[derangedHorse]

Landlords have to allocate capital to fixing and improving the house, as well as taking care of insurance and taxes. Also, assuming that they're not living in the house and the value of the home goes up, they're taxes will rise whenever an appraiser reassesses their home value.

[estearum]

All improvements are excluded from a land value tax, which actually means improvements are even more incentivized.

Yes that is correct if you occupy land while your community makes it more and more valuable, you should not get wealthier and wealthier for no reason. All of that should be taxed away.

[svieira]

So when you build a sewage farm on your back 40 you should get wealthier (while your neighbors thank you because their land tax went down), but if someone snaps a photo of your area that goes viral on {THE PLATFORM DU JOUR} thus making your county more popular and driving up a bidding war for postage stamp sized lots of land (leading to the land being valued at a higher rate than it was a year before) you suddenly have a massive tax bill because "we noticed you are living in a popular county" and the benefits of living in a popular place should be taxed away? Or do we need some kind of a standard for "more valuable" that deals only with tangible things? And if so, which tangibles?

[estearum]

No, we don’t need standards for “tangibles.” The price factors in all relevant variables.

[derangedHorse]

> All improvements are excluded from a land value tax, which actually means improvements are even more incentivized.

I'm not sure what this applies to with regards to my original comment. Improvements, insurance, and taxes are capital expenditures which need to be managed. This was to counter that landlording "is simply owning an asset."

> Yes that is correct if you occupy land while your community makes it more and more valuable, you should not get wealthier and wealthier for no reason. All of that should be taxed away.

Why assume that the landlord isn't getting the brunt of the cost for making the community more valuable? I don't think there's a strong case for saying a property manager is a job while denying landlording being one. Assuming landlording is completely passive is as far-fetched as thinking that property management is completely passive (both may require irregularly tasks to be performed or require no involvement in the ideal case).

[kiba]

While we don't want to tax a landowber's capital investment and improvements, most of the land value is due to the agglomeration effect of the surrounding land. So land value is mostly not an individual owner's own work, but the sum total of the community's efforts and entrepenural spirits.

[potato3732842]

>but the sum total of the community's efforts and entrepenural spirits.

More like "was too rural or too poor in the 70s/80s/90s to indulge in the then trendy policy like zoning the crap out of themselves and passing a bunch of ordinances more akin to country club rules thereby making incremental growth and development actually possible in the 2010s and 2020s"

Because most development today seems to correlate with whether or not that particular policy bullet got dodged than culture or spirit or anything like that.

[pixelatedindex]

> Landlords have to allocate capital to fixing and improving the house, as well as taking care of insurance and taxes.

These costs aren’t that high though, compared to rent. 3 months of rent covers a year of property taxes where I live. Major repairs are about a couple months rent. There is still another half year of rent that’s pure profit. Then they raise your rent every year, demonize rent increase caps, and then vote for reduced housing builds. I find it very difficult to accept them. If I had the money and the capital I absolutely would own a dozen homes and rent it all out, you would make insane money. Not to mention the mortgage costs being so low during ZIRP days. At the rate of AI coming for SWE jobs, landlords seem untouchable.

[jjav]

> 3 months of rent covers a year of property taxes where I live. Major repairs are about a couple months rent. There is still another half year of rent that’s pure profit.

You missed insurance and mortgage.

[pixelatedindex]

Fair. Mortgage during the ZIRP days and prior was really low though. A 3K mortgage then is like a 6-7K mortgage now. And home insurance is also relatively low, I pay like 1.5K for the whole year. Point is, it’s a great way to make money and that is why people become landlords.

[jjav]

> Point is, it’s a great way to make money and that is why people become landlords.

If it is, why not do it and become rich too?

It's not really a particularly good way to make money. I've run the numbers on hundreds of properties over the last two decades and I've yet to find a scenario where I could buy something and rent it out with enough profit to be worth the hassle. You'll be much better off investing in some index fund instead.

[pixelatedindex]

> If it is, why not do it and become rich too?

If I had the capital I absolutely would have. It’s a bit worse now but any property you bought pre-covid (at least in big cities) can be rented out for more than what mortgage costs. I remember looking at houses in the Bay Area and the monthly mortgage would be 3K while you can rent it out for 4-5K. Anyone who owned property in the 90s and early aughts are absolutely rolling in it. You can invest the profits in an index fund on top of it.

[jjav]

There's quite a bit of optimism in those numbers.

I bought a house in the Bay Area in the 90s and the mortgage was well over $3K (remember interest was over 7%) and an equal house back then was renting for $1300 (my rent at the time for a 3br house in south San Jose).

Try to run the numbers for any property you like. Remember to include taxes and insurance and maintenance. Just to break even is not easy and then you'll have to work for free on the maintenance. Or pay a rental management company, which is another 8-10% taken from the rent.

[PaulDavisThe1st]

You're assuming a mortgage.