Why not? It seems like a solid business and the net result is decent, affordable housing. What am I missing?

Because people who never own a house end up eating cat food in retirement.

Look at the examples. $187,000 mansions renting at $2K per month and more. These tenants could well afford to buy a house and choose not to.

All butter, no guns.

Wow.

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Nothing good will come of this

Agreed.

From the article:

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Once you own a fixer-upper, of course, you need to fix ’er up. Amherst spends an average $28,000 per home, roughly 20% of the purchase price, on renovations. Many of the middle-class families in Amherst’s customer base could amass the down payment to buy the same low-priced homes, but few would have the savings to also fund big improvements.

Yep. Our house wasn't quite a fixer-upper, but we've spent a fair amount of money since closing (new HVAC, painting, new W/D set, random repairs here and there). We could do that because we had the now-decimated piano fund money in the bank after the closing. If the house was truly a fixer-upper, I don't think we would have been able to afford the repairs, in terms of money or time.

Also, if the rental options in this town were better, we might not have decided to buy so soon...

And last comment: I was really surprised by the rental prices they quote in that article. Waay too much for the cities they're mentioning. What I mean by that is, people who can afford that in rent would be so much better off if they could buy. The one rent they mentioned, $1800-ish, is more than we pay for our mortgage plus the extra we're paying to work towards an early pay-off. (Ok, the market is different, but still. Yikes!)

Oh, also this:

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Economies of scale help these renovations pay off. The improvements that cost Amherst $28,000 would, by the company’s estimates, cost a regular buyer at least $44,000. Because Amherst purchases in such high volumes, it can buy fixtures on heavily discounted national contracts. Its cost for the four GE appliances combined, for example, is $1,850 per home; a do-it-yourselfer would pay around $3,000 at Home Depot.

Oh, so that's how they manage it! Ugh. The individual buyer doesn't stand a chance!

That reminds me of an article I read recently (NYTs? can't remember) about how individual buyers are having to compete with investors for homes for sale, and the individuals usually lose out. An investor (flipper etc) buys the house, does some upgrades and turns around and sells for much more. When the house goes back on the market, the original buyer who wanted to live there is priced out.

Here's the NYT article I mentioned:

Want a House Like This? Prepare for a Bidding War With Investors

I dunno. I see a lot of "younger" (that is, younger than I) people these days that just don't want to own a house. Careers are flexible, your next job might be a thousand miles from your current one, or your employer in Seattle might up and move an entire division to Billings. Still there are people who don't want to live in an apartment, so the option to rent a decent house with a yard for the kids and dog, in a nice neighborhood, is very attractive.

So, if someone is building a business by serving that market, I don't have a lot of heartburn with that.

It beats the hell out of Kushner who buys run down apartment blocks, lets them decay further, then sues his paycheck-to-paycheck tenants when they move out because they can't live another day with mold, rodents, insects, bad plumbing, and dangerous wiring.

I do agree with SK that developers and flippers are raising prices (by applying a veneer of raising value) that price out the current class of people in a market. That is happening all over Seattle, and especially in my immediate neighborhood. If I hadn't already owned this house years ago, there's no way in hell I'd ever be able to afford to live anywhere in this city if I had to buy a house now. People who grew up in neighborhoods all over Seattle are being shut out of their plans and dreams to move back into the area they grew up in.

I have yet to decide if this is the work of the developers, the realtors, the sellers and buyers, or all of the above. There is some crazy money here now, thanks to Microsoft, Amazon, and the like. So the good ol' Boeing employees, and people who work in all the jobs that support the community -- teachers, police and firefighters, restaurant and retail employees, everyone -- are also shut out of living in the community they serve. I can't quite put my finger on it, but something tells me this is not healthy for the community. (Have I mentioned the ever-growing homeless problem here?) But a transient workforce -- people who come and work for a high-tech company for three to five years, then move on -- aren't keen on investing in the place they live.

Just like people renting a house. Renters might mow the lawn and keep the place tidy. But they are not going to sink any money or effort into upgrades or even heavy maintenance. That's the property-owner's responsibility. A transient workforce treats the entire city and community the same way. They, literally, have no ownership in it. Everything is simply transactional.

So, if one guy has been successful at those transactions and it's not abusive or predatory, as I said, I don't have a lot of heartburn with that.

To PJ's point, there used to be a rule of thumb (maybe just my thumb) that you needed to be in a house for ~ 5 years before you started to earn any equity.... and that's assuming values increase. This is because it costs so much to just buy a house--realtor fees, closing costs, yada yada. So if you are in an area where housing value is flat or even declining, or you anticipate not staying in your current location for more than a few years, buying a house doesn't make a lot of economic sense.

Maybe.

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people who work in all the jobs that support the community -- teachers, police and firefighters, restaurant and retail employees, everyone -- are also shut out of living in the community they serve.

This is a huge problem. That and the other point you made about renters not putting effort into rental properties.

I wonder how much upkeep the company in Steve's article will do as the years go by. In our rental, the property management company was very responsive if something broke. So HVAC, W/D, those kinds of things were taken care of, and in a timely fashion. Beyond that, forget it. The house looked very run down and will only get worse. That was one of the reasons (though not the only reason) we were keen to get out of there.

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Originally posted by Steve Miller:
Because people who never own a house end up eating cat food in retirement.

Look at the examples. $187,000 mansions renting at $2K per month and more. These tenants could well afford to buy a house and choose not to.

All butter, no guns.

I don't know if that is quite true. Our home, while paid off, is not a large a portion of our nest egg. That we got from saving.

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Originally posted by ShiroKuro:
Its cost for the four GE appliances combined, for example, is $1,850 per home; a do-it-yourselfer would pay around $3,000 at Home Depot.

Or not. Shop the sales and you can do much better than that. Shop Craigslist and you can do better still.

Even so, these guys are marketing to a demographic raised on flip house shows- their lives constantly choreographed on Instagram - and they know exactly what they are doing. These tenants want stainless, hardwood, and granite, and will rent rather than buy to get it.

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Originally posted by Mikhailoh:

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Originally posted by Steve Miller:
Because people who never own a house end up eating cat food in retirement.

Look at the examples. $187,000 mansions renting at $2K per month and more. These tenants could well afford to buy a house and choose not to.

All butter, no guns.

I don't know if that is quite true. Our home, while paid off, is not a large a portion of our nest egg. That we got from saving.

Yeah but you paid it off and did so with a steady monthly payment. No rent increases. You've no need to make rent payments any more and you can move your equity tax free when you decide you want to do so.

No cat food for you.

Quite true, that if you are going to be a life-long renter, you need to re-jigger your retirement planning, and make sure you are saving and investing enough to continue renting after you retire.

The old progression of: graduate from college or trade school, get a job you will have for the next 35 years, buy a house with a 30-year mortgage, retire about the time the house is paid off, play golf until you head off to the nursing home, let the kids fight over the house when you die... that's not what I see happening with anyone who has entered the workforce in the last decade or more.

Also, I know very few people who entered the workforce in the last decade who will ever know what a pension is.

Either we are heading at warp speed to an entire generation of dead-ass broke senior citizens in about 20 years, or they'll be working and paying rent until they croak.

Maybe the company that's renting houses to middle-class folk should team up with a financial advisory to provide some guidance to their tenants on how to retire non-destitute.

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Originally posted by pianojuggler:
If I hadn't already owned this house years ago, there's no way in hell I'd ever be able to afford to live anywhere in this city if I had to buy a house now.

Bingo.

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Boeing employees, and people who work in all the jobs that support the community -- teachers, police and firefighters, restaurant and retail employees, everyone -- are also shut out of living in the community they serve.

No they aren’t, and if it becomes a problem then Boeing will start paying more. So will the cities. Or Boeing will move. Right now Boeing is doing just fine and they know, unlike Toyota, that moving to a low cost state will kill them.

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So, if one guy has been successful at those transactions and it's not abusive or predatory, as I said, I don't have a lot of heartburn with that.

I don’t have a problem with the investors. They looked at the market, identified a need, and are doing an excellent job of filling it. The problem I have is the number of influencers - who should know better - who are promoting instant gratification over long term financial strategy.

Paying rent is stupid. Very, very, stupid. If you simply must pay rent, buy something in a blue state and rent it to someone else while you burn $hundys trying to live an Instagram life in Atlanta.

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If you simply must pay rent

If you simply must pay rent, make sure it’s significantly less than what you’d pay for a mortgage.

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Originally posted by ShiroKuro:

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If you simply must pay rent

If you simply must pay rent, make sure it’s significantly less than what you’d pay for a mortgage.

And bunk with your parents, sleep in your car or bunk with friends. Couch surf and cram savings. Band together with friends and buy something in a blue state.

Or you’re gonna eat cat food.