Is investing in real estate immoral if you use it to buy your first home?
Is investing in real estate immoral if you use it to buy your first home?
I'm someone who believes landlording (and investing in property outside of just the one you live in) is immoral, because it makes it harder for other people to afford a home, and takes what should be a human right, and turns it into an investment.
At the same time, It's highly unlikely that I'll ever be able to own a home without investing my money.
And just investing in stocks means I won't have a diversified portfolio that could resist a financial crash as much as real estate can.
If I were to invest fractionally in real estate, say, through REITs, would it not be as immoral as landlording if I were to later sell all my shares of the REIT in order to buy my own home?
I personally think investing in general is usually immoral to some degree, since it relies on the exploitation of other's labour, but at the same time, it feels more like I'm buying back my own lost labour value, rather than solely exploiting others.
I'm curious how any of you might see this as it applies to real estate, so feel free to discuss :)
I think renting a multiflat out. you know where you live in one unit and rent the rest. is super great for people. your keeping the place up to standards you want to live in and there always needs to be some rental options. Im not answering you question im just saying being a landlord is not always immoral. renting out in abstentia im not comfortable with.
there is no ethical consumption, just do your best.
No matter what you do you'll be able to find someone who says it's immoral. Does investing in the stock market not turn you into a capitalist whose capital exploits labor according to some people? Just do your best, always remember to vote, and maybe read some Henry George when you have a chance.
If you invest in a broad, market-based index fund like VTSAX, then you're already diversified. Including real estate. Investing in the total stock market (which is what VTSAX is) also includes investing in real estate companies, automatically.
Investing in real estate beyond that would actually make your portfolio LESS diverse, overweight on real estate relative to the market.
As for the moral aspect, stop trying to cope. Either admit that "this is immoral but I want to do it anyway", or admit "this is not immoral". You can't have your pie and eat it too.
Unless you're part of a greater organized movement that has the ability to make effective changes, not investing is just screwing yourself over so someone else can make the money. Invest. Buy a home. Save up for retirement. Have nice things. Go on vacations. It's okay to not be the poorest person on Earth. You are not the problem.
I appreciate that take.
I just don't want to be yet another contributor of many to a problem, y'know? Like how even though corporations are by far the largest contributors to climate change, I still try to reduce the excess emissions I possibly produce whenever I can just to help a tiny bit more.
I'm still investing in the stock market regardless, I just want to make sure that diversifying my portfolio won't have an outsized negative impact on others since, well, that would suck. ¯\_(ツ)_/¯
I believe a single person having two or even three properties isn't an issue. As long as you're a fair and honest landlord. Owning isn't for everyone. Renting is a viable option for many people. Especially if someone is going to live somewhere for only around a year.
There are entire corporations that revolve around slumlording. High rents, poor maintenance, shitty lease terms with hidden fees, kicking out low income renters to raise rates for new tenants, leaving units empty when there are lots of homeless, etc.
John Oliver did a nice episode about these types of slumlords. THESE are the issue. Career landlords. For people owning more than 2 homes if we heavily taxed/fined (like a years worth of rent) empty units (defined as not rented for 4 months out of the year) this would be a start to fix the housing crisis.
If you truly believe investing, and especially investing in real estate, is immoral, then you shouldn't do it, the same way you shouldn't eat pork if you keep kosher or halal.
Anything else, especially "it feels more like buying back my own lost value" is such a gigantic cope that I've seen pictures of it taken from the ISS.
Either accept that your beliefs are incorrect, and participate in the market like a normal person, or stick to your beliefs when it's inconvenient too.
This behaviour is morally no better than that of megachurch pastors who preach the immorality of gay sex and get caught paying men to fuck them in the ass.
Either accept that your beliefs are incorrect, and participate in the market like a normal person
Yeah?
This behaviour is morally no better than that of megachurch pastors who preach the immorality of gay sex and get caught paying men to fuck them in the ass.
OP didn't say they preached their morals though. Holding morals and preaching them are different things. I'd put this more in the category of people who pray secretly to a different god than the state-enforced religion, since OP is living in a capitalist society whilst not holding capitalist values.
I think there's got to be room for some grey areas in morality. I abhor late-stage capitalism, but I would not rather die than shop at a chain supermarket.
Holding morals and preaching them are different things.
I fundamentally disagree that this distinction exists, and even if it did this is not a situation where it would apply.
Morals regulate your own actions, there is no point in holding a moral value that you don't abide by. That makes you a hypocrite whether you preach that value or not.
Preaching it also makes you a public hypocrite if you get caught, but you're still hypocritical even if you are only betraying a private value, you're just not accountable to others.
And if that's all that matters to you then you don't actually hold that value.
I think there's got to be room for some grey areas in morality.
There is room when you can draw a clear line as to why a principle ought to apply in one situation but not in another, an argument that "it feels different when I do it" is no such standard.
For instance, killing is permissible in self defense, but murder is not acceptable. Easy line to draw that makes the same practical action morally distinct depending on context (aggressor/victim).
I abhor late-stage capitalism, but I would not rather die than shop at a chain supermarket.
And if that's your only option that is a pretty straightforward line you can draw that has nothing to do with your personal gain by ignoring an otherwise inconvenient principle.
"I won't patronise large corporations whenever I have an alternative" is a fair line to draw, as long as you don't immediately walk back on it as soon as it becomes inconvenient by being slightly out of your way or a bit more expensive.
OP said no such thing, however. They straight up went "when I break my own moral principles it doesn't feel as bad as when others break them against me" which is utter horseshit.
You mean to tell me that when you try to kill someone it somehow feels less bad than when someone else tries to kill you? No fucking way, what a discovery!
So yeah, unless OP can actually provide a generalized standard by which anyone can do what they're doing and still maintain an ethical position, they're just finding excuses to placate their own conscience, while pretending to maintain a coherent moral standard, when really they never held anything of the sort, they just don't like to be on the receiving end of the stick.
I feel that using housing as a commodity for building wealth is absolutely immoral. Homes should be owned by those who live in them. But investing is a personal choice. Some people choose to invest in immoral companies or practices. But what you buy with the money doesn't change what you funded to get it.
IMO there's nothing wrong with a landlord that charges fair rent (mortgage + well reasoned maintenance costs + a reasonable profit, they do need to live themselves after all) and keeps up with maintenance in a good manner. Remember that not everyone is able to get a mortgage but is able to afford the same amount in rent.
This is close to my belief. Someone has to own the home and they're worth hundreds of thousands of dollars (I'm not getting into the overblown values right now, one step at a time). Since most people don't have $300k+ in cash (US non-metro), then they're not buying it outright. What's the difference between paying rent to a landlord or mortgage to a bank? Both are making a profit and both can kick you out for non-payment (again, one problem at a time). So, given the current state of housing, you can legitimately provide housing at a reasonable price that doesn't require a 50k+ down payment first. I am not a landlord sympathizer, I am not a landlord. I'm just someone still putting 60% of my monthly mortgage payment into the interest accrued just in the last 30 days (read: new homeowner).
Don't be a dick corpo fuck that buys blocks of houses and let's them sit vacant to drive up scarcity. Don't be a flipper that does a cheap reno to turn $30k of improvements into a $150k upsell. Don't do the cheapest repairs to meet code for your tenants.
Someone has to own the home and they're worth hundreds of thousands of dollars
Public housing. Look at what Finland has done with regards to this topic, and how much it has benefited them.
I look forward to the comments explaining to me why this is impossible in America as if Finland is some magical alternate universe where a mixed-economy works incredibly well.
IMO owning property for investment only becomes unethical once you are profiting beyond a "good living"
Property is the safest and largest growth investment that real people can make and the most likely to create generational wealth. Demonising that only advantages the multi-billion dollar conglomerates who have absolutely no ethics.
This is really one you have to decide for yourself. If you buy and eat a banana and there is a shortage of bananas on the market, are you immoral? As long as housing is bought and sold, it will always be an investment. But if you feel it shouldn’t be, then that is your choice or belief. Not sure if this helps?
Not sure if it adds any more clarity, but to be fair, this question was about morals, which is entirely subjective based on personal opinion.
Thanks for your addition to the conversation though, I appreciate it!
Why are you replying with my answer to you?
Most folks who look at this (economic philosophers?) don't believe that regular working folks are part of the problem. Having a 401k or even working in an oil field isn't necessarily being part of the problem. Being an employee of Walmart doesn't mean someone is objectively a capitalist, they just want to eat and generally survive. I avoid driving, but do, and don't lose sleep over it.
The problem is, people who work a full-time job in addition to being a landlord, are not capable of performing the latter job properly. Most successful landlords are scum who do not work otherwise. People who try to do it while continuing to do their "day job" are shit landlords that often cannot even adhere to basic regulations.
I completely get that.
I mostly have just thought of housing as a different kind of beast, since unlike working a job, I don't have to invest in real estate to save for a house or retirement, but doing so might make it easier to accomplish that.
The biggest problem is definitely going to be full on landlords and private corporate investors, but I don't want to add any more to that problem, no matter how small my impact might be.
A small fight is still a fight. Thanks for trying to be better.
Real estate markets are tied closer to stocks than we like to think
Dont worry as much about having too many egg baskets to diversify as much as having strong egg baskets you are confident they wont break before you reach your goals
And just investing in stocks means I won’t have a diversified portfolio that could resist a financial crash as much as real estate can.
That's nonsense. A house would be equally difficult to liquidate in a financial crash than stocks would. Probably even more so. If you have a diversified portfolio and enough savings so that you don't need to touch your investments then you'll handle crashes like that just fine. The stock market has always bounced back up. Always.
I’m someone who believes landlording is immoral
Wouldn't that then mean that there would be no rental apartments available and everyone would be forced to take a loan and buy a home? To me this kind of thinking is just the opposite far end of the spectrum where as what is optimal is likely somewhere in the middle as is the case with most things.
To be clear, I wasn't talking about liquidations, I was talking about actual market performance. Housing is necessary, even during a financial crisis, whereas unnecessary purchases of goods from corporations become secondary. Thus, housing can stay more stable while stocks crash.
While the market does always go back up, to some degree, I want to be at least slightly more resistant to the possibility of a major failure, (i.e. multiple major tech companies going under from some highly unforseen event) that could lead to entire stocks not existing to go back up again in the future.
I would also theoretically be investing via publicly-traded REIT funds, which could be liquidated in the same manner as stocks.
Wouldn’t that then mean that there would be no rental apartments available and everyone would be forced to take a loan and buy a home?
Not exactly, first off, I mostly mean real estate that is required for survival. Housing, not including the types of places you'd use for a quick vacation stay like hotels, corporate office real estate, etc.
If there weren't landlords, there would be a significant decrease in housing prices, due to a few factors, namely banks now offering lower-rate loans (since the higher-paying institutional investors are out of the picture), higher supply availability (instead of investor hoarding of empty rentals for property value over use by humans), and generally larger amounts of capital available to spend on new homes, rather than rent payments going to alternative asset classes in wealthy investor portfolios.
It also doesn't mean no rentals would exist at all, but that properties wouldn't exist solely for the purpose of being rented. (think someone renting a portion of their existing house, or adding an ADU, instead of buying an entire single-family home solely for the purpose of renting it as an investment.)
Landlording is only a problem because it reduces the supply of housing available for people to own directly, and by the extent of it existing, increases housing values. If existing properties are partially used as rentals by those who have extra space to spare, any of the issues I mentioned functionally don't exist.
But what does it matter if the value of your stocks drop in a market crash? Assumeably you're in it for the long run so you can always just wait for them to go back up before selling. Even if a property might hold it's value better during a crash, which is not guranteed either, that would still be irrelevant unless you intend to sell the house, which again would be difficult during a market crash. If you want something that holds it's value that you can liquidate at any time then perhaps you should buy gold instead.
If you're invested into something such as S&P 500 and something happens which causes a significant number of those companies to go out of business at once, then we're talking about an extremely rare world wide event that'll effect your investments no matter what they're tied into. Keep in mind that the ~7% yearly average growth of the stock market includes events such as both world wars.
There's nothing about small-time landlords that's worse than the evil that many people contribute to the world through their jobs like being a banker or manager of a walmart etc. If you have like 2 or 3 properties you rent out then that's just making your way through the capitalist world we're all stuck in. The evil of buying up properties to rent out comes when you're really hogging up like 5 or more properties. IMO, obviously.
REITs are buying hundreds/thousands of properties for investment
Investing in real estate like that is just making it fractional harder for you to ever buy a house too. You can have investment diversity without a reit in the same way you can have a full meal without french fries.
Pardon the whataboutism, but what about things like industrial and office REITs? Would you say that has any impact on the price of housing?
Probably less bad but I might still be a little squicked out by it. You need to talk to someone smarter than me for a clearer and more insightful answer.