[stevecalifornia]

As a landlord of single family homes, I have to look at the detailed credit history of potential tenants. Before I even get to that stage I let them know the income requirements, etc. so usually we are looking at the top 3 applicants out of the 30 that applied.

With almost no exception, the renters make horrible financial decisions that set them up to work until they die. The average credit report I see is about a 500 and it's filled with missed payments, loans sent to collections, etc. Then, right at the top, in the last two or three months will be new loans for expensive cars and jewelery. It's mindboggling and sad. Most of my tenants have a nicer car than me (I own a pretty vanilla $30k sedan).

The renters usually come just above the 3x income to rent ratio and they never fail to pay their rent. But I don't really ever forsee them owning a home if they continue to make luxury purchases that prevent them from saving. The loan industry really enables a life of debt.

[fathyb]

> The loan industry really enables a life of debt.

It really does, and I've seen so many people fall into it, especially at the beginning of their career. Financial responsibility should be something taught early on at schools. With cryptos today, maybe even with the risks behind investing.

That said, I'm glad I live in the majority of countries where someone more privileged than me cannot judge my financial decisions to give me access to housing. I consider myself financially responsible, and credit scores aren't a thing here anyway, but I find it very disturbing.

[josephcsible]

What happens in your country if you move into a house and then just stop paying?

[FrontierPsych]

>Financial responsibility should be something taught early on at schools.

100% guarantee that this does not matter one iota.

I've tried and tried to help so many people with their financial picture. You would have more luck talking to a brick wall.

People don't care. They just simply do not care.

This is because most people - maybe 95% - are ruled by their emotions rather than rationality. Or to put it more precisely, people make decisions based on emotions and then use their rational mind after they make their decision to rationalize their purchase.

Also, becoming financially responsible is just about the simplest thing to do, at least at the beginning stages. All it requires is addition and subtraction, mostly, which we learn in second grade or whenever it is. Second grade.

I remember opening my first savings and checking account when I was 15 years old (when you could do it yourself without parent's permission). The person who helped my took about 10 minutes to help me understand, that's all you need.

The internet is inundated with videos and classes on basic financial knowledge. I'm sure that I could go to Udemy and find 500 courses on basic financial training and pay $15 for it....hmmm, let me go check right now...ok, typed "personal finance" in the search and it came back with "6,496 results for “personal finance”"

People don't take those classes because they don't want to take them. Probably personal finance is one of the topics that is #1 for total courses available.

Honestly, personal finance is so easy. It is just about the easiest thing to do. Sure if you get into complicated stuff, if you have $200 million in the bank/assets/whatever, maybe it is hard. But for the general person, no, it is simple. And the part that someone doesn't get, there are a ton of videos and articles on that, too.

I have gotten exceptionally angry at some people because they were so broke and asked me for help. There I was, spending countless hours with them, doing what you said and educating them, and they go out and blow a HUGE chunk of their feeble savings on the stupidest shit. I got angry because I knew these people and got emotionally invested in helping them (I don't regret getting emotionally invested).

I don't help people anymore. It's an exercise in frustration and futility. People simply do notwant to be financially responsible...well, maybe in the 20/80 law, 20% are financially responsible. The other 80%...don't waste time on them.

Kind of a rant, but it still burns deep in my soul, because the people I tried to help are good people.

You can lead a horse to water, but you can't make it drink. Pearls before swine.

[tomxor]

> the renters make horrible financial decisions that set them up to work until they die.

Did you read the article? Genuine question. Because you seem to be completely missing the main point it's making, it's not exactly lacking in examples.

[rich_sasha]

Not GP but these comments and the article are not unrelated.

TFA says amortized cost of things is lower when you have access to cash, or cheap credit. Buying in bulk in large shops is cheaper than buying small amounts at local shops. Proper renting is cheaper than weekly-billed accomodation.

But then GP is saying, the poor often have better access to credit than it might seem, it just goes to things that don't improve their financial situation. Nice cars and jewelry for instance.

I don't really know and suspect both are true to an extent, but chipping in since poverty is fascinating to me and I don't fully understand it (I come from and remain in a modest background btw). Sometimes it's just a lack of cash but often it seems not as simple as that.

[onphonenow]

Other factors in fairness are kids and medical stuff. I spent 3k fixing up a wonderful 3.5k used car - have had it for years - runs great even though 16 years old. I do want / need to buy a new car but prices seem crazy to me! Kia soul maybe as a cheap car? Everything else has puffed up to high 20s and 30s (and far far higher) - this old car costs nothing to insure - and Kia seems to have waiting lists around the block for warranty work. My old car I can have anyone work in it without warranty issues.

It made me wonder if all the required features and electronics are puffing up costs a bit?

[caeril]

I grew up around a lot of poor people and I saw much of the same.

I wish this article broke down the "food" and "clothing" categories into the specific products they are purchasing.

A little anecdata:

These families would buy brand-name sneakers and jeans for their kids, whichever brand was popular that year, whereas I was on year two of home-sewn or no-brand cheap jeans. I'd go visit friends and see boxes of brand-name Lucky Charms, Apple Jacks, etc, and be envious versus the bulk oatmeal I choked down every morning. Their mothers were getting their "nails did" regularly whilst mine had perpetual dishwater hands.

My parents didn't make much money, but they knew how to spend it wisely. Other poor families, not so much.

Another anecdata:

My father-in-law grew up absolutely dirt poor (far far worse than my parents), but did reasonably well for himself over time. He still has significant debt and inability to manage his money because he has to buy luxury goods regularly as some sort of compensatory mechanism to ensure that other people would never see him to be poor.

At the end of the day, when I look at poor people's spending habits, I see the same thing you do: they are hooked on unnecessary spending. I suspect there is something in the human psyche that makes poor people try to compensate for it by spending to not appear poor, thus exacerbating the cycle.

It's a largely self-inflicted problem.

[derivagral]

Consider that some of those appearances aren't just for social circles but for job status. As someone in startup software (now remote!) my wardrobe choices are far broader than someone working in service who may be expected to wear and use the products they're selling.

[Eextra953]

Why do you have to look at their credit history before allowing someone to rent from you? Shouldn't their income be all you need? Whether you realize it or not, you are a part of the system that enables a life of debt. Owning a home allows people to build equity and sets a foundation for a stable life. By being a land lord, you are preventing people from buying and building equity. Instead their hard earned money goes right into your pocket.

[zdragnar]

Believe it or not, people exist who don't want to own a home and would rather rent. There are also plenty of times where it is a better idea to rent than buy a home- plenty of people who bought right before a housing market crash then needed to move for a job can attest to that. Generally, if you aren't sure that you're going to stay in a home for several years, you're not getting any equity back out if you need to sell... Especially if you had to do any big repairs or maintenance.

Landlords are a necessary part of a functioning society.

[MisterMower]

> Shouldn’t their income be all you need?

Sometimes people can pay but choose not to. Ability to pay is necessary but not sufficient. Demonstrating a proven track record of financial responsibility makes a landlord much more willing to lease on favorable terms.

> By being a land lord, you are preventing people from buying and building equity.

Landlords increase the supply of housing by improving and renovating older structures or converting them into residential use.

A landlord has the exact same costs as a homeowner. He has a mortgage, property taxes, insurance, repairs, etc. Because he wants to operate at a profit he needs to keep those costs low, and a lot of landlords do that by purchasing distressed properties at lower prices, improving them, and leasing them profitably.

Alternatively a landlord can lease to tenants who have poor credit and can’t obtain a mortgage to buy a house. Those tenants would probably be homeless if it weren’t for landlords willing to risk leasing to them. No bank will lend $300k to those tenants so they can purchase the houses they would otherwise be renting. Those landlords are charging higher rents commensurate with the higher nonpayment risk inherent in tenants with low credit scores.

Generally the only thing preventing tenants with poor credit from building home equity is their poor financial decisions.

[zamfi]

> By being a land lord, you are preventing people from buying and building equity. Instead their hard earned money goes right into your pocket.

What? This is like arguing that someone who owns a car and is a taxi driver is “preventing people from buying” and “instead their hard earned money goes right into your pocket”.

One person being a landlord does nothing to prevent others from owning property. Housing is no more a scarce resource than cars are. Or, at least, that would be true if the US weren’t covered in laws preventing new housing. There’s your actual bogeyman.

[josephcsible]

> Why do you have to look at their credit history before allowing someone to rent from you? Shouldn't their income be all you need?

Am I missing something obvious? Isn't it just because not everyone who misses payments is low-income?

[kube-system]

The rest of the comment makes it pretty clear why income is not the whole story. Overextending finances can happen in any income bracket.

Renting is a service that is available to everyone, not just those who can’t afford houses. Most people who buy houses previously rented. Gotta live somewhere when you save up.

[KingMachiavelli]

For better or worse, real estate is one of the earliest investment opportunities available for the most Americans. The ROI is easy to understand and capital is much easier to access compared to VC, bespoke business loans, etc. The industry is large and competitive, not investing or participating in the market isn't going to actually change housing affordability. Almost everyone except the poor/working class is invested in real estate directly or indirectly.

Most importantly, only residents vote in local elections and it's local policy that has the largest impact on housing supply and renter protections. Market's are quick to react to policy changes but policy has to actually change - advocating for individual actors to behave against the market is, on average, not going to actually help the people you aim to help... instead other actors (and perhaps actors biased to even more amoral decision making) will take advantage.

[rich_sasha]

The landlord is effectively a lender, or at least a rusk-taking intermediary. They buy the house with outright cash or a mortgage backed by good credit. Their risk is that they don't find tenants, can't receive rent, or the house price goes down.

It's effectively shielding the tenant from the financial risks of house ownership, for a price.

I also agree it's unfair to the poor that renting is more expensive long-term when they can't afford to buy, but I don't think it's the landlords fault.

[mym1990]

Your judgement seems misguided towards someone that may have been incentivized to take risk on an investment property, or someone that bought a home and had to move due to any number of circumstances, but was not able to sell.

I agree that homeownership is becoming less and less viable for the middle class and below due to a lot of speculation that has entered the market in the past few years, and this should be nipped in the bud with regulation. But without knowing much about OP, it feels like an over reach to make assumptions that they are the problem.

On the credit history, I don't know if you have rented out a place before(sounds like maybe not), if you get a bad apple as a renter...everything gets massively more complicated and remedying the situation is not a clean maneuver. You wouldn't buy a vehicle off one picture, so why would someone rent out something that is 10-20x more valuable without proper due diligence?

[skt5]

Income is evidence of a person's ability to pay. Credit history is evidence of a person's willingness to pay. I would expect a positive correlation between the two but relying on that correlation seems risky.

[koliber]

Your comment is confusing.

Are you concerned that the parent is using a credit history to make a decision who to rent to?

Or are you concerned that by being a landlord the parent is somehow preventing people from buying a house?

I can see each being a concern. However, phrased as it is, it sounds like an incoherent emotional rant that is hard to respond to.

[kamaal]

>>By being a land lord, you are preventing people from buying and building equity.

Yeah me going to the gym, reading, and eating healthy is the reason why so many others are obese and unread.

>>Instead their hard earned money goes right into your pocket.

What is the connection between X being a landlord and Y not being allowed to be a landlord?

[pas]

If you look at housing as equity why do you have problems with renting it out?

[paulpauper]

it's hard to evict people. missed payments means loss of $

[pasquinelli]

you make your living off them, so you have a psychlogical incentive to see them in a certain way.

[breadbreadbread]

> the renters make horrible financial decisions that set them up to work until they die

The point of this article is that those "horrible financial decisions" aren't mistakes, they are costs of living that are imposed upon those that are already struggling. Sometimes it may be irresponsibility, other times it is an inevitability, a distinction that you truly cant discern from the outside. It's possible that splurging on a car might be a long term benefit, maybe fuel efficiency or maintainence costs are money savers after the initial buy in. You don't know the personal calculus of each decision so maybe don't assign motive to what renters are doing under the heel of capitalism.

And it turns out, these people need a roof over their heads, which you could provide at a cheaper cost if you chose to but instead you take a chunk of their paycheck each month as your personal profit. Like you could help people. You could treat housing as a necessary resource and not a commodity. Overnight you can alleviate people's debt if you wanted to.

[smn1234]

very fair, but from my handful of observations I've seen people chase brand name over the quality benefits a brand carries (e.g. maintenance, efficiency) to consider

[P5fRxh5kUvp2th]

You're not renting to poor people ... and you're rationalizing.

poor people don't have 3x income to rent ratio, middle class people do. poor people don't drive $30k+ vehicles, middle class people do.

The only thing you got right is that poor people make bad financial decisions. Often times they're forced into it, although not nearly always. Poor people trade time for money.

People are often predatory towards the poor because there's a combination of money being there but not having enough to protect yourself from the bullshit.

Personally, the one group of people I have absolutely no sympathy for are landlords, and I say this as someone with a 6-figure income who rents. I grew up dirt poor, to the point of being homeless.

And the number of times I've had a landlord try to pull some shit only to be shocked when my lawyer got in touch is entirely too damned high. Only for the problem to magically go away.

And why? Because you would never imagine my resources by looking at me and how I live. landlords do this shit as a matter of course and only back off when they realize not only CAN you defend yourself, but you WILL defend yourself.

Think about it like this.

There are laws on the books that very explicitly state if a landlord makes a persons property inaccessible before they're legally required to move, that person can sue them for the value of everything lost.

1. How do you think I know that (they gave away 2 of my pets, reptiles)?

2. Why did that law need to be passed?

---

I'm sure there are landlords that act in good faith as decent human beings, but it seems as if there's something unique about landlords that makes it difficult. In all the time I've been renting I've met a single decent property manager, and no decent land lords.

[joenot443]

> the one group of people I have absolutely no sympathy for are landlords

Going through life categorizing people into buckets and then proudly proclaiming you have zero sympathy for ANYONE in that bucket isn't a mature or healthy way to view the world. It seems like you have some really intense bones to pick (your reptile story) and are extending that anecdotal experience onto a group of tens of millions, a mental leap which is usually frowned upon in circles like this. Just my thoughts.

[lordfrito]

> Personally, the one group of people I have absolutely no sympathy for are landlords

As a counterpoint, I was a landlord of a cheapish condo (rented for 17 years), and also a decent house in a solid middle class neighborhood (rented for 5 years). Wasn't looking to be a landlord, fell into it (really long story involving divorce right before housing bubble burst). Needed to do something to tread water until the housing market returned, renting was the only sane option (or bankruptcy, which I abhor). Had 4 tenants over the 17 year span.

Anyhow, having no experience as a landlord I tried my best to treat my tenants as "real human beings" and not be the evil landlord character you see on television. Repairs on time, quality work (by me), below market rent, didn't raise rent often (had an elderly lady on HUD in one, only raised her rent once in 10 years). I really tried to make it work, treat them well and they'll treat me well I figured.

I learned several valuable lessons about tenants. By and large they can and will take advantage of any good will you give them, as they assume that you're screwing them somehow. They also will not take care of your property regardless of how well you treat them. Their attitude towards me can be summarized as "take what you can get while the getting is good". I did not have a single tenant that didn't burn down the relationship with me on their way out. I usually found out the tenant was planning to leave once they stopped paying rent. Twice they squatted, had to get a lawyer in both cases, took forever to get them out. Just a mess.

The experience was (and still is) quite shocking to me. Being the type of person that pays my bills on time, I figured that everyone else did as well. I learned the hard way that you have to protect yourself or you will end up getting screwed. End of the day it's financially stressful making my monthly mortgage payment (and lawyer) on a place that someone else lives in but isn't paying me rent.

It seemed to me that what all of my renters had in common was that they rented because they weren't responsible enough to own. Being poor is a trap for sure, but at the end of the day I don't feel bad for the people I dealt with. Maybe I should, but it's hard to look past having to pay a lawyer to reclaim control of my property.

Got out of being a landlord as soon as the market made it possible. I could feel the stress roll off me when I sold those places.

The entire experience really soured me. I don't give people the benefit of the doubt like I used to, and am a lot more jaded with random strangers. Talking about it now is bringing back bad memories.

That said, it sucks being poor for sure. It's hard to rise above it. And yes I'm sure most career landlords suck. You have to be a lot more callous than I was to make it work at scale. Personally I know I went above and beyond and was just treated poorly for it. I suppose I let that happen, but I'm never going to make that mistake again.

It's not so much that the poor can't catch a break, but that they don't recognize the break when they get it, and don't know how to follow through and/or capitalize on opportunity, and have no problem biting the hand that's helping them. It's a very moment-by-moment type of existence, I suppose it's survival instincts kicking in that explains some of the behavior. Lying is better than being homeless, etc.

Just one man's experience and my 2 cents. I wasn't a career landlord. Draw whatever conclusions you will.