Who’s best?

remote equity rentals

Amid a national housing crisis, giant private equity firms have been buying up apartment buildings en masse to squeeze them for profit … snapping up rentals by the thousands,” along with “tens of thousands of single-family homes lost to foreclosure.” This means more remote landlords in major American cities, according to ProPublica’s analysis.

This puts upward pressure on rent prices for everyone, pushing up the cost of renting and driving down affordable housing stock. Meanwhile, many so-called mom-and-pop landlords have been displaced by corporate players. All tenants pay more, while the only ones benefiting from soaring rents are out-of-town investors.

“What the real estate industry won’t tell you” is that as the ratio of investor-owned houses to live-in buyers rises, the investors get more tax deductions but prices skyrocket for everyone else.”  “Housing is getting less affordable for everyone at every level,” says Daryl Fairweather, chief economist for Redfin.

“Such firms use economies of scale to more aggressively squeeze profits from their buildings” than live-in or even local landlords usually do, tenant advocates say. “The firms’ tactics can include sharply increasing rent or fees and neglecting upkeep.”

“In contrast, so-called mom-and-pops usually look for steady streams of rental income over time while their buildings grow in value.”

Meanwhile, living with roommates to whom you rent rooms can be reasonably profitable, but only reasonably. So if you own a property good enough for roommates, you can rent part of it out. That’s reasonably profitable, and reasonable property owners and reasonable roommates could be happy together.

But investors demand high yields, not reasonable places to live. Investors always want to push past reasonable. Since investment property tends to change hands, each time with someone new taking another cut, ultimately it inflates well past property taxes alone.