investing in houses

I had a really interesting conversation with someone yesterday about investing in houses.

We were walking down the streets in Columbia Heights, where there are dozens of for sale signs, and were talking about the old group house I used to live in.

The man that owned the house owned several houses in Washington, DC's Northwest quadrant. From 1810, he used to make well over 3 grand a month from the rent. Sheer profit because the homes were paid for. Sheer profit because he inherited the houses and didn't even have to shell out the money to buy them in the first place. I guess his family started buying and investing in homes all over Mt. Pleasant back in the days . . and this guy just inherited them. He probably makes over 10 grand just from renting them out.

When I think about this, it makes me feel a little sick. Maybe it's because I am a bit naive (or that I have too much faith in humanity) . . but I assumed that this kind of profit making on the backs of working class people who can't afford to buy a home themselves and must rent . . would also make others feel sick.

I was little taken aback when my friend told me that it was genius. She felt investing in home is such a smart tactic . . and that she had been thinking about doing it herself. She said that while she would probably never have a job that would allow her to come up with a down payment for a home where she would want to live . . she could probably come up with a down payment for a home in a neighborhood that she could rent out. She would rent out the home in the other neighborhood . . and then when the market goes up, she would sell it and use the profit for the down payment on a home where she would actually want to live.

While I guess she thought this makes absolute sense (and hey, maybe it does), I was taken aback. I think I was taken aback for two reasons.

First, amid the housing crisis . . I wondered by ANYONE would do that. I shared stories of my relatives who purchased a home, then rented it out, then purchased a larger home . . and just lived for free because the rent from one home used to cover the mortage of both homes. She said that was really smart. I said that they were being greedy . . and while they were my family, housing foreclosures were apart of karma.

Second, I was also taken aback because my friend who I was walking with identifies as being liberal and progressive. She even goes as far as to call her self a hippie. How could someone who identifies with being progressive even think about make profit on the backs of working class people who (whether it is because of preference or not) have to rent.

Maybe I'm just making assumptions that most people, if given the opportunity, would buy a house to make their home rather than rent it. Maybe I'm just being naive again or maybe I just don't really understand what this is really about.

After her logic on how to invest in houses, I said, "I don't know if I agree with that," and went on to bring up my perspective. "So, you're saying that you want to make money by renting out a house to people who can't afford houses? Probably a young family that if given the opportunity to buy a house at a good deal . . would probably buy it . . except investors come in first to grab the hot deals and they are forced to just rent because investors want to make a buck?"

Maybe it's just very Buddhist of me . . but I think that if you're not going to live in a house and actually make it your home . . you should probably let someone who does intend to live there and make it their home buy the house themselves. Maybe it's just very Southeast Asian of me because back in Laos and China, you can't just claim land without occupying it and renting it to someone else. If you claim land and leave it vacant, you lose the land to someone who does have some use to it. Maybe it's very indigenous of me to think that land can't be bought, sold, and rented unless you need it or unless you want to cultivate it . . because everyone needs a land . . everyone needs a home and who are you to come in and try to rent land or a home to someone else when you already have adequate space for yourself? Maybe it's very refugee-like or working class of me to think too seriously of homes because my parents bought our five bedroom house in san diego for $110,000 in 1986 . . when they were making $3.25 an hour. Maybe it just freaks me out to think that if people in the mid-80s were going around investing in affordable homes in new and not so nice areas . . my life growing up would have been completely different and my family probably would have been thrown on my streets in highschool.

I've seen entire neighborhoods of newly developed and affordable houses be bought by investors. Temecula, California. My relatives were guilty of such doing. When people who actually want to live there come in, the price has already skyrocketed because of these investors . . and they're forced to rent from the investors who already took the good deals.

My friend went on to talk about her mother. Maybe she sensed that I was feeling really offended and wanted to remind me of her modest upbringing. She talked about how her mother has no savings and is actually in a lot of debt. Investing in a house would not only help her save enough money to buy a home for herself . . but it would also help her help her mom get out of debt.

This comment made me think. How dare she try to bring up the hardships her mom has gone through (and is currently going through) to justify such actions? Maybe her mom is stuggling . . but how does that justify taking advantage of other people who are also probably struggling?

To preface this . . I guess I should share that over my friendship with this person . . she's shared with me a lot of stories about her mother. How she was definitely an unconventional mother who didn't cook and moved around a lot and never really had a stable job. With that in mind, I think this conversation also brought up a lot of personal questions I've had over the years regarding people who are struggling because of institutional injustices . . and people who (dare I say) are struggling because of an inability to get their shit together.

I guess that makes me sound very conservative. Or at least it sounds like something my brother or sister would say about those on unemployment, youth who are at risk, or folks who need help through governmental assistance programs.

Maybe it's my own pull your self up by your bootstraps mentality after seeing my parents, who barely speak english and have never made more than $10 an hour -- raise three children who went to college.

Maybe I am moderate in some ways. Or maybe I am conservative in other ways. However, how could someone who claims to be progressive and wants to study urban planning feel good about making a profit in this manner?

How can someone who says she values "community" think it's a good idea to invest in houses by buying them then renting them out?

When we got to our destination, I guess it was obvious I was a little sick and I didn't want to talk about it anymore. I guess this was somewhat of a reality check. Welcome to Washington, DC . . the land of single issues and where progressive in one issue . . doesn't necessarily mean progressive on all issues.