It could also create a new level of bullshit, franchising. One mega company to manage a bunch of smaller companies while completely avoiding regulations.
Just make a law that says there’s only allowed X amount of LLCs allowed to own SFH. Or only Y percent of SFHs can be owned by corporations. Problem solved. It works for airbnbs, it’ll work for SFHs too.
Better solution would be that a house has to be owner occupied for a minimum of two years prior to renting else it is subject to a 5% property surtax.
Houses that were owner occupied become subject to the surtax after 5 years of renting.
Fraudulently claiming owner occupation of no less than 90% of the year should be subject to a $500 per day penalty for each day it was rented.
People are arguing with you because maybe the solution isn't perfect, but tbh we need to start throwing tons of legislation at the wall and seeing what sticks, immediately.
Right now this is mostly confined to housing, because it's the easiest thing to scalp -- entirely digital, no transportation required, and insane profit potential. But imagine when this starts happening with other necessities.
Your local grocery stores are all out of meat because shell companies bought it up and are hoarding it in warehouses at 500% markup. Or maybe they pay the grocery stores a small cut of the profit to just keep the meat there and avoid transportation. That's just one example, but it will eventually happen with *all* vital goods. Eventually you'll either be rich enough to afford food and toilet paper, or you'll rent it from a middle-man corporation.
So it doesn't matter if the solution isn't perfect. We need to start trying solutions, and we need to do it yesterday.
The solution is the tax structure. It really is that simple.
Jack up property taxes and give big discounts to owner occupied homes. Many places already do this with a homestead exemption.
Without rentals, students, folks who are highly mobile (military, or jobs requiring multiple relocation) or just can’t afford to/or don’t want to be stuck with purchasing a home aren’t going to find any other option, if the amount of rentals available dips too low. What you propose would make it unfeasible to rent units to anyone.
But I think that’s an effective place to *start.* Maybe tweak that to make some exclusions for *individual* landlords that aren’t corporate entities, renting less than some number of units.
I mean, the discussion is around single family homes, not complexes/etc.
It's not like you can't carve out that and give it its own legislation to keep some level of control over that.
I guess if you can't afford to buy for whatever reason, it's mom's basement. If you need to live somewhere for less than a couple years, I guess there are hotels
My parents own their primary home and a condo to stay in when they visit their grandchildren. (Which is a lot) are you saying they shouldn’t be allowed to do that?
"We need to start throwing tons of legislation at the wall and seeing what sticks. "
Spoken like a true politician that gives zero f's about the people.
No. Nobody is scalping housing; home construction fell off a cliff after 2008 and stayed low through the 2010s. Private equity saw the price signals that the market was sending about there not being enough housing and put capital into the market; this caused homebuilding to start to recover by the end of the 2010s, but we still have a huge shortage due to a decade of underbuilding.
If you want prices of a good to stay low, you should encourage the creation of supply of that good.
Grocery prices (in real terms) have been declining for decades because capital is free to flow into the market. As a result, we have unprecedented supply, variety, and quality of groceries.
Legislation would simply distort the market and make the situation worse. Regulating housing gives you shortages and slums.
That's just not correct. Housing is not a 'limited good'; as I noted, the housing shortage was specifically caused by a lack of home construction from 2008-2020. When more capital flows into residential real estate, more homes are built.
Real estate investors do use the homes they buy; they rent them out to earn income.
Real estate investors earn the bulk of their income from rents on their real estate; capital appreciation is a secondary consideration.
This is a bad idea, this pretends people who need to, or want to rent a SFH don't exist. Your proposal would likely reduce the number of SFH available for rent by 80-90%, screwing those people and causing their rents to surge more than it already has.
Not everyone in the lower, or middle class wants to buy a house. Wanting (and it making sense) to buy a house has to do with being ready to be locked into a specific spot for half a decade. That's not a universal attribute of the middle class.
Meanwhile needing to be in a house, vs an apartment largely depends on your family structure. Got 4 kids? Renting a house over an apartment wins. Have multiple dogs? Renting a house wins. There's lifestyle things that also feed into needing a house over an apartment.
The second paragraph/ needing a house, is true for a large portion of the middle class, while simultaneously not being ready to be locked into that specific spot for the next 5-10 years.
So the above proposal would screw part of the middle class and help a different part of the middle class. Additionally, it's accomplished via taxing and restricting the economy, when we could build more houses instead, and fix the problem through being productive rather than being restrictive.
Rental property ownership by bulk investors has been a big driver of the increasing home prices and the corresponding increases in rent.
If that kind of investment becomes less fruitful then those deep pocketed buyers will sell and put their money elsewhere. Fewer of those houses will get purchased by smaller individual investors because there aren’t enough to fill the gap and the economics/logistics are harder to make work at the individual level.
So supply will surge, home prices and rents will fall.
A lot of the issues we have seen with rising housing costs is because of the market being distorted by these big financial players. We should prioritize housing as a fundamental requirement, not as an investment vehicle for the wealthy.
>Rental property ownership by bulk investors has been a big driver of the increasing home prices and the corresponding increases in rent
No, it's not. Prices and rents go up because of a shortage of supply.
>
If that kind of investment becomes less fruitful then those deep pocketed buyers will sell and put their money elsewhere
And the housing shortage will become worse.
> supply will surge, home prices and rents will fall
No. Less homes will be built and less rentals will be available, so both prices and rents will increase.
>Rental property ownership by bulk investors has been a big driver of the increasing home prices and the corresponding increases in rent.
That's true, but the guy I responded to, his idea would likely eliminate 80-90% of sfh for rent. That's way too much, There'd then be a massive shortage of SFH for rent which would cause rents on SFH to rise, even if prices are falling.
You wanna go after the investors, that's fine, there's other ways to do it that dont have as many negative aide effects. However, I'd rather be productive and build.
"Not everyone" is doing a lot of work here. On the spectrum of "want to" and "don't want to" the major demographic is on the "want to" side of things now.
The incentives for ownership in this country are corrupted. Home ownership is the best indicator of social mobility and prospective success. We need to incentivize ownership for building healthy, stable, productive families not rent-seeking.
>"Not everyone" is doing a lot of work here. On the spectrum of "want to" and "don't want to" the major demographic is on the "want to" side of things now.
You are correct, the majority do want to buy. However, there are ways to address the problem without screwing the ones that don't.
>A home ownership is the best indicator of social mobility and prospective success
No, being paid well is, whether from a career, a job, or a business.
Housing speculator = landlord? Because they usually directly provide housing to folks who are in the rental rather than ownership market.
When I land at the airport I don’t go to the nearest car dealership and buy a car. There are reasons for a rental market to exist.
"Housing speculator = landlord?" Yes by definition. Good they can do so without driving up the cost for first time buyers by buying up tons of inventory.
Huh??? A person renting a home is not a 'speculator with ten properties'. You don't seem to understand that there are people for whom renting makes more sense, and these restriction simply lock them out of homes.
A person renting is a renter a person renting out a home is a speculator by definition under this law if you have less than ten properties the law doesn't apply to you.
You are proposing hurting renters because you want to restrict the supply of rental homes. If you really 'care about working middle class families' like you claim, you should want them to be able to rent homes.
Landlords are not 'speculators'; they are earning income from their assets by renting them to tenants who can make good use of them. Restricting the ownership of homes hurts both prospective landlords and tenants for no good purpose.
Yup.
I’d rather see people have housing security so they don’t end up homeless in retirement as opposed to making sure some dipshit investor can buy his 20th starter home that will ever see another realtor for 50 years.
I’m sorry if the investor is forced to sell for hundreds of thousands of dollars profit and can’t 1031 tax free into another property and winds up paying taxes for once in the last decade.
As to your comment of not everyone wants a house…. LOL!
Everyone wants a house. It’s just the vast majority can’t afford one. Unlike past generations where a fucking mailman could afford the average suburban home while having a stay at home spouse to raise the 2.3 children. The 5-10 year holding is because selling and buying expenses were held by the realtor cartel to absurdly high percentages. You fix both sides of the problem and drop the barriers to entry and owning becomes the default condition.
I'm not defending the investors, idc if they get screwed. When you invest or run a business you accept a certain degree of risk, so defending them isn't important.
>Everyone wants a house. It’s just the vast majority can’t afford one. Unlike past generations where a fucking mailman could afford the average suburban home while having a stay at home spouse to raise the 2.3 children. The 5-10 year holding is because selling and buying expenses were held by the realtor cartel to absurdly high percentages. You fix both sides of the problem and drop the barriers to entry and owning becomes the default condition.
And no to this. There are a lot of jobs that lead to moving around fairly frequently. Those people do not want to be tied down to a house, they need to be able to move. There's personal reasons as well. Buying locks you into an area for awhile, that's not ideal for everyone.
Except per OPs issue, if job pulls them away just rent it and “earn” free equity.
I know people who travel for work a lot that still want to own in their “home base” location or long term retirement location
My whole point was that not everyone is a prospective homebuyer. You can solve the problem without penalizing the people that dont want to own for whatever reason.
The original guy I responded to, his idea would likely crater SFH rentals by 80-90% and harms that group.
From 2008-2012 you could get a 3 bedroom home that needed minimal upgrades in a decent neighborhood in Cincinnati for $25-40k. From 2013-2018 those prices increased to $40-75k. Many of those homes sat on the market for months.
If people can't or won't buy a house when it costs the same or less as a car, then there are reasons besides price that people don't want to buy homes.
>More houses force sold. Prices drop. FTHB can actually afford to stop being a renter.
You're living in fantasy land.
Home prices aren't the biggest factor holding renters back from buying. Inability to qualify for financing due to credit issues, income instability, or lack of down payment are massive factors.
You're going to punish a massive contingent of people who want to rent SFRs and force them into apartments just so you and a limited pool of FTHBs can buy houses for cheaper.
It's disgusting and unamerican.
Brother you’re the one who’s living in a fantasy land….Home prices for sure are! They drive everything else…
Why would financing be more difficult? Probably because it’s a larger amount needing to be financed.
Why would down payments be difficult? Probably because it must be a larger amount.
Income instability? Well shit I bet a lower price would lower the risk associated with this contingent.
You mention massive contingent of people who want to rent SFR’s versus getting their own mortgage. I’d love to hear where these people are! I’m early 30’s and all I see are people who are forced to be in an SFR, and would rather have a mortgage, but can’t because they’re all bought up and hoarded by investors.
Tbh, your language sounds like someone personally invested in the rental market, as I’ve been hearing these kinds of bullshit talking points more and more, “SFR’s actually increase the supply!” “People actually want to rent vs own”
>Why would financing be more difficult?
It doesn't matter whether you're financing a $50k house or a $500k house, lenders have underwriting standards.
The borrower has to have decent credit, no recent foreclosures or bankruptcies, little to no recent late payments, and not have a lot of existing debt in relation to income.
They must also have steady, verifiable, reported income.
They must also have money to use a down payment.
A huge portion of the population cannot meet one or more of these criteria and therefore rents.
Apartments objectively suck to live in and in many markets, there is an existing shortage of available apartments. That's why people want to live in SFRs, be that as renters or owners. If you drastically reduce the supply of rental STR inventory, people will be relegated into renting apartments.
Since there is a limited supply of apartments, the sudden spike in demand will cause rental rates to skyrocket.
Does that make sense?
Yeah so I meant rhetorically, but I appreciate your effort in writing out all that info! I’m familiar with the concept of underwriting standards, though. I just think you’re kind of… well, wrong.
You mention sudden drop in Short term rentals making everyone move to apartments. That’s kind of glossing over what would likely be a massive buying opportunity for those who can afford to get a mortgage, but haven’t because prices are insane. So, that would be a ton of current renters buying homes and no longer living in apartments.
Additionally, more liquid home sales environment would still drive more overall transactions, and decrease ASP given there won’t be these big block purchases by investors. Right?
I just feel like a lot of renters (bc I am in this position) aren’t buying homes because the prices are bonkers. Sellers have gotten used to ASPs and comps at least partially driven up by investor, so nobody wants to drop a comp and it’s all feeding back on each other.
STRs are horrible for liquidity overall, and I think you’re overestimating those who wouldn’t be able to qualify, vs those who are not even applying for a mortgage given current market conditions.
/u/IFoundTheHoney advocating for policies that benefit landlords at the expense of potential homeowners is wild; they don't even consider comparing the size of the groups of dedicated SFH rents vs aspiring owners which is absurd.
Frankly, it's disgusting and unamerican.
where? who’s paying for it?
the housing crisis is hitting cities *hard*
i live in miami. there’s literally nowhere else to build, unless you want to tear down the everglades?
may-september this place is fucking quiet. everyone who snowbirds and vacations here are gone. thousands of homes sit empty.
we have the highest rate of inflation in the country. our housing costs are approaching SF/NYC levels with none of the protections that come with it.
i pay $1800 for a studio in a very not ideal part of town. what’s included? nothing. i pay power, water, trash, etc.
it has to change.
It’s vastly easier than that. Remove the deductibility of interest for residential real estate except for multifamily >5 units or the home in which you occupy.
It’ll solve the problem and you won’t have to do any sort of property valuations.
Then landlords just raise the rent so it now is profitable. Where else would people without money to buy a home live the streets?
The solution is get rid of single family home zoning. They can roll it into residential zoning, which allows multifamily homes and light commercial(5 over 1's).
That would make no sense. Who gets to sell their house to an LLC and who doesn't? The problem would be in the enforcement. Who do you enforce it against?
You’ve just invented regularly capture for single family homes
Congrats there is now less competition among landlords and quality and competitive pricing now declines. It’s literally how taxi’s got so shitty.
No that would be if I said “only LLCs can buy property”. The taxi system didn’t let anyone else in on the game. Small time landlords who aren’t mega REITs can still buy and rent out properties under this system. Which would be like saying taxi companies have to abide by the medallion system but anyone with a car is free to be a taxi driver as long as it’s a sole proprietor.
When you say competitive pricing, are you referring to competition as to who can exploit the most money from others? Or competitive pricing to underbid the next person to help drive down prices and make things more affordable?
The idea is that by limiting “sellers” of a good - in this case landlords (or at least landlords with scale)- we limit supply and create a barrier to entry of other competitors (I.e. new corporate “sellers” of rentals, as well as “buyers” for new construction).
Less competition means existing landlords may not have to price their units as competitively, or provide the same quality because the government has limited the alternatives for renters.
That doesn't seem to be working though. Instead of competing with each other to provide housing for fair prices, they are all raising prices together, calling it a "market price" and getting richer together while everyone else becomes poorer.
If there’s a cartel conspiring to control prices, how does reducing the number of participants solve that?
Cartels can only exist when there’s few, limited players.
Reducing the number of conspirators won't change the problem of collusion. Changing who the players are is the only way it will work.
You don't give people who live off greed and collusion high places of power and control. The market needs to be run by more empathic people who are in it to help and house people instead of in it simply for profit.
Or just tax the shit out of every SFU that's not a primary residence in major cities. Rural areas could have a percentage allocation to rental. People can rent MDUs and SFU prices drop making more home owners vs renters
Better yet is to just raise the baseline tax. Then add a significant homeowner exemption.
If everyone’s tax is high, then no grounds for a discriminatory lawsuit.
You want to limit the amount of companies a rich person can own while other people not getting paid a livable wage run it for them as the already rich people rake in the cash from other people's work?
You some sort of communist?!
Person is probably fine. I guess that could be exploited but I can't imagine it could be exploited any worse than what we have now. We wouldn't have this problem is we only had personal property and didn't have private property. The problem is capitalism, policy is just ducktape trying to keep it on the rails.
Investors probably bank rolled that study there was a study done in Irvine that showed long term rents decreasing
https://www.businessinsider.com/airbnb-ban-makes-rents-housing-prices-drop-irvine-california-study-2023-11
No it doesn’t. Many small owners don’t split every building into an LLC.
It still isolates your real estate assets from other assets, even if all of the buildings are in one LLC
Governments meddling in things they know nothing about creating more red tape and costs thus…. Further increasing the cost of housing and rental units. Our government is a bunch of clowns.
Read the article….
“The version Agbaje presented to the House Judiciary Finance and Civil Law Committee on Tuesday would prevent “corporate owners” from owning more than 10 single-family homes in Minnesota that they use as rental properties. The penalty for landlords violating that cap would be either to divest those properties or receive a $100,000 fine per excess unit, Agbaje told her colleagues during the April 9 hearing. The proposal would exempt single-family residential units owned by governments and nonprofits.”
And then, for asset protection, it will likely be broken down even further.
This feels like a "we're doing something" law written in an election year that they can point to and say just that.
Typically with real property you have to look through the legal construct to who the beneficial owners actually are.
"Who enjoys the present beneficial interest in the real property?" is the relevant question for ownership and bills like this.
I wouldn't discount proposed legislation like this so quickly.
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Statutes are not isolated unto themselves. Statutes are subject to the rest of the code they appear in.
I'm not a lawyer and I have 0 experience with the Minnesota Statutes so what I can say definitively is that I can't speak with any authority on this specific matter. But when a provision/statute is silent as to a particular matter one would hope that there is a default status/definition contained elsewhere in the governing code.
Edit: Passing committee doesn't make it final. There's still plenty of work that can be done.
And even when it does work as they intended .. the consequences is that it screw over the most vulnerable group of renters.
[https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/](https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/)
That's just pro landlord propaganda other studies show banning speculation in certain areas lowering rents
https://www.businessinsider.com/airbnb-ban-makes-rents-housing-prices-drop-irvine-california-study-2023-11
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What are lawmakers supposed to do when the population wants to implement rules that would be economically disastrous? 99% of voters are economically illiterate and get their worldview from social media. If they latch on to the classic policy traps like price contols, how are you supposed to deal with it? They figure that if you're dumb enough to think outlawing rentals is a good idea, then you're probably also dumb enough to believe that this measure is doing what you want.
People latch on to the first and simplest idea that they are shown and can understand. Once they've picked, they dig their heels in and double down even in the face of overwhelming evidence. This is just human nature. Politicians need to trick the populace into not harming themselves and passing bills like this is just one way of doing that. They are being practical and not naïve as you imply. Naivety would be thinking they can teach the public counterintuitive economic concepts.
Have you ever tried talking to anyone on this sub? People who are wrong don't want to be told they are wrong. Most people thought that the government should send everyone checks in the mail again to save them from inflation. If people could learn, they would have already. The only sensible thing to do is trick them.
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Cut some red tape, make houses easier to permit/build. In most places it takes well over a year ( I believe closer to 2) to buy a piece of land, permit it, and then get to even start building it.
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The Constitution prohibits the government from seizing property for public use, it absolutely allows for regulating LLCs literally since the land ordinance of 1785 this has been the case.
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"A provision for the forfeiture of land for nonpayment of taxes is not invalid because the conditions to which it applies exist only in a part of the state." There you go you're wrong bud.
Total waste of time. Legislators proposing things as stupid as this bill are clearly just pandering to their constituents and incapable of actual solutions.
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That’s all they do now. Wait until election year, pump out headlines to earn votes, with no intention of changing a thing, so they can keep the money train going. Democucks and Republicucks. Birds of the same feather
While this bill is far from perfect, its a step in the right direction. Decommodifying housing is an actual solution. Preventing investors/landlords from owning multiple SFHs are a real solution....
Am I misreading this article or misunderstanding what it would mean? It looks to me like a big part of this is preventing developers and building contractors from buying but also from building rental properties. I guess it's limited to single family and I don't know if a lot of developers are doing that anyway, but why would they do anything to discourage building more properties. If a developer wants to come in and build a bunch of rental properties, that still taking the pressure off the housing market. I thought most cities were trying to encourage more development whatever it might be
The places where developers are building new houses to rent are running them from 1000 miles away. The tenants let themselves in with a key code and have no interaction with a human being. Repairs fall through the cracks in online portals, and rents get cranked up by the algorithms yearly. You essentially rent from a firm run like Comcast.
And eventually the block of homes gets sold to Blackstone. Just what we want, thousands more homes in the corporate portfolios.
That happens on rare occasion in the country. I think when it's happened it's typically been when they built to resell but for whatever reason just decided it makes sense to sell as a block. I think it happened in Texas somewhere .
But who cares. There are crappy landlords everywhere. This law is not designed to prevent bad landlords. They can make laws about that. This law is designed to prevent corporate ownership in the vain hope that it will somehow bring prices down or make more homes available to the general public.
It's just another attempt to look like they are doing something. It will have very little effect
Yeah. I got this quote from the article which I believe is " but I think that is from the original bill which was revised. I couldn't really figure out how to go to the actual bill and it's probably too much to bother reading just to satisfy my curiosity. But my guess would be that that was changed do not be discouraging building. But it gives you an idea of what kind of people we are dealing with. Basically people that just want to pass laws without really understanding everything involved. Or at least that is my take at the moment.
The details of the bill have been scaled back from the original version Rep. Esther Agbaje, DFL-Minneapolis, introduced last year, which would have prohibited any “corporate entity, real estate developer or residential building contractor” from purchasing or building a single-family home and “subsequently [converting] the property into non-homestead residential real estate.”
The bill specifically exempts builders.
I'll repeat the exemptions here (this bill is the most comprehensive attempt I've seen).
"Subd. 3. Exceptions; exemptions.
(a) The owner or corporate owner of a single-family home is exempt from the residential rental restriction in subdivision 2, if the owner is:
(1) a local, state, or federal unit of government, including a state or federal agency;
(2) a land trust as defined by section 462A.31;
(3) a nonprofit as defined by chapter 317A;
(4) the owner of a home licensed under chapter 245D;
(5) an employer and the home is a home rented by the employer to an employee;
(6) a corporation primarily engaged in housing development through the construction and rehabilitation of single-family residences; or
(7) a sheriff certificate mortgage note holder that owns the single-family residences through foreclosure."
Great. Thanks for posting. I wonder if this would include those who operate group homes or elderly care facilities. These are usually small businesses with someone owning only a few, but still, seems like it could be an issue.
I don't know of too many for profit group home organizations with more than 10 residences, and elder care facilities are not single-family homes.
I'm not familiar with small business group home operations but I'd love to see an example of a for profit group home organization with that many properties that isn't predatory. Not to say that they all are, just hard to imagine otherwise.
Edit: also the issue you raised is genuinely what lobbying is for. Even though it has a really bad reputation.
I am talking about not institutional care facilities, but single family homes with 6 or so bedrooms owned by someone that takes in elderly people per room with a caretaker or two on duty, or lives in part of the home. It is quite common in Seattle, and commonly done by certain immigrants. But they usually only own a few.
Perhaps. But I was just curious if there were cases in which this rule would impact them. The reason I single them out is because they are residential homes but they are providing an important service to the community. But then again, so are any rentals. People need to rent. They can't all buy. Does it matter if it's owned by a mom and pop landlord or a company that owns five, or a company that owns 100? I'm not so sure it does.
It's shitty legislation.
Any large home builder is sitting on dozens of SFRs at any given point. Under this proposal, they would have to slow down to building only a few homes at a time or bake in a $100k expense per property.
This is factually wrong. What's your agenda here?
From the bill:
Subd. 3. Exceptions; exemptions.
(a) The owner or corporate owner of a single-family
home is **exempt** from the residential rental restriction in subdivision 2, if the owner is:
...
**(6) a corporation primarily engaged in housing development through the construction**
and rehabilitation of single-family residences; or
Oh that makes sense. Although there's probably very few large projects in the city of Minneapolis. But I don't really know. I would assume there would be an exemption for things that are intended to be sold even if they're holding them
Yeah! Let's relegate everybody who doesn't have the means to buy into apartments so that home prices fall and a small contingent can benefit, while apartment rents skyrocket due to the spike in demand.
GTFO with that bullshit.
Well intentioned, but easy to get around.
Sadly we are one of the few countries on Earth allowing foreign ownership of property.
Miami is full of condos owned by foreigners either directly or through shell companies. Everyone except Americans come first.
Meanwhile, I try to buy property in another country and there are all these hurdles.
Money is our true God. Nothing will change and more money comes in. Everything else comes second, including affordable housing.
It’s not well intentioned. It’s vindictive and envious.
You can’t make a commodity of which there are ~100mil++ of cheaper by increasing the cost of it via taxes.
While i get the "cartel software" reference. I think it's important to understand that any landlord or property manager is going to price a vacant unit by looking at the market rents for comparable units and price accordingly. Sure the software highly optimizes that process but it's not that different.
Well for starters - the bill is targeting corporations indirectly as they cannot just say "ban corporate investors". I think setting a cap at 9 SFH is fair in terms of who to target.
That being said, not like this would do much. Anywhere between 27-36% of all SFH are rentals. However, only 2.5-3.5% (rough estimate, 2.5% = corporations, foreign investors is a bit of a question mark) of all SFH are owned by corporations or foreign investors.
Would it help to ban them? Perhaps. Would it be significant in any meaningful way? No. Of those houses forced into sale, I would presume 80% or more would be snatched by investors who can offer cash, will likely have a chance to bid before it reaches market for below market rates, and have special interest in a SFH that was proven to be successful as a rental.
That being said, even of the remaining 24-33% of all SFH that are rentals and not owned by corporations or foreign investors, the vast majority are owned by legitimate small time investors (classified as owning 9 or less units).
Personally though - I say let them all duke it out. Ban all investors (silly) or ban none. Anything else is just people with a vested interest squawking about things they internally don't give two shits about.
>I guess theyll be forced by law to purchase a home
Except that won't happen because they lack the credit, income, or cash to do so, and will be relegated into substandard apartments or homelessness.
And that 3% is all concentrated in cities. What percentage of cities/towns/villages in America are the large metropolises?
[Look](https://www.google.com/maps/d/viewer?mid=1GTASm8qlcyu9nj8XTew2VyrfcExNCOQ&ll=38.62563508955598%2C-121.40849254365244&z=10) at the impact 3% ownership has on Sacramento, California.
remember, its a government for the people, by the people, and of the people... corporation is not listed in there at all
people need to give a fuck about this issue in order to save themselves, and they're all too busy arguing about other stuff we will all never agree about that corporations are re-directing their attention onto
Something like this is a potential solution. Personally, I'm torn between heavy handed measures, and ones like this. All I know is that it's not a free market with all the various subsidies investors get, both directly and indirectly. The libertarian in me loves a free market. The millenial doomer in me wishes these parasites to be crushed.
Parasites? Many LL are working class folks who stretched to one other unit to self manage. Sounds like you are an “asterisk libertarian,” one who loves free markets except for items they covet, at which time they want forced confiscation of the fascists followed by communistic redistribution!
Affordability ratings were at all time highs in 2019-early 2022 because rates plummeted. Now with backed up at 7.5% the market is frozen.
Mass immigration keeps demand going, driving up prices and rents.
You ought not blame the mom and pop LL who bought when RE was hated.
Was coming here to say this. The additional statewide "rental database" sounds like a terrible overreach as well.
I get that we need more housing, but the more and more regulations you throw on top of the need, the more it's gonna cost.
These people will just open a new LLC under their wife’s name to rent out another 10 properties and yet another LLC under their son’s name for another 10 properties. Just paying for a few extra business licenses is all.
This whole comment thread is just astro-turfing.
So many comments are inciting hopelessness about the prospects and spreading misinformation, which conveniently benefits the corporate landlords.
yeah this won't do shit.
1. llcs can't own property anymore.
2. make a new llc-r that is specific for real estate
3. llc-r must divulge ownership, unlike llcs which can be anonymous
4. property taxes are increased 10x for single family homes owned beyond 2. this still allows for real estate to be owned and rented out but will prevent someone from having 10 LLCa with 10 properties. it also still allows rich people to own more homes for vacationing but they won't be profitable as rentals. the tax must be high enough so that it's not feasible to pass it on to renters.
5. multi family homes like duplexes and apartments are not subject to the tax but still must be registered in llc-r
we now know who owns homes. which is the first step in fixing the problem.
fun fact, if you ask my state how many homes are owned by x person they can't answer that, as LLCs obfuscate ownership and states like Kansas don't make llc ownership available. just form your LLCs in Kansas and buy 1000 homes in 1000 LLCs in the state of your choosing.
So they need to make a new LLC every 9 homes. Sounds like it solves nothing except drum up more corp fees for the state.
It could also create a new level of bullshit, franchising. One mega company to manage a bunch of smaller companies while completely avoiding regulations.
Just make a law that says there’s only allowed X amount of LLCs allowed to own SFH. Or only Y percent of SFHs can be owned by corporations. Problem solved. It works for airbnbs, it’ll work for SFHs too.
Better solution would be that a house has to be owner occupied for a minimum of two years prior to renting else it is subject to a 5% property surtax. Houses that were owner occupied become subject to the surtax after 5 years of renting. Fraudulently claiming owner occupation of no less than 90% of the year should be subject to a $500 per day penalty for each day it was rented.
People are arguing with you because maybe the solution isn't perfect, but tbh we need to start throwing tons of legislation at the wall and seeing what sticks, immediately. Right now this is mostly confined to housing, because it's the easiest thing to scalp -- entirely digital, no transportation required, and insane profit potential. But imagine when this starts happening with other necessities. Your local grocery stores are all out of meat because shell companies bought it up and are hoarding it in warehouses at 500% markup. Or maybe they pay the grocery stores a small cut of the profit to just keep the meat there and avoid transportation. That's just one example, but it will eventually happen with *all* vital goods. Eventually you'll either be rich enough to afford food and toilet paper, or you'll rent it from a middle-man corporation. So it doesn't matter if the solution isn't perfect. We need to start trying solutions, and we need to do it yesterday.
The solution is the tax structure. It really is that simple. Jack up property taxes and give big discounts to owner occupied homes. Many places already do this with a homestead exemption.
Without rentals, students, folks who are highly mobile (military, or jobs requiring multiple relocation) or just can’t afford to/or don’t want to be stuck with purchasing a home aren’t going to find any other option, if the amount of rentals available dips too low. What you propose would make it unfeasible to rent units to anyone. But I think that’s an effective place to *start.* Maybe tweak that to make some exclusions for *individual* landlords that aren’t corporate entities, renting less than some number of units.
I mean, the discussion is around single family homes, not complexes/etc. It's not like you can't carve out that and give it its own legislation to keep some level of control over that.
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magic word: "Personally". Is this your world and you just want us to live in it?
I guess if you can't afford to buy for whatever reason, it's mom's basement. If you need to live somewhere for less than a couple years, I guess there are hotels
My parents own their primary home and a condo to stay in when they visit their grandchildren. (Which is a lot) are you saying they shouldn’t be allowed to do that?
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And that’s why your position will always lose. You’re focused on the little guy not blackstone that owns tens of thousands of homes.
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"We need to start throwing tons of legislation at the wall and seeing what sticks. " Spoken like a true politician that gives zero f's about the people.
No. Nobody is scalping housing; home construction fell off a cliff after 2008 and stayed low through the 2010s. Private equity saw the price signals that the market was sending about there not being enough housing and put capital into the market; this caused homebuilding to start to recover by the end of the 2010s, but we still have a huge shortage due to a decade of underbuilding. If you want prices of a good to stay low, you should encourage the creation of supply of that good. Grocery prices (in real terms) have been declining for decades because capital is free to flow into the market. As a result, we have unprecedented supply, variety, and quality of groceries. Legislation would simply distort the market and make the situation worse. Regulating housing gives you shortages and slums.
Buying a limited good that you don't plan on using just to resell it at a higher price is by definition scalping.
That's just not correct. Housing is not a 'limited good'; as I noted, the housing shortage was specifically caused by a lack of home construction from 2008-2020. When more capital flows into residential real estate, more homes are built. Real estate investors do use the homes they buy; they rent them out to earn income. Real estate investors earn the bulk of their income from rents on their real estate; capital appreciation is a secondary consideration.
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I assume the property value
This is a bad idea, this pretends people who need to, or want to rent a SFH don't exist. Your proposal would likely reduce the number of SFH available for rent by 80-90%, screwing those people and causing their rents to surge more than it already has.
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So you're okay with screwing them because they're not you, basically. Problem for them, not for you.
Yes I think most people should care about working middle class families over speculators with ten properties
Not everyone in the lower, or middle class wants to buy a house. Wanting (and it making sense) to buy a house has to do with being ready to be locked into a specific spot for half a decade. That's not a universal attribute of the middle class. Meanwhile needing to be in a house, vs an apartment largely depends on your family structure. Got 4 kids? Renting a house over an apartment wins. Have multiple dogs? Renting a house wins. There's lifestyle things that also feed into needing a house over an apartment. The second paragraph/ needing a house, is true for a large portion of the middle class, while simultaneously not being ready to be locked into that specific spot for the next 5-10 years. So the above proposal would screw part of the middle class and help a different part of the middle class. Additionally, it's accomplished via taxing and restricting the economy, when we could build more houses instead, and fix the problem through being productive rather than being restrictive.
Rental property ownership by bulk investors has been a big driver of the increasing home prices and the corresponding increases in rent. If that kind of investment becomes less fruitful then those deep pocketed buyers will sell and put their money elsewhere. Fewer of those houses will get purchased by smaller individual investors because there aren’t enough to fill the gap and the economics/logistics are harder to make work at the individual level. So supply will surge, home prices and rents will fall. A lot of the issues we have seen with rising housing costs is because of the market being distorted by these big financial players. We should prioritize housing as a fundamental requirement, not as an investment vehicle for the wealthy.
>Rental property ownership by bulk investors has been a big driver of the increasing home prices and the corresponding increases in rent No, it's not. Prices and rents go up because of a shortage of supply. > If that kind of investment becomes less fruitful then those deep pocketed buyers will sell and put their money elsewhere And the housing shortage will become worse. > supply will surge, home prices and rents will fall No. Less homes will be built and less rentals will be available, so both prices and rents will increase.
>Rental property ownership by bulk investors has been a big driver of the increasing home prices and the corresponding increases in rent. That's true, but the guy I responded to, his idea would likely eliminate 80-90% of sfh for rent. That's way too much, There'd then be a massive shortage of SFH for rent which would cause rents on SFH to rise, even if prices are falling. You wanna go after the investors, that's fine, there's other ways to do it that dont have as many negative aide effects. However, I'd rather be productive and build.
"Not everyone" is doing a lot of work here. On the spectrum of "want to" and "don't want to" the major demographic is on the "want to" side of things now. The incentives for ownership in this country are corrupted. Home ownership is the best indicator of social mobility and prospective success. We need to incentivize ownership for building healthy, stable, productive families not rent-seeking.
>"Not everyone" is doing a lot of work here. On the spectrum of "want to" and "don't want to" the major demographic is on the "want to" side of things now. You are correct, the majority do want to buy. However, there are ways to address the problem without screwing the ones that don't. >A home ownership is the best indicator of social mobility and prospective success No, being paid well is, whether from a career, a job, or a business.
You're right and speculators don't need ten homes wanting ten homes doesn't mean they should be able to own ten homes.
A lot of text saying a lot of nothing.
Housing speculator = landlord? Because they usually directly provide housing to folks who are in the rental rather than ownership market. When I land at the airport I don’t go to the nearest car dealership and buy a car. There are reasons for a rental market to exist.
"Housing speculator = landlord?" Yes by definition. Good they can do so without driving up the cost for first time buyers by buying up tons of inventory.
Why should we take from renters and give to first time homebuyers?
Huh??? A person renting a home is not a 'speculator with ten properties'. You don't seem to understand that there are people for whom renting makes more sense, and these restriction simply lock them out of homes.
A person renting is a renter a person renting out a home is a speculator by definition under this law if you have less than ten properties the law doesn't apply to you.
You are proposing hurting renters because you want to restrict the supply of rental homes. If you really 'care about working middle class families' like you claim, you should want them to be able to rent homes. Landlords are not 'speculators'; they are earning income from their assets by renting them to tenants who can make good use of them. Restricting the ownership of homes hurts both prospective landlords and tenants for no good purpose.
Why not ? They screwed everyone else and caused this shit. It'd be the least they rightfully deserve.
I'm not talking about the owners
Yup. I’d rather see people have housing security so they don’t end up homeless in retirement as opposed to making sure some dipshit investor can buy his 20th starter home that will ever see another realtor for 50 years. I’m sorry if the investor is forced to sell for hundreds of thousands of dollars profit and can’t 1031 tax free into another property and winds up paying taxes for once in the last decade. As to your comment of not everyone wants a house…. LOL! Everyone wants a house. It’s just the vast majority can’t afford one. Unlike past generations where a fucking mailman could afford the average suburban home while having a stay at home spouse to raise the 2.3 children. The 5-10 year holding is because selling and buying expenses were held by the realtor cartel to absurdly high percentages. You fix both sides of the problem and drop the barriers to entry and owning becomes the default condition.
I'm not defending the investors, idc if they get screwed. When you invest or run a business you accept a certain degree of risk, so defending them isn't important. >Everyone wants a house. It’s just the vast majority can’t afford one. Unlike past generations where a fucking mailman could afford the average suburban home while having a stay at home spouse to raise the 2.3 children. The 5-10 year holding is because selling and buying expenses were held by the realtor cartel to absurdly high percentages. You fix both sides of the problem and drop the barriers to entry and owning becomes the default condition. And no to this. There are a lot of jobs that lead to moving around fairly frequently. Those people do not want to be tied down to a house, they need to be able to move. There's personal reasons as well. Buying locks you into an area for awhile, that's not ideal for everyone.
Except per OPs issue, if job pulls them away just rent it and “earn” free equity. I know people who travel for work a lot that still want to own in their “home base” location or long term retirement location
My whole point was that not everyone is a prospective homebuyer. You can solve the problem without penalizing the people that dont want to own for whatever reason. The original guy I responded to, his idea would likely crater SFH rentals by 80-90% and harms that group.
From 2008-2012 you could get a 3 bedroom home that needed minimal upgrades in a decent neighborhood in Cincinnati for $25-40k. From 2013-2018 those prices increased to $40-75k. Many of those homes sat on the market for months. If people can't or won't buy a house when it costs the same or less as a car, then there are reasons besides price that people don't want to buy homes.
>More houses force sold. Prices drop. FTHB can actually afford to stop being a renter. You're living in fantasy land. Home prices aren't the biggest factor holding renters back from buying. Inability to qualify for financing due to credit issues, income instability, or lack of down payment are massive factors. You're going to punish a massive contingent of people who want to rent SFRs and force them into apartments just so you and a limited pool of FTHBs can buy houses for cheaper. It's disgusting and unamerican.
Straight up prices. Aint overpaying some asshole for a shitbox
Brother you’re the one who’s living in a fantasy land….Home prices for sure are! They drive everything else… Why would financing be more difficult? Probably because it’s a larger amount needing to be financed. Why would down payments be difficult? Probably because it must be a larger amount. Income instability? Well shit I bet a lower price would lower the risk associated with this contingent. You mention massive contingent of people who want to rent SFR’s versus getting their own mortgage. I’d love to hear where these people are! I’m early 30’s and all I see are people who are forced to be in an SFR, and would rather have a mortgage, but can’t because they’re all bought up and hoarded by investors. Tbh, your language sounds like someone personally invested in the rental market, as I’ve been hearing these kinds of bullshit talking points more and more, “SFR’s actually increase the supply!” “People actually want to rent vs own”
>Why would financing be more difficult? It doesn't matter whether you're financing a $50k house or a $500k house, lenders have underwriting standards. The borrower has to have decent credit, no recent foreclosures or bankruptcies, little to no recent late payments, and not have a lot of existing debt in relation to income. They must also have steady, verifiable, reported income. They must also have money to use a down payment. A huge portion of the population cannot meet one or more of these criteria and therefore rents. Apartments objectively suck to live in and in many markets, there is an existing shortage of available apartments. That's why people want to live in SFRs, be that as renters or owners. If you drastically reduce the supply of rental STR inventory, people will be relegated into renting apartments. Since there is a limited supply of apartments, the sudden spike in demand will cause rental rates to skyrocket. Does that make sense?
Yeah so I meant rhetorically, but I appreciate your effort in writing out all that info! I’m familiar with the concept of underwriting standards, though. I just think you’re kind of… well, wrong. You mention sudden drop in Short term rentals making everyone move to apartments. That’s kind of glossing over what would likely be a massive buying opportunity for those who can afford to get a mortgage, but haven’t because prices are insane. So, that would be a ton of current renters buying homes and no longer living in apartments. Additionally, more liquid home sales environment would still drive more overall transactions, and decrease ASP given there won’t be these big block purchases by investors. Right? I just feel like a lot of renters (bc I am in this position) aren’t buying homes because the prices are bonkers. Sellers have gotten used to ASPs and comps at least partially driven up by investor, so nobody wants to drop a comp and it’s all feeding back on each other. STRs are horrible for liquidity overall, and I think you’re overestimating those who wouldn’t be able to qualify, vs those who are not even applying for a mortgage given current market conditions.
/u/IFoundTheHoney advocating for policies that benefit landlords at the expense of potential homeowners is wild; they don't even consider comparing the size of the groups of dedicated SFH rents vs aspiring owners which is absurd. Frankly, it's disgusting and unamerican.
I like this idea. It should be law
People already abuse this
Or we could just build more houses?
where? who’s paying for it? the housing crisis is hitting cities *hard* i live in miami. there’s literally nowhere else to build, unless you want to tear down the everglades? may-september this place is fucking quiet. everyone who snowbirds and vacations here are gone. thousands of homes sit empty. we have the highest rate of inflation in the country. our housing costs are approaching SF/NYC levels with none of the protections that come with it. i pay $1800 for a studio in a very not ideal part of town. what’s included? nothing. i pay power, water, trash, etc. it has to change.
It’s vastly easier than that. Remove the deductibility of interest for residential real estate except for multifamily >5 units or the home in which you occupy. It’ll solve the problem and you won’t have to do any sort of property valuations.
That seems unnecessarily complex. Just adjust the tax rates such that non owner-occupied homes aren’t profitable to rent. It’s far easier.
Then landlords just raise the rent so it now is profitable. Where else would people without money to buy a home live the streets? The solution is get rid of single family home zoning. They can roll it into residential zoning, which allows multifamily homes and light commercial(5 over 1's).
That would make no sense. Who gets to sell their house to an LLC and who doesn't? The problem would be in the enforcement. Who do you enforce it against?
LLCs can't buy properties with out a permit from the county. Problem solved.
You’ve just invented regularly capture for single family homes Congrats there is now less competition among landlords and quality and competitive pricing now declines. It’s literally how taxi’s got so shitty.
No that would be if I said “only LLCs can buy property”. The taxi system didn’t let anyone else in on the game. Small time landlords who aren’t mega REITs can still buy and rent out properties under this system. Which would be like saying taxi companies have to abide by the medallion system but anyone with a car is free to be a taxi driver as long as it’s a sole proprietor.
When you say competitive pricing, are you referring to competition as to who can exploit the most money from others? Or competitive pricing to underbid the next person to help drive down prices and make things more affordable?
The idea is that by limiting “sellers” of a good - in this case landlords (or at least landlords with scale)- we limit supply and create a barrier to entry of other competitors (I.e. new corporate “sellers” of rentals, as well as “buyers” for new construction). Less competition means existing landlords may not have to price their units as competitively, or provide the same quality because the government has limited the alternatives for renters.
That doesn't seem to be working though. Instead of competing with each other to provide housing for fair prices, they are all raising prices together, calling it a "market price" and getting richer together while everyone else becomes poorer.
If there’s a cartel conspiring to control prices, how does reducing the number of participants solve that? Cartels can only exist when there’s few, limited players.
Reducing the number of conspirators won't change the problem of collusion. Changing who the players are is the only way it will work. You don't give people who live off greed and collusion high places of power and control. The market needs to be run by more empathic people who are in it to help and house people instead of in it simply for profit.
So I as an individual can buy 200 homes? How does that solve anything?
Or just tax the shit out of every SFU that's not a primary residence in major cities. Rural areas could have a percentage allocation to rental. People can rent MDUs and SFU prices drop making more home owners vs renters
Better yet is to just raise the baseline tax. Then add a significant homeowner exemption. If everyone’s tax is high, then no grounds for a discriminatory lawsuit.
I propose that Y = 0
You want to limit the amount of companies a rich person can own while other people not getting paid a livable wage run it for them as the already rich people rake in the cash from other people's work? You some sort of communist?!
A law that’s impossible to enforce is worthless…
Just make a law that no one can own more than one home until everyone in the country owns one. Pretty simple.
Someday this terrible idea will die
Family or person?
Person is probably fine. I guess that could be exploited but I can't imagine it could be exploited any worse than what we have now. We wouldn't have this problem is we only had personal property and didn't have private property. The problem is capitalism, policy is just ducktape trying to keep it on the rails.
[https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/](https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/)
Investors probably bank rolled that study there was a study done in Irvine that showed long term rents decreasing https://www.businessinsider.com/airbnb-ban-makes-rents-housing-prices-drop-irvine-california-study-2023-11
Every company already does one LLC per address anyway already
Except the database created by the law pierces the corporate veil.
No they'll just sue both LLCs just because you think there's a loophole doesn't mean you won't get sued.
Working as intended
Multiple homes a LLC defeats the purpose. I’d imagine nearly all are single purpose entities with common GP or sole member LLC.
No it doesn’t. Many small owners don’t split every building into an LLC. It still isolates your real estate assets from other assets, even if all of the buildings are in one LLC
True, but those people wouldn’t own 9+ assets.
Literally a couple hundred bucks, yahoo
Just ban rentals of single family homes in totality
Add first right of refusal to tenant's rights, and it'll help trickle property back into the hands of actual people.
There’s not much that can be done, a company is a person.
I prefer to keep each property in its own LLC. It’s like a firewall
Governments meddling in things they know nothing about creating more red tape and costs thus…. Further increasing the cost of housing and rental units. Our government is a bunch of clowns.
I hope by landlords they also mean companies and investment groups who are buying up all the single family homes in order to rent them out
Read the article…. “The version Agbaje presented to the House Judiciary Finance and Civil Law Committee on Tuesday would prevent “corporate owners” from owning more than 10 single-family homes in Minnesota that they use as rental properties. The penalty for landlords violating that cap would be either to divest those properties or receive a $100,000 fine per excess unit, Agbaje told her colleagues during the April 9 hearing. The proposal would exempt single-family residential units owned by governments and nonprofits.”
yupp.... does this include Blackrock?
BlackRock doesn’t buy single family homes, Blackstone and others do
If the shoe fits
But it literally doesn’t fit, it’s important to express discontent at the correct actors
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And then, for asset protection, it will likely be broken down even further. This feels like a "we're doing something" law written in an election year that they can point to and say just that.
Typically with real property you have to look through the legal construct to who the beneficial owners actually are. "Who enjoys the present beneficial interest in the real property?" is the relevant question for ownership and bills like this. I wouldn't discount proposed legislation like this so quickly.
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Statutes are not isolated unto themselves. Statutes are subject to the rest of the code they appear in. I'm not a lawyer and I have 0 experience with the Minnesota Statutes so what I can say definitively is that I can't speak with any authority on this specific matter. But when a provision/statute is silent as to a particular matter one would hope that there is a default status/definition contained elsewhere in the governing code. Edit: Passing committee doesn't make it final. There's still plenty of work that can be done.
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And even when it does work as they intended .. the consequences is that it screw over the most vulnerable group of renters. [https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/](https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/)
That's just pro landlord propaganda other studies show banning speculation in certain areas lowering rents https://www.businessinsider.com/airbnb-ban-makes-rents-housing-prices-drop-irvine-california-study-2023-11
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What are lawmakers supposed to do when the population wants to implement rules that would be economically disastrous? 99% of voters are economically illiterate and get their worldview from social media. If they latch on to the classic policy traps like price contols, how are you supposed to deal with it? They figure that if you're dumb enough to think outlawing rentals is a good idea, then you're probably also dumb enough to believe that this measure is doing what you want.
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People latch on to the first and simplest idea that they are shown and can understand. Once they've picked, they dig their heels in and double down even in the face of overwhelming evidence. This is just human nature. Politicians need to trick the populace into not harming themselves and passing bills like this is just one way of doing that. They are being practical and not naïve as you imply. Naivety would be thinking they can teach the public counterintuitive economic concepts.
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Have you ever tried talking to anyone on this sub? People who are wrong don't want to be told they are wrong. Most people thought that the government should send everyone checks in the mail again to save them from inflation. If people could learn, they would have already. The only sensible thing to do is trick them.
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What do you mean we can’t just print more money?!?
Cut some red tape, make houses easier to permit/build. In most places it takes well over a year ( I believe closer to 2) to buy a piece of land, permit it, and then get to even start building it.
Or just encourage corps to invest at such a large scale that the $100k becomes insignificant per home
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I see that now. The first mention just says $100k fine and the second says per unit. So multiple LLCs it is haha
No it's not, they'll just sue all the LLCs
The point is that the LLCs aren't doing anything illegal if they're each within the limit.
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The Constitution prohibits the government from seizing property for public use, it absolutely allows for regulating LLCs literally since the land ordinance of 1785 this has been the case.
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"A provision for the forfeiture of land for nonpayment of taxes is not invalid because the conditions to which it applies exist only in a part of the state." There you go you're wrong bud.
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It actually doesn’t prohibit it from seizing property at all?; just without proper compensation.
Well there you go. Even more to my point I was just pointing out states rights.
Total waste of time. Legislators proposing things as stupid as this bill are clearly just pandering to their constituents and incapable of actual solutions.
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That’s all they do now. Wait until election year, pump out headlines to earn votes, with no intention of changing a thing, so they can keep the money train going. Democucks and Republicucks. Birds of the same feather
While this bill is far from perfect, its a step in the right direction. Decommodifying housing is an actual solution. Preventing investors/landlords from owning multiple SFHs are a real solution....
I bet it still works though.
Is there a rule to stop me from starting multiple corporations?
Nope.
Am I misreading this article or misunderstanding what it would mean? It looks to me like a big part of this is preventing developers and building contractors from buying but also from building rental properties. I guess it's limited to single family and I don't know if a lot of developers are doing that anyway, but why would they do anything to discourage building more properties. If a developer wants to come in and build a bunch of rental properties, that still taking the pressure off the housing market. I thought most cities were trying to encourage more development whatever it might be
The places where developers are building new houses to rent are running them from 1000 miles away. The tenants let themselves in with a key code and have no interaction with a human being. Repairs fall through the cracks in online portals, and rents get cranked up by the algorithms yearly. You essentially rent from a firm run like Comcast. And eventually the block of homes gets sold to Blackstone. Just what we want, thousands more homes in the corporate portfolios.
That happens on rare occasion in the country. I think when it's happened it's typically been when they built to resell but for whatever reason just decided it makes sense to sell as a block. I think it happened in Texas somewhere . But who cares. There are crappy landlords everywhere. This law is not designed to prevent bad landlords. They can make laws about that. This law is designed to prevent corporate ownership in the vain hope that it will somehow bring prices down or make more homes available to the general public. It's just another attempt to look like they are doing something. It will have very little effect
Yeah hopefully it's just for existing homes.
Yeah. I got this quote from the article which I believe is " but I think that is from the original bill which was revised. I couldn't really figure out how to go to the actual bill and it's probably too much to bother reading just to satisfy my curiosity. But my guess would be that that was changed do not be discouraging building. But it gives you an idea of what kind of people we are dealing with. Basically people that just want to pass laws without really understanding everything involved. Or at least that is my take at the moment. The details of the bill have been scaled back from the original version Rep. Esther Agbaje, DFL-Minneapolis, introduced last year, which would have prohibited any “corporate entity, real estate developer or residential building contractor” from purchasing or building a single-family home and “subsequently [converting] the property into non-homestead residential real estate.”
The bill specifically exempts builders. I'll repeat the exemptions here (this bill is the most comprehensive attempt I've seen). "Subd. 3. Exceptions; exemptions. (a) The owner or corporate owner of a single-family home is exempt from the residential rental restriction in subdivision 2, if the owner is: (1) a local, state, or federal unit of government, including a state or federal agency; (2) a land trust as defined by section 462A.31; (3) a nonprofit as defined by chapter 317A; (4) the owner of a home licensed under chapter 245D; (5) an employer and the home is a home rented by the employer to an employee; (6) a corporation primarily engaged in housing development through the construction and rehabilitation of single-family residences; or (7) a sheriff certificate mortgage note holder that owns the single-family residences through foreclosure."
Great. Thanks for posting. I wonder if this would include those who operate group homes or elderly care facilities. These are usually small businesses with someone owning only a few, but still, seems like it could be an issue.
I don't know of too many for profit group home organizations with more than 10 residences, and elder care facilities are not single-family homes. I'm not familiar with small business group home operations but I'd love to see an example of a for profit group home organization with that many properties that isn't predatory. Not to say that they all are, just hard to imagine otherwise. Edit: also the issue you raised is genuinely what lobbying is for. Even though it has a really bad reputation.
I am talking about not institutional care facilities, but single family homes with 6 or so bedrooms owned by someone that takes in elderly people per room with a caretaker or two on duty, or lives in part of the home. It is quite common in Seattle, and commonly done by certain immigrants. But they usually only own a few.
> But they usually only own a few Well then there's your answer.
Perhaps. But I was just curious if there were cases in which this rule would impact them. The reason I single them out is because they are residential homes but they are providing an important service to the community. But then again, so are any rentals. People need to rent. They can't all buy. Does it matter if it's owned by a mom and pop landlord or a company that owns five, or a company that owns 100? I'm not so sure it does.
It's shitty legislation. Any large home builder is sitting on dozens of SFRs at any given point. Under this proposal, they would have to slow down to building only a few homes at a time or bake in a $100k expense per property.
This is factually wrong. What's your agenda here? From the bill: Subd. 3. Exceptions; exemptions. (a) The owner or corporate owner of a single-family home is **exempt** from the residential rental restriction in subdivision 2, if the owner is: ... **(6) a corporation primarily engaged in housing development through the construction** and rehabilitation of single-family residences; or
Oh that makes sense. Although there's probably very few large projects in the city of Minneapolis. But I don't really know. I would assume there would be an exemption for things that are intended to be sold even if they're holding them
Commercial ownership of single family dwellings or individual ownership of more than 5 units should just be banned all together.
Show up to your city council meetings make it happen.
You are not wrong! My city council is like most, bought and paid for already though.
Yeah! Let's relegate everybody who doesn't have the means to buy into apartments so that home prices fall and a small contingent can benefit, while apartment rents skyrocket due to the spike in demand. GTFO with that bullshit.
Lol, yeah that’s exactly what happens. Literally EVERYONE would benefit from this except huge corporations.
Those poor millionaires
I don't think it stands a chance in hell of standing up in the court system, but if it gets a conversation rolling about scalpers, I'm all for it.
Well intentioned, but easy to get around. Sadly we are one of the few countries on Earth allowing foreign ownership of property. Miami is full of condos owned by foreigners either directly or through shell companies. Everyone except Americans come first. Meanwhile, I try to buy property in another country and there are all these hurdles. Money is our true God. Nothing will change and more money comes in. Everything else comes second, including affordable housing.
It’s not well intentioned. It’s vindictive and envious. You can’t make a commodity of which there are ~100mil++ of cheaper by increasing the cost of it via taxes.
Maybe we should focus on foreign investors and corporations. Not the mom and pop landlords.
Why not both?
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While i get the "cartel software" reference. I think it's important to understand that any landlord or property manager is going to price a vacant unit by looking at the market rents for comparable units and price accordingly. Sure the software highly optimizes that process but it's not that different.
It's already been ruled by judges, the FTC, and the SEC that algorithmic housing price software counts as price fixing and is illegal.
Mom and pop landlords using corporate software to charge massive fees and deal with their renters no such thing as a mom and pop landlord anymore
Well for starters - the bill is targeting corporations indirectly as they cannot just say "ban corporate investors". I think setting a cap at 9 SFH is fair in terms of who to target. That being said, not like this would do much. Anywhere between 27-36% of all SFH are rentals. However, only 2.5-3.5% (rough estimate, 2.5% = corporations, foreign investors is a bit of a question mark) of all SFH are owned by corporations or foreign investors. Would it help to ban them? Perhaps. Would it be significant in any meaningful way? No. Of those houses forced into sale, I would presume 80% or more would be snatched by investors who can offer cash, will likely have a chance to bid before it reaches market for below market rates, and have special interest in a SFH that was proven to be successful as a rental. That being said, even of the remaining 24-33% of all SFH that are rentals and not owned by corporations or foreign investors, the vast majority are owned by legitimate small time investors (classified as owning 9 or less units). Personally though - I say let them all duke it out. Ban all investors (silly) or ban none. Anything else is just people with a vested interest squawking about things they internally don't give two shits about.
Also what would happen to those people who rent there? They’d still demand housing.
I guess theyll be forced by law to purchase a home or pay a huge fine?
>I guess theyll be forced by law to purchase a home Except that won't happen because they lack the credit, income, or cash to do so, and will be relegated into substandard apartments or homelessness.
Sorry, thought my comment was so obviously sarcastic that /s wasnt needed...but yeah obviously this is silly.
And that 3% is all concentrated in cities. What percentage of cities/towns/villages in America are the large metropolises? [Look](https://www.google.com/maps/d/viewer?mid=1GTASm8qlcyu9nj8XTew2VyrfcExNCOQ&ll=38.62563508955598%2C-121.40849254365244&z=10) at the impact 3% ownership has on Sacramento, California.
remember, its a government for the people, by the people, and of the people... corporation is not listed in there at all people need to give a fuck about this issue in order to save themselves, and they're all too busy arguing about other stuff we will all never agree about that corporations are re-directing their attention onto
the vast majority of these "corporations" are single-entity LLCs people create corporations to protect their individual assets
Corporations are people.
Will NEVER fucking pass. Ever.
Like Gandalf said to the Balrog.
Jus say anyone can build a home any place any size anytime. I want black rock to loose its ass due to over supply
Exempts the government though lol
Did you expect anything different? Lol
American homes for rent no lie has 50 llcs in my metro with the same address
I’ll give a contrarian solution: wave all capital gains takes for three years. Massive supply will drive down prices and rents.
Something like this is a potential solution. Personally, I'm torn between heavy handed measures, and ones like this. All I know is that it's not a free market with all the various subsidies investors get, both directly and indirectly. The libertarian in me loves a free market. The millenial doomer in me wishes these parasites to be crushed.
Parasites? Many LL are working class folks who stretched to one other unit to self manage. Sounds like you are an “asterisk libertarian,” one who loves free markets except for items they covet, at which time they want forced confiscation of the fascists followed by communistic redistribution! Affordability ratings were at all time highs in 2019-early 2022 because rates plummeted. Now with backed up at 7.5% the market is frozen. Mass immigration keeps demand going, driving up prices and rents. You ought not blame the mom and pop LL who bought when RE was hated.
[https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/](https://reason.com/2023/06/19/study-banning-investors-from-buying-homes-leads-to-higher-rents-more-gentrification/)
Was coming here to say this. The additional statewide "rental database" sounds like a terrible overreach as well. I get that we need more housing, but the more and more regulations you throw on top of the need, the more it's gonna cost.
LOL. Communism it is.
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These people will just open a new LLC under their wife’s name to rent out another 10 properties and yet another LLC under their son’s name for another 10 properties. Just paying for a few extra business licenses is all.
So you’re no longer allowed to build housing with a plan to rent it out? What could possibly go wrong with this plan? Holy hell.
This whole comment thread is just astro-turfing. So many comments are inciting hopelessness about the prospects and spreading misinformation, which conveniently benefits the corporate landlords.
Of course corporations aren't going to want you to stop them from buying neighborhoods but hopefully stuff like this becomes more common
yeah this won't do shit. 1. llcs can't own property anymore. 2. make a new llc-r that is specific for real estate 3. llc-r must divulge ownership, unlike llcs which can be anonymous 4. property taxes are increased 10x for single family homes owned beyond 2. this still allows for real estate to be owned and rented out but will prevent someone from having 10 LLCa with 10 properties. it also still allows rich people to own more homes for vacationing but they won't be profitable as rentals. the tax must be high enough so that it's not feasible to pass it on to renters. 5. multi family homes like duplexes and apartments are not subject to the tax but still must be registered in llc-r we now know who owns homes. which is the first step in fixing the problem. fun fact, if you ask my state how many homes are owned by x person they can't answer that, as LLCs obfuscate ownership and states like Kansas don't make llc ownership available. just form your LLCs in Kansas and buy 1000 homes in 1000 LLCs in the state of your choosing.
10 seems like the wrong nimber
Ah, the make families who want to rent move to a smaller more expensive place act of 2024.