex because that’s usually the largest multi-family size lenders will still allow for owner-occupied mortgages. And the lenders usually consider 75-80% of the projected rental income toward your qualification numbers.
That requires trends to shift so that multi-family homes are the kinds that get built going forward.
In smaller more rural areas, you run up against zoning issues when you try to do that, although actually, if you want to maintain green spaces while still improving your economic outlook, high density housing is the way to go.
Luckily one of the trends fueling falling rent has been precisely the construction of more multifamily units.
If only people were taught this kind of thing more frequently, while also being taught not to overextend themselves.
It’s one thing to tell potential homeowners to go and do this. But you have to build the change management of the mindset because most people wouldn’t even think to do this.
The first rental we lived in (45 years ago) when we got married is still there. It was built in 1880. It was worth 50K back then, and it’s worth 600K now. There are multi-families all over the country. You don’t need new construction for this.
Where I used to live (New England) there were also a large number of conversions - people turning large single family homes into duplexes.
Also a good number of people adding “accessory dwelling units”, simple units attached to (or one the same property as) the main unit. These required a zoning change in many towns but they can make a big difference both in terms of affordability and expanding the housing stock.
If you want more people to get involved in such a market, you will need more high density housing.
The fact that multifamily construction has ticked up recently has gone a long way towards alleviating the rent issue…it’s likely the key driver in rents decreasing.
