Hesitancy to Invest - is it Morally Right?

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Hesitancy to Invest - is it Morally Right?

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

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.

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Jeremy Horton
Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
3y

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

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Alexa K.:

    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. 

    Says someone with 49 posts here.......you 'moral' people with your 'moral compasses' and 'sense of morality' are just incredible. It would be funny if it weren't so sad....

    1Reply
  • John Hernandez
    Member since 2022 · 47 posts · 39 votes
    3y

    You claim that this is a discussion forum with no vitriol but your mockery and expression of ideas as if you have it all together is ridiculous. Your “superior” postings don’t indicate you have all the answers especially if it is to pound your chest as if we should all pay attention. Take a breath and step back from your account for a few….

    0Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    3y
    Quote from @Nick Kenrick:

    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.


     If it bothers you that there's no affordable housing you can figure out how to provide that to people. I just heard a podcast where a guy buys crappy houses for $80k gets private money at 8% and seller finances them for $100k at 11% to people who otherwise wouldn't have the opportunity to purchase the home. He makes money and they get a home, everyone wins.

    The nice thing about real estate is that your strategy can be helpful to others. My end goal is to develop a tiny home community of subsidized housing with the aim of getting homeless people off the streets. I can raise capital, give a decent return to investors, provide affordable housing to those who need it, and help them change the trajectory of their lives through other services like mental health groups and providing work options.

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Conner Olsen:

    See, that's an incredible idea.....not only a good idea for someone like the OP and his way of thinking, but maybe all of us. Win/wins are the best.

    0Reply
  • Alexa K.
    Rental Property Investor · Youngstown, OH · Member since 2016 · 58 posts · 45 votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Alexa K.:

    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. 

    Says someone with 49 posts here.......you 'moral' people with your 'moral compasses' and 'sense of morality' are just incredible. It would be funny if it weren't so sad....

    That's correct, 49 posts. Because I tend to not spend too much of my time on the BP forums where a lot of the posts are variations of newbies looking for advice, or investor-friendly agent suggestions, etc. etc. Regardless, I find it oddly amusing that a fellow investor having differing moral values from your own is something that bothers you so much. Sad that you find such an odd thing threatening. 
    1Reply
  • Nick Kenrick
    OP
    Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes
    3y
    Quote from @Brian Adams:

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


     Oh I'm hardly qualified to find a solution. I just don't want to be a part of the problem if I can help it.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Nick Kenrick:
    Quote from @Brian Adams:

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


     Oh I'm hardly qualified to find a solution. I just don't want to be a part of the problem if I can help it.


    Maybe there isn't a problem....? At least not to the extent that some think....?

    If you've follower the other threads on similar topics, you'll see some good discussion regarding: is there really a housing crisis of any sort, or is it more about choices and entitlement thinking? Just putting that out there....

    What say you?

    0Reply
  • Nick Kenrick
    OP
    Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes
    3y

    @Bruce Woodruff I think you raise a valid point - there is certainly a lot of hysteria around the topic. Hysteria is very popular, and validates a lot of people's ineptitude and/or laziness and allows them to dismiss the idea of buying a home as impossibility without thinking critically or creatively.

    That said, there are many markets, and I live in one of them, where even if two people are working full time at good jobs they can't really ever even dream of affording that "American Dream" house. I know couples who make combined ~$200k, but the average mortgage payment in most of the South Bay Area is like $8k and lenders won't consider their applications.
    Yes, they could move out of state (as many have). Yes, they could lower their standards or find better jobs or start a side hustle or borrow private money to house hack or whatever. But that's the social contract we've come to expect - people willing to put in an honest days work 5+ days a week for 40+ years of their life ought to be able to live the American dream. And if they can't... why work a job at all? Why even live here? 

    I think our populace lacks financial savvy, but I also don't think it should be as hard as it is.

    2Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    3y

    @Nick Kenrick

    It really is part of the market cycle. Assets are expensive now, but they will adjust as we enter a recession and rates continue to climb.

    Owning real estate is a business, and if you can't make a profit, then there is no reason to be in the business. Profit is the fuel, not the destination. 

    The best thing to do is to try to align your goals with your values, and try to execute values based decision making. If you become successful at the business, yet think you are doing something immoral, you will feel terrible and have not achieved true success.

    It comes down to a personal decision.

    Gino

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    Good advice from @Gino Barbaro Identify your values and your goals very clearly, then set your sights to those values. Yet you still have to focus on making the money in order to run a successful business...

    2Reply
  • Dan Rowley
    Investor · Cary, NC · Member since 2012 · 218 posts · 196 votes
    3y

    This post covers a lot of ground... I'll just say there are probably a million or more things that that are 'morally' worse than providing a safe/clean/functional place for someone to live in.

    1Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    3y
    Quote from @Nick Kenrick:

    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.

    We should rent them places to live so they don't have to live under freeway overpasses.

    Why take our customer base and shrink it.

    Seriously Nick, I get your angle on this, and what some do is "Give Back".

    In the Bay Area there are so many "Destitute" (many for their own problems) who could use a hot meal.

    Maybe volunteer to serve some chow on a couple of Holidays every year....

    And as your situation in life improves, maybe send them a check every once in a while.

    I do get what you say....but at the end I think most will chase the almighty dollar vs being a charity.

    Also, do you have a housekeeper--without your income she would have less income.

    Do you frequent $$$ eating places sometimes--without your money they would not be able to employ as many people as they do.

    (AND) these renters could choose to live with their parents until they save up enough of a down payment for a SFH, but they don't, they want to be on their own ASAP in their own place and (under today's rules) that comes at a price--no down payment.

    Just my 2 cents.

    2Reply
  • Jonathan AndersonPro Member
    Real Estate Agent · Greenville, SC · Member since 2016 · 199 posts · 105 votes
    3y
    I know I'm a little late to the party here -- but I just wanted to validate how you're feeling, Nick. Affordable housing is a major issue in my area and I often struggle with the morality/ethical nature of this business. Thankfully I know some local investors who are doing great work in the arena of affordable housing.
    1Reply
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