Small landlords: Efficient housing providers

Let’s compare the efficiency of housing providers. Small landlords, who provide roughly 75% of all rental housing in America, are the most efficient. Small landlords usually have full-time jobs with benefits. Their rental property is a part-time job for them. And they do their own management and repairs from their homes, no hired personnel with benefits, no fancy offices. Their properties are usually older housing, often historical and architecturally beautiful, built to older codes and “grandfathered.” Their housing usually has fewer modern amenities, and mortgages are often paid off. All these factors mean less upward pressure on rents, so they can keep their rents lower. 

Since small landlords provide such a large percentage of rental housing, they should be carefully respected. Proposed laws should always be evaluated for their impact on small landlords, especially in lower-income neighborhoods where operating margins are slim and keeping a steady rental income stream is always difficult.

Larger private landlords, in contrast, are inherently more expensive. They must maintain separate offices with salaried managers and employees with benefits, and they use hired contractors with high overhead for all repairs and improvements. All these additional costs put upward pressure on the rents of large landlords. Nevertheless, larger landlords have an important role in the private market where competition still keeps their rents relatively lower.

The most expensive way to provide lower-rent housing is the completely tax-funded way, so-called “affordable housing.” This housing is inherently expensive because it is brand-new construction or older housing completely gutted and rehabilitated to modern code standards. It is also expensive because it is operated just like large landlords operate (offices plus hired personnel with benefits). Given that “affordable housing” relies entirely on taxpayer funding in various forms, it must go through oodles of government bureaucracies with employees, all taxpayer-funded, all adding to the actual cost. But taxpayers will pay only so much for “affordable housing,” so it can only be built in small quantities that will never meet actual demand. 

The most economical taxpayer subsidy is “Section 8” vouchers used by tenants to help pay their rent in – guess what – privately owned housing! 

This entry was posted in Other Issues, Other Reforms. Bookmark the permalink.