Hi all, I've done a little bit of real estate investing - I currently own 3 single family rentals in Indianapolis. I also own my primary residence and plan to convert the garage into a studio. I'm doing fine and see opportunities to grow my portfolio, but the housing affordability crisis has been bothering me lately and has got me questioning if scaling is a morally acceptable thing to do in this climate. For the longest time, owning a home was the only way for blue collar workers to achieve the American Dream. With interest rates rising and no real decline in demand, it's becoming harder and harder for regular folks to own their own place. And now regular folks who are hoping to afford their own place have to compete with institutional capital and hundreds of out of state individual investors who can afford to take some losses for long-term appreciation plays. It's just gotten harder and harder for the little guy and I'm wondering - is there more we as real-estate investors should be doing to help? Are we partly to blame? Or are my concerns overblown? Thanks in advance.

Absolutely it's morally right to provide decent affordable housing - I provide good housing and restore old run down properties It's not my problem if someone can't afford a house - it's not a "right" as many would have you to believe. Some people have bad luck and have just been dealt a bad hand. Many more take advantage of social assistance and continue on a path of horrible decision making. If anything blame the government for meddling in private market affairs. Is it right I pay 24-32% in taxes while many people pay none? Is it right I pay for other people's housing, kids they can't afford, food stamps, college degrees? I have 0 moral hesitancy when it comes to my properties - I'd own the entire city if I could. I actually had this come up recently - had to evict a lady. The court shuts down over Christmas, so it took an additional 3 weeks to get her out. She can't afford her rent, yet she can afford alcohol and cigarettes. I'd have evicted her Christmas eve, if I could have. The ONLY people I genuinely feel for are the kids of these people. Simply because they are innocent and cannot help themselves like a full grown adult

I hear you on this. I have had the same moral quandary. I come from Portland, Oregon originally and I was priced out of my home market in 2011. Investors were buying all the affordable homes. One thing thing that has helped me with this though is the thought that if private investors weren't providing rental housing for the masses, then the government would have to. And we know what government housing/projects are like. I think we are actually doing a service to renters by providing really nice/well taken care of housing. It still doesn't change the issue of buying these houses from under first time homebuyers and raising the market. My only other takeaway on that is I am an agent in the Boise, ID area and a majority of my buyers are first-timers. We always find something great, even in competition with investors. So in conclusion my advice is don't feel badly about it. Just create great sustainable housing for renters and knowing you are doing a better service than affordable government housing would.

Hello Nick, I totally understand your concerns but there are a few things to consider. First, Someone is going to own the houses and people need to rent. Because you are asking this question it sounds like you are more conscious and thus probably are a better landlord than most. Would you rather you have the opportunity to give someone an excellent tenant experience or someone who doesn't care and just wants the money. Second, if you feel burdened to support fair housing there are ways to do so. You could invest in developing opportunity zones or multifamily affordable housing. These types of properties typically give you big tax benefits. You could also consider getting involved in your cities zoning board. Zoning policies are one of the main reasons housing is as difficult to find as it is. You could also consider volunteering at a homeless shelter to give back to the community

There is a lot to unpack here but itś great to hear that there are people who actually have a conscience, giving a damn about their fellow man. As a Black investor Iḿ commonly asked how I feel about gentrification and am even accused of working with the man to run out minorities. That´s another discussion but it rings of familiarity. In terms of the topic you introduced, I feel the blame or someone responsible for addressing this is our elected leaders. As an investor, I don´t set the price of real estate and whatever the value of the asset I´ḿ working it falls directly in line with already established comps. Those comps are set back many factors including those who can afford to and are willing to pay. In addition, cities or areas under revitalization is driven by the advocacy, well being and interests of the citizens already there. Maybe big time corporate investing firms play a role but the average investors is not responsible in any way. Also, I disagree with the assertion that the only way for blue collar to build wealth is through homes. If needed, anyone has multiple forms of programs and assistance available to them to get a home. They have the federal govt and entire organizations devoted to getting people in homes. Also, this is the United States and there a countless stories where people who came from nothing and have nothing become wealthy in no time. Yes, everyone will not make it but many will. For me, I do feel I have some responsibility to give back to my community but I do advocacy through other means and for the most part (most but not all) it´s separate from my business. So in essence I personally feel I do my part for the better good and do not feel responsible for the direct destiny of others. Above my pay grade!

Here is another idea, how about buy land and build new houses? And sell them to first time home buyers. If inventory is low, we create our own inventory here. Cheers.

ask this question to people from Bangladesh and they will smile lol, btw USA is still the lowest income to housing GDP in the world (it still the most affordable place in the world to purchase a house), meaning folks selling a hamburger in US is still have the higher purchasing power to buy a home (maybe in Ohio), but not so much for someone selling biryani in bangladesh. so try to visit bangladesh (or Mali) next time for this moral question lol

Did you know that of the 35% of people who don't own a property, most don't want to because it takes work to buy, own & maintain. They don't want the responsibility. Check out the number of people who chose not to pay their rent when given the chance by the government. The others who do want to buy will do the work necessary to become property tax payers otherwise known as "home owners" How Many Vacant Homes Are There in America? https://housegrail.com/how-man..."The number lags some, but currently, there are about 15 million vacant homes in the United States."

For the most part I believe us mom and pop investors help renters. We improve neighborhoods and have a heart. It's the institutional hedge fund and syndications that place stakeholder value above all else. They refer to rent raises as 'stabilizing the property '. When I sell singles and doubles, it has always been to a local first-time buyer. I sell 1 to 2 per year and have a short list of current and former renters of ours who are saving their money right now. I sell by owner at a price net of commissions to maximize value for them going in and have no gotchas or shady stuff. But selling commercial apts, I'm like every other greedy schmuck. I sold 2 to out of area syndications last year, letting 2 or more duke it out auction style. Investor to investor larger MF sales are harder to protect the tenants and I consider these sales as my legacy reward for years of battle in the trenches. Give back as you can. Good discussion 👍

Hey all, I really appreciate the great discussion and ideas here. There were a lot of great actionable ideas - like considering lease options, rent to own, buying 1 bedroom condos/studios, or even getting into the developing game that I think directly address my concerns.Ultimately, I've had a lot of hesitancy and I've struggled to discern if it's truly a moral quandary holding me back or if I'm just making excuses to sit on the bench. I think ultimately the points about us doing a better job than the government and being able to give back to our communities better really highlight a lot of the positives that us investors bring. So this helps a lot. I mentioned these concerns to my cousin once, and he said "it sounds to me like you haven't had a bad tenant yet". He's right. I sometimes have a hard time accepting the reality that not all people are looking to better themselves, and that a lot of people are out there to make a quick buck and don't care who they hurt. If I'm fixing otherwise unusable properties and renting to good people and being decent, I'm doing a lot more good than harm. Thanks again all.

Hesitancy to Invest - is it Morally Right?

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @Nick Kenrick:

Now you're just being arrogant. You have no idea where I have lived. San Jose rent is cheap compared to Coronado Island....And I've been paying rent and/or mortgages for longer than you've been alive.

3 Reply

Chris John

Member since 2020 · 671 posts · 937 votes

3y

I'm... virtue signalling... so... HARD! (Man, I hope someone, somewhere sees this and gives me credit for my progressiveness!!!) haha.

Tons of water has fallen in California, but we're in a drought. Man made problem.

We have tons of natural resources which could easily be translated into building materials, tons of labor sitting at home on their arses getting free money, and tons of empty land, but homelessness is rampant. Man made problem.

The people that need free market capitalism the most to get them out of their crappy situations are falling for the lies of collectivism more and more and voting themselves into misery. Used to care, now I don't.

Capitalism and Democratic Republics are the bee's knees!

2 Reply

Katheryne Womack

Investor · MD · Member since 2022 · 9 posts · 7 votes

3y

Hey friend- I get it. I go back and forth about this as well. It's something you definitely have to sort out on your own/frame it the way you need to. For me- I think about how I'm buying properties that most people don't want and then making them actually desirable/helping build up the neighborhoods- to be very very brief. Also, when I sold one of my properties, I refused to sell to an institution, and instead sold at a market value (I still run a hard bargain :D ) to an actual person who intended to use it as their primary residence. That was my small way of sort of doing the right thing as I see it for me.

2 Reply

Darius Ogloza

Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes

3y

Is it immoral to pick up a $100 bill that happens to be lying on the sidewalk?

Maybe, just maybe, a homeless guy might wander by and find it. Or a family short on rent money that month might find it? Or a recent immigrant living in a car? Or maybe you can spend the day searching for the slob who dropped the bill. Seriously, if owning rentals flies against your conscience, then donate the rent money to your favorite charity or simply don't charge rent to your tenants. Or, donate your flip profits, if you flip.

1 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @Darius Ogloza:

Seriously, if owning rentals flies against your conscience, then donate the rent money to your favorite charity or simply don't charge rent to your tenants. Or, donate your flip profits, if you flip.

I was going to say this. It's the ultimate win/win/win. The tenants get housing, the OP gets a relief from the guilt and some fortunate charity gets an unexpected influx of funds....brilliant!

1 Reply

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

3y

Quote from @Chris John:

Lol. Posts like this have me ready for Galt's Gulch. WHAT. HAPPENED. TO. AMERICA????

do you mean "some" people in California ? :-) LOL

0 Reply

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

3y

Quote from @Bruce Woodruff:

Quote from @Jon Kelly:

@Nick Kenrick I'm offended by your post. Have you even been in a position in life you've had to rent? Some of us didn't always have an option to buy a house right away or live comfortably with mommy and daddy until we had enough money.

I'm thankful for the landlords that provided me an opportunity to rent a property.

(edit: I reread the original post 5 times. I'm still not sure if the original post was real or if he's trolling all investors)

This ^^^^^. The OP is a San Jose resident so very wealthy by default. I thought possibly troll as well, but could just be looking for those 'First World' problems as is common nowadays. And this is most certainly a 'First World' problem...

As fellow San Jose ownership, we have lot of diversity of way-of-thinking in our area.
We have folks that like to say "Cancel Rent", or "Immoral to buy rental property" but we have a majority also that would like to invent business that "disturb all business and move all business to us the tech guy", we also have vibrant community that would like to work 25/8 and sometimes the only purpose is to just keep acquiring property and assets lol.

0 Reply

Jay ThomasPro Member

Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes

3y

Buying land and building new houses could be a great way to create additional inventory for first time home buyers. Real estate investors who are looking for a long-term investment should consider this option as it could bring returns over the years. It can also help increase the availability of homes in an area, making it easier for those looking to find their perfect fit. With careful planning and research, this strategy could prove rewarding!

[email protected]832-889-5607

0 Reply

Nick Kenrick

OP

Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes

3y

Quote from @Bruce Woodruff:

Quote from @Nick Kenrick:

Now you're just being arrogant. You have no idea where I have lived. San Jose rent is cheap compared to Coronado Island....And I've been paying rent and/or mortgages for longer than you've been alive.

Hey man, I don't want any trouble. This isn't a competition. You just came in and assumed I was rich and out of touch just for being born in San Jose. You don't like me, that's fine. Just spare me the vitriol, I'm not trying to prove anything here.

1 Reply

Nick Kenrick

OP

Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes

3y

Quote from @Chris John:

I'm... virtue signalling... so... HARD! (Man, I hope someone, somewhere sees this and gives me credit for my progressiveness!!!) haha.

Tons of water has fallen in California, but we're in a drought. Man made problem.

We have tons of natural resources which could easily be translated into building materials, tons of labor sitting at home on their arses getting free money, and tons of empty land, but homelessness is rampant. Man made problem.

The people that need free market capitalism the most to get them out of their crappy situations are falling for the lies of collectivism more and more and voting themselves into misery. Used to care, now I don't.

Capitalism and Democratic Republics are the bee's knees!

Didn't mean to virtue signal, but yeah I can see how it gives off those vibes.

1 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

3y

Honestly, dude. Just don't invest, we don't need to prove to you why it's morally correct....or not. That's your take. Invest if you want to, if you don't no one cares.

1 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @Nick Kenrick:

Quote from @Bruce Woodruff:

Quote from @Nick Kenrick:

Now you're just being arrogant. You have no idea where I have lived. San Jose rent is cheap compared to Coronado Island....And I've been paying rent and/or mortgages for longer than you've been alive.

Hey man, I don't want any trouble. This isn't a competition. You just came in and assumed I was rich and out of touch just for being born in San Jose. You don't like me, that's fine. Just spare me the vitriol, I'm not trying to prove anything here.

Hey, no trouble or vitriol intended, this is a friendly forum....! I like you just fine, you have just said some presumptuous things.

You asked a question that actually gets asked quite occasionally on here (usually by fresh out college folks ;-) and it's a fair question. You got some good replies, right?

Question for you - now that you've had time to study and digest the replies, what is your take now?

1 Reply

Nick Kenrick

OP

Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes

3y

Quote from @Bruce Woodruff:

Quote from @Nick Kenrick:

Quote from @Bruce Woodruff:

Quote from @Nick Kenrick:

Now you're just being arrogant. You have no idea where I have lived. San Jose rent is cheap compared to Coronado Island....And I've been paying rent and/or mortgages for longer than you've been alive.

Hey man, I don't want any trouble. This isn't a competition. You just came in and assumed I was rich and out of touch just for being born in San Jose. You don't like me, that's fine. Just spare me the vitriol, I'm not trying to prove anything here.

Hey, no trouble or vitriol intended, this is a friendly forum....! I like you just fine, you have just said some presumptuous things.

You asked a question that actually gets asked quite occasionally on here (usually by fresh out college folks ;-) and it's a fair question. You got some good replies, right?

Question for you - now that you've had time to study and digest the replies, what is your take now?

Thanks for that. I did get some good replies, actually some of them were even from you :P

My takeaway is this: If I spend too much of my energy worrying about people who won't help themselves, I'm hurting both them and myself. So long as I'm not being a crappy lazy landlord, and as long as systems are in place to provide good service to my tenants, investing does much more good for local economies than bad.

1 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @Nick Kenrick:

Quote from @Bruce Woodruff:

Quote from @Nick Kenrick:

Quote from @Bruce Woodruff:

Quote from @Nick Kenrick:

Now you're just being arrogant. You have no idea where I have lived. San Jose rent is cheap compared to Coronado Island....And I've been paying rent and/or mortgages for longer than you've been alive.

Hey man, I don't want any trouble. This isn't a competition. You just came in and assumed I was rich and out of touch just for being born in San Jose. You don't like me, that's fine. Just spare me the vitriol, I'm not trying to prove anything here.

Hey, no trouble or vitriol intended, this is a friendly forum....! I like you just fine, you have just said some presumptuous things.

You asked a question that actually gets asked quite occasionally on here (usually by fresh out college folks ;-) and it's a fair question. You got some good replies, right?

Question for you - now that you've had time to study and digest the replies, what is your take now?

Thanks for that. I did get some good replies, actually some of them were even from you :P

My takeaway is this: If I spend too much of my energy worrying about people who won't help themselves, I'm hurting both them and myself. So long as I'm not being a crappy lazy landlord, and as long as systems are in place to provide good service to my tenants, investing does much more good for local economies than bad.

Yay! You got it! BP has some awesome folks giving out advice, eh? You are the kind of person who make great landlords, go get 'em.....

PM me if you need any help with construction stuff....

1 Reply

Kelly Asmus

Real Estate Broker · Portland, OR · Member since 2018 · 126 posts · 71 votes

3y

There are people who need to rent and providing high quality affordable rentals is all part of the housing market. Don't be ashamed that you are an investor providing, paying for and maintaining good housing stock. There are a new wave of builders who are developing and building whole communities of BTR - Build To Rent. High quality, single family communities that are all rentals. We have to remember we're short millions of homes nationwide - whether that home is a SF, apartment, condo, ADU, etc. We need to provide more units, everywhere, all kinds. So the run up in prices is due to lack of adding more housing stock. Lots of investors are doing their part in small ways - converting basements to ADUs, adding tiny houses, building on empty lots, etc. Our communities need these extra units. We as investors are taking the risk, paying the permit fees, doing the remodeling and bringing these extra units to the market. We are helping the market, yes, in a small way, but it is adding available homes to an already anemic housing stock. So yes - keep adding housing!

2 Reply

Nick Kenrick

OP

Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes

3y

@Kelly Asmus, Great point. My investments have all been BRRRRs, I hadn't considered that adding previously unlivable housing stock is what the market needs at the moment. Thanks for your input!

4 Reply

Jordan Knight

Investor · Manchester, CT · Member since 2014 · 6 posts · 3 votes

3y

I like where your head is, I too feel for the people who are getting beat out by institutional capital. There is a need for some single family rentals but in some markets it has hit such an extreme that would-be buyers are being deprived of a supply of homes. I'm constantly solicited to sell my duplex (almost daily) by institutional buyers that flap cash around, I tell them everyone is looking for properties and if they have that much cash they should go build some. I think there is a real opportunity at hand to push back on minimum size requirements and to build new homes in such a way that they use space well and are cost effective to build. Even at higher interest rates they would be affordable due to the smaller size. Also on a smaller build there is more room for learning curve expense, so most investors with a little cash and basic know how could feasibly create more properties.

2 Reply

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

3y

The big institutional investors would be a bigger concern than the mom and Pop investor like yourself trying to grow a portfolio.

0 Reply

Adam Martin

Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes

3y

To look at this from another angle most of us on here believe in owning property as a means to build wealth but not everyone feels that way. Some people either want or need to be renters for part or all of their lives. Why should you feel guilty providing them with shelter and what necessarily makes their decision to rent wrong. You wouldn’t feel guilty about owning property if you weren’t at least subconsciously judging their decision to rent as wrong. Just to be clear I don’t think you have any bad intent but this is my response when someone asks me if it is wrong for me to own more than one house so I thought I’d throw it in here.

2 Reply

Carlos Ptriawan

Member since 2019 · 7k+ posts · 4k+ votes

3y

Quote from @Joe S.:

The big institutional investors would be a bigger concern than the mom and Pop investor like yourself trying to grow a portfolio.

Why in the world "citizen of USA should care more about investors outside US snatching up properties in US" ?

1. US investor is investing real estate internationally as well.
2. People outside USA uses US Dollar to pay for everything in their own country, meaning they're indirectly subsidizing You as US citizen that has this special privilege.
3. In many many countries, International real estate investment to their country is not just allowed, but recommended, with a regulation.

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @Adam Martin:

You wouldn’t feel guilty about owning property if you weren’t at least subconsciously judging their decision to rent as wrong.

Wrong or somewhat inferior....? Good points.

1 Reply

Alexa K.

Rental Property Investor · Youngstown, OH · Member since 2016 · 58 posts · 45 votes

3y

Nick, the BP forums are not the best place to find any sense of morality when it comes to RE investing. You're going to find morals here to be undeniably skewered in one direction. It's essentially an echo chamber.

The only advice I can give as someone who often dwells on the issue of morality of RE investing as well is to look inward -- and outward -- on your own. Don't take anyone else's opinion into consideration on this matter. And if you do, make sure to get equal sides of the coin. Spend time reading through the BP forums, but also spend time reading from the points of views of others elsewhere. You don't necessarily need to swing one way all the way in particular. There can be a middle ground. Whether or not you'll need to make some moral concessions, however, will depend on your own conscience.

Personally, I plan on taking my portfolio and making it so that, down the line, my properties will not be able to be used for investment purposes, or ever owned by another RE investor. I want them solely in the hands of those who will benefit from them. How I can do this, I'm not entirely sure yet. I've read that it's possible to alter deeds so that they're unable to be used for specific purposes, and there's also the option of putting them into a non-profit syndicate of sorts where rental proceeds will be used to provide assistance or donations for other matters. Either way, this is so far down the line that it's not quite on my radar yet, but certainly in the back of my mind. This is how I've personally come to be able to compartmentalize my own moral concerns when it comes to RE investing. My belief system is sort of a mix of "smoke 'em if you got 'em" and "If I don't do it, someone else will -- and they might not be as benevolent." Whether it's right, who knows. But it's my own belief. Which, again, as I started off with, you should not care about because what I say doesn't matter. I only gave it as an example. You'll have to find your own system. Good luck!

2 Reply

Brian Adams

Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes

3y

@Nick Kenrick why is it important for you to find a solution to the housing affordability crisis?

0 Reply

John Hernandez

Member since 2022 · 47 posts · 39 votes

3y

Quote from @Bruce Woodruff:

@Nick Kenrick It's like they say - "if you have to ask what it costs, you can't afford it." In your case, it would be - "If you ask that question, you aren't suited for the REI business".

I disagree with that summary. Just because you have a moral compass doesn't exclude you from being in REI. His question comes down to a self-analysis, is he contributing to the problem of housing affordability or is he accelerating it? This kind of concern separates a good landlord from a slumlord. Furthermore, asking the question opens up for learning and different perspectives.

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @John Hernandez:

Asking that question does not mean one has a 'moral compass'.

0 Reply

Hesitancy to Invest - is it Morally Right?

Hesitancy to Invest - is it Morally Right?

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