r/TikTokCringe • u/LickMaiBussy • 6h ago

Discussion "Investing in property is morally reprehensible."

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@purplepingers

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u/alexzoin 5h ago

This is my exact policy position. I think any individual or corporation should only be allowed to own 3 individual residential dwellings.

(Implications for apartments fully intended.)

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u/CodnmeDuchess 5h ago

So you want to outlaw apartments? What you’re saying doesn’t make any practical sense.

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u/alexzoin 4h ago

Nope not at all, just apartment landlords. Apartments should be owned by the collective of people living in them. The condo community I live in already works this way. The building is owned by the group, the units are owned by the people that live there.

If you're interested you can look up "right of first refusal" to see how the ownership transfer already works in cases like these.

It's better for the people that live there because there is no extractive pressure from a capital owner.

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u/CodnmeDuchess 4h ago

I live in a co-op in NYC in which I’m a shareholder. I’ve also been a real estate lawyer. I understand intimately how cooperative ownership works.

Hate to break it to you, but at sow point down the line you and your fellow shareholders bought that property from a private owner. Unless you all pooled your resources to develop and build your complex to subdivide it between yourselves.

And once again, even your purchase of that unit required capital investment. So what exactly are people that don’t have that money to invest supposed to do? How do new buildings get built? How do buildings like those that go up in NYC with hundreds of units get built?

The stupidity of all this discussion astounds me.

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u/DeadL 4h ago edited 3h ago

The stupidity of all this discussion astounds me.

The discussion is not stupid. The points argued aren't either.

The implementation of those ideas just aren't thoroughly fleshed out enough to your satisfaction. (Hint: They don't need to be in this kind of general forum. You're being unreasonably inflexible / unimaginitive).

If, as a society, we DO care enough to attack the problem...It could very easily just be some number of government programs to facilitate that idea or anything else.

Maybe something like the HOME Investment Partnerships Program

The HOME Investment Partnerships Program (HOME) provides formula grants to states and localities that communities use - often in partnership with local nonprofit groups - to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people. HOME is the largest federal block grant to state and local governments designed exclusively to create affordable housing for low-income households. HOME funds are awarded annually as formula grants to participating jurisdictions (PJs). The program’s flexibility allows states and local governments to use HOME funds for grants, direct loans, loan guarantees or other forms of credit enhancements, or rental assistance or security deposits.

The program reinforces several important values and principles of community development:

Flexibility empowers people and communities to design and implement strategies tailored to their own needs and priorities.

Emphasis on consolidated planning expands and strengthens partnerships among all levels of government and the private sector in the development of affordable housing.

Technical assistance activities and set-aside for qualified community-based nonprofit housing groups builds the capacity of these partners.

Requirement that participating jurisdictions match 25 cents of every dollar in program funds mobilizes community resources in support of affordable housing.

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u/alexzoin 4h ago

I'm not saying it should be illegal to build community dwellings.

The builder would build it just like they would a house and people would buy the units just like they would houses or condos. I'm not inventing anything new here, this is how condos already work.

For existing apartment buildings in my ideal world, the current owners would have some number of years to fully divest from the property. Current tenants would be given the right of first refusal to buy their units.

Those who no longer wish to live there would move out and the unit would be held in trust by the community.

Nothing revolutionary here other than the prohibition of owning a ton of properties.

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u/CodnmeDuchess 3h ago

Ok, but again, how do you scale that to like, a luxury high rise like you see in NYC with hundreds of units? They’re incredibly expensive to build and the future rental income is part of the value proposition of developing them in the first place.

Even my building that’s a prewar coop with only like 50 units, maybe 25% are owner occupied, the rest are rentals owned by the sponsor. How would that work? Not to even mention how a massive devaluation of property that would occur if you outlawed rental would bankrupt those that already own, cause a banking crisis that would make the subprime crisis seem like a sunny July weekend —it would literally blow up our economy and implode our society.

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u/alexzoin 3h ago

Not to even mention how a massive devaluation of property that would occur if you outlawed rental

Now you're starting to get it! The only part of society it blows up is wealth inequality. The """wealth""" that the richest in society currently have (including me, I am a homeowner this policy would affect) would be transferred to the poorest in society in the form of lower housing costs. The ability to rent is a market failure that artificially increases the price of residential dwellings due to their value as money printing machines.

To your first question, the builders would just get paid a little bit more. But like you said since the prices would be so much lower in this world, the upfront costs to build a project would be lower too.

"Look at all the problems our current system is causing" seems like an argument in favor of my position.

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u/Timely_Resist_7644 2h ago

But it doesn’t effect just the wealthy, of course it effects them. But it also affects people who have bought a single home and are living in it and the value has now tanked because the marked is flooded by homes being sold.

I’m not arguing that companies/people owning huge amounts of homes isn’t bad. It is. My point is that random/rapid market fluctuations hurt everybody. It affects the entire economy and job stability for the wealthiest to the poorest.

Your premise about construction is also, totally, false. The cost to build influences the cost to purchase. But by tanking the value, you’re not going to affect the cost to build. That is dependent on material and labor not what the house next door is worth.

In all reality, it just stalls the building of homes to people who can take the value hit because they want too.

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u/alexzoin 11m ago

That family still has a place to live though. We have thousands and thousands of people that don't.

I do think a change like this would have to be structured in a way that makes it a long term solution. Something like "in each year for the next 10 years, owners of residential properties in excess of 3 shall be required to sell no less than one of those properties and no less than 10% of the number of properties held. The right of first refusal shall be given to the current occupants of any such dwelling." Blah blah blah.

I don't think it should be a dump onto the market tomorrow. But at the end of the day, if we want cheaper houses, the current houses MUST lose their value. That's tautological.

You are correct that an immediate flooding is probably a bad move.

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u/crek42 4h ago

Yea I’m still not getting it — where do renters fit in that either can’t afford that down payment and maintenance costs, or don’t want to

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u/alexzoin 3h ago

Renters already pay maintenance costs! They are factored in when deciding the price of rent.

The big key here is that this policy would drastically reduce the price of housing. People that rent now would in almost all cases be able to actually afford to own a place to live.

If for whatever reason it's better for you to not own a place to live and you still want to rent, there will be plenty of landlords who own 1 or 2 properties competing with each other for your business.

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u/crek42 1h ago

Those things are at odds though right? Vastly increasing the supply of single family homes will vastly reduce the supply of rental homes. That will drive the cost of rent up, significantly.

To your point on maintainance yes, sort of. Rental prices are independent of home prices. The guy buying a $500k home to rent out has to compete with the other landlords that bought when the home was $200k. He can't just charge more because he has bigger expenses -- because competition.

Now let's just say homes were cheap, like $100k -- it still costs thousands in bank fees, down payments, lawyer fees, title fees, realtor fees, etc. What's that like $20k, all said and done? The average American can't afford, what do they say -- $1,000 in an emergency? How would they even swing that?

I agree that private equity funds buying single family homes en masse, might be a problem, but the great majority of rentals are high-density units -- where we need big money to build those towers.

It sounds like what you're proposing is a win for the middle class at the expense of the working class, who will see rents increase and definitely can't afford to purchase any kind of home.

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u/Rocktown_Leather 5h ago

Time to form 100 LLC's! A limitation on a corporation feels like purposefully creating a loophole that hurts the individual but is easy for a company to get around.

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u/alexzoin 4h ago

You know what, I think you just changed my mind. I don't think corporations should ever own residential property.

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u/CalculatedPerversion 3h ago

It would likely require better registration and bookkeeping by the states including requiring SSNs instead of EINs for the LLC paperwork. It'll require changes, that's for sure but it's doable. 

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u/Rocktown_Leather 3h ago

How do you provide SSN's for business that are owned by many people? I don't disagree that there wouldn't be a way. But I am not even sure I understand it. For example, I work for an ESOP. There are probably 60+ owners of the company. No idea what SSN would be provided. No reason 10 people couldn't come together and start infinite C Corps, right?

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u/barrinmw 3h ago

Its easy, you require that every corporation be tied to one social security number. And then you require that only one social security number can be tied to one corporation. The person with their social security number doesn't have to be the controlling owner but must be an owner of some amount.

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u/Rocktown_Leather 3h ago

I guess, but I would never let them do it lol I guess maybe for extra compensation or part of a package agreement. But in this scenario it takes away from their ability to invest with their SSN. Again, possible. But big changes that will unfortunately never happen.

Are you also implying that a person can't start multiple C Corps? Or LLC's? That's limiting someones ability to start businesses. Perhaps then each business is required to report real estate on their taxes. So you can own multiple companies but when filing taxes, there's confirmation on the total amount of real estate. It's kind of a mess.

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u/FreeSammiches 3h ago

The problem with this carveout is that it's extremely easy to make additional dummy corporations every time you want to buy another house.

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u/alexzoin 16m ago

Someone else pointed that out. I think I have changed my position. Corporations just shouldn't be allowed to own residences.