I am not here to ruffle feathers. I am actually looking for geniune answers with some stats backing them up if possible.
I never understood the ethics behind real estate investing. Before anyone says that businesses own more individual properties than individual investors please look at the link below. The “average joe” is definitely a part of this.
When rent is calculated for a property many things are taken into consideration. Either way, the rent a tenant pays for a home owned by an individual investor encompasses the mortgage payment, maintenance, appreciation costs, etc… and profit/selling house otherwise what is the point of investing in real estate if you are not making money out of it.
So my question is, if a renter can pay rent (which “should” encompass numerous other items) which is basically the mortgage payment and then some, why does he need to pay a middle man like a landlord? Is it because renters are so inept at managing finances they can never own a home and apply for a mortgage on their own?
Moreover, if an amazing tenant pays rent to a landlord for 15 years, takes part in repairing the home, is always on time with payments, etc… why do they never get shared equity despite the fact they literally paid off a large percentage of the mortgage? Is it because the percentage of people that do this, is low? Where are the stats on this?
Most landlords say that the rent a tenant pays never accounts for risk/damage to the home and that most tenants are incredibly bad with managing finances and will never be able to meet income and credit requirements in order to apply for a mortgage. Some say that some renters never want to deal with the responsibilitirs of owning a home which I completely understand and is a reason for landlords to exist.
Most tenants complain about rent hikes, a landlords poor response in dealing with problems, poor incentives on taking part in repairs, finger pointing when problems occur, lack of consideration and discretion when family emergencies or natural disasters occur, etc…
Who is right or wrong here? Please do not say “it depends” because most dynamical systems lean/attract a certain away, even chaos does mathematically.
I think the only real solution to this dilemma is providing shared equity mortgages so that renter and landlord can get a cut of the equity. Just because you are labeled a “bad” person does not mean you shouldn’t get what you lawfully paid for.
I chose real estate in particular because of how clear the middle man’s role is. Person X is giving Person Y money and then some for a product that they are proving they can pay themselves.