Discuss Latest WCI Blog Post: Raising Rent: Is Dave Ramsey Wrong?

[uptoolate]

If we start expecting religious people to live by the strict word of their faith, then this country is going to look very different, for better and worse, but also for the trivial. I won't wade in any deeper than this, but for a superficial point, Lululemon stock will go to zero for sure and our food selection will look very different. "You shall not sow your field with two kinds of seed, nor shall you wear a garment of cloth made of two kinds of material." Leviticus 19:19.

Completely agree. I was just pointing out that there have, in the past, been quite strict rules against loaning money at interest in response to earlier posts. I am not a church goer but certainly consider myself a 'Christian'. The world would be a much better place if people would live by 'The Golden Rule', versions of which exist in all major religions, or perhaps even better the so called, new and improved, 'Platinum Rule' - 'Do unto others as they would want done to them'. And add in some humane version of the Three Laws of Robotics for good measure. One can dream.

[StarTrekDoc]

If you decide to do direct ownership of rental properties, the quality of your tenants is important in so many ways. Good tenants who take care of the property and who pay rent in a timely fashion make your life easy. Bad tenants make landlording torture.

We recently had a tenant break their lease after being with us for several years. They purchased a house. We told them we would fully refund their security deposit, despite breaking their lease, if they would partner with us to find a replacement with no gap and no vacancy. They showed the house, found new tenants for us, and we gave them all of their security deposit back. Again, I win-win situation.

Perfect example of being a good landlord and profitable and fair market pricing.

Can probably find bad landlords in the same neighborhoods of WBD.

[pit.alumni]

If you want to be successful in investment RE that you hold directly unless you are flipping properties it’s a long game. You make your money over time by appreciation of the property, pay down of the mortgage, and gradual increase of the rents. You are much better off not being friends with your tenants and treating it as a business. One of the big disadvantages of renting over the long term is that your rent will increase while a mortgage will stay relatively flat. This is also an advantage to the investor. If you are not prepared to raise rents and draw a hard line over late payments you should not invest in that space. I don’t see where religion fits into this. Even in direct RE there are different market strategies. The owners of the apartments in Brooklyn with the tragic fire had a business model of poor maintenance and low income tenants and no doubt juiced their returns by limiting their maintenance expense. My model is nice and safe properties at market or even above market rents. I’ve found tenants will pay a premium for granite counters and stainless appliances. I don’t care to interact with my tenants and use a property manager. If you own VNQ there may be a building like the one in Brooklyn in your portfolio. Just saying.

[White.Beard.Doc]

If you decide to do direct ownership of rental properties, the quality of your tenants is important in so many ways. Good tenants who take care of the property and who pay rent in a timely fashion make your life easy. Bad tenants make landlording torture.
We purchased rental real estate with the perspective of “what type of tenants will this property attract?“ And so we bought rental properties in quality school districts that would attract young families. While these are upscale communities, we tried to purchase properties that would cash flow and be in the upper middle market for the community.

Landlord/tenant relationships are a two-way street. When we get a new tenant, we directly welcome them to the property. We tell them that we hold ourselves to high standards, responding to any issues efficiently and timely is a top priority. We also tell them that we hold our tenants to high standards regarding good communication, and partnering with us to take quality care of the property. This has worked out exceptionally well. Our tenants will show the property and help us find quality new tenants when they move. They tell the new tenants what a phenomenal landlord they have. It becomes a win-win situation.

Over time, we are transitioning most of our rental properties to professional management. But we have just enough self managed properties for my spouse to qualify as a real estate professional. The self management of this handful of properties in our portfolio has allowed us to qualify for REPS and to save millions of dollars in taxes.

We recently had a tenant break their lease after being with us for several years. They purchased a house. We told them we would fully refund their security deposit, despite breaking their lease, if they would partner with us to find a replacement with no gap and no vacancy. They showed the house, found new tenants for us, and we gave them all of their security deposit back. Again, I win-win situation. The new tenant is working for google making 700k per year, so they can easily afford the rent at $5,950 per month.

As the bonus depreciation deductions will sundown beginning in 2023, we will transition all of our portfolio to professional management in preparation for our retirement years. The real estate portfolio provides quality housing to so many families. We have affordable apartments renting for 1200/month to nurses and residents. We have SF homes renting for about 2000 per month in solid, middle class communities, and we have properties in upscale communities renting for 6k-7k per month. Our goal is to run this as a profitable business, and at the same time provide high-quality, well-maintained housing for quality tenants. This portfolio of properties provides a generous physician level income in a relatively passive fashion. We likely won’t need to touch our taxable or retirement accounts, given the real estate cash flow.

[StarTrekDoc]

I'm wondering where all the government overreach folk are. This isn't unique to any religion as it's not a religious issue.

This whole interest charging rule is a construct developed by humans to control humans. The administration/powers that be created this to control their subjects and conveniently use their prevailing superior entity as the source of truth.

The Catholic Church is notorious for this. Clergy to disavow all lands and title and give to the Church. Purchases of indulgences are right up there to fund its government

This is human on human issue led by humans to humans.

[MPMD]

Respectfully, as a Christian, I think you’ve made an incorrect assessment on nearly all accounts. There is nothing against a free economy and capitalism in the Bible. No mental gymnastics necessary. But you do need to understand the stories told.

I think you’re greatly misunderstanding the context of Jesus and the merchants. He flipped tables because of a couple reasons, none had to do with selling something or making profit. The people I’m question we’re selling animals to be sacrificed for the atonement of sin at the steps of a holy place. They were ripping off poor people for the forgiveness of sins. It wasn’t strictly that a business transaction occurred, it was how and where it was occurring that was the problem. Jesus was a carpenter - by definition, he participated in building a product and selling it. Pretty hard to make an argument that he is against selling a good or service for a price.

I’ve never heard of Christians being unable to charge interest. I think you have this confused with Islam. Quite the opposite is true. There is a parable of different servants getting different sums of money from their master while he is away. Two put the money to work and multiplied it. One buried it. The two that had more when the master came back we’re favored and the one who buried it was not, because he had used his money unwisely.

There’s a lot in the Bible about being a good steward. We believe all we have is a gift from God and we are only stewards. Similar to what Ramsey was talking about, if you are charging under market rent, you are not being a good steward.

And finally, someone doing something awful in the name of Christ means they are applying the faith wrong, but that the faith is wrong. The transplant surgeon who burned his initials into a patients liver means that he sucks, not that liver transplantation is wrong.

what you just did is deliver us your interpretation of a very old book. others have different interpretations which are equally valid as yours because they are also opinions, and there is absolutely no reason to value one of those opinions over another.

i personally think the new testament is essentially a road map for living in spiritual communes with no worldly possessions, shared ownership of goods, and very little attention paid to anything other than relentless evangelism.

in what sense am i wrong? because i am interpreting a confusing and contradictory message differently and someone needs to explain their interpretation to me?

q.e.d.

[Molar Mechanic]

I think you should dig a little deeper and look a little more critically. All three of the major monotheistic religions basically forbade interest payments on loans of money at some point in their history. Judaism differed from Christianity and Islam in that its prohibition was only meant to be between individuals of the Jewish faith. This is one of the reasons that Jews were persecuted. From the mid-12th century, charging interest was forbidden to all of the Christian faith (as it had been to Christian clerics since the 4th century). 'The Merchant of Venice' is a literary example of the members of the Jewish faith being sources of capital to Christians at a time when charging interest was still officially forbidden for members of the Christian faith.

If we start expecting religious people to live by the strict word of their faith, then this country is going to look very different, for better and worse, but also for the trivial. I won't wade in any deeper than this, but for a superficial point, Lululemon stock will go to zero for sure and our food selection will look very different. "You shall not sow your field with two kinds of seed, nor shall you wear a garment of cloth made of two kinds of material." Leviticus 19:19.

[uptoolate]

That says it is morally wrong to charge exorbitant interest. I think we can all agree that loan sharks and payday lenders are unethical.

That doesn’t negate the clear story of making interest in the Bible.

I think you should dig a little deeper and look a little more critically. All three of the major monotheistic religions basically forbade interest payments on loans of money at some point in their history. Judaism differed from Christianity and Islam in that its prohibition was only meant to be between individuals of the Jewish faith. This is one of the reasons that Jews were persecuted. From the mid-12th century, charging interest was forbidden to all of the Christian faith (as it had been to Christian clerics since the 4th century). 'The Merchant of Venice' is a literary example of the members of the Jewish faith being sources of capital to Christians at a time when charging interest was still officially forbidden for members of the Christian faith.

[Molar Mechanic]

the problem is that if you don’t keep rents near market, that tenant will never leave. Now you have an investment that lags inflation. The work of maintaining the property doesn’t decrease, just the amount you are paid for time landlording goes down and you have less to maintain the property with.

If tenants receive raises ahead of inflation do you advocate for them to give a certain share to their landlord? It baffles me why people think housing should be immune to the balance of supply and demand.

It's totally reasonable to raise costs if your costs increase. I think that raising the rent on good tenants just because you can, and raising it enough that your tenants need to move, is not as reasonable if you want to be a "good christian". I think it's tough to be a "good christian" if you're concerned about maximizing your money imo, and if you're in the business of providing shelter it's even trickier. I wouldn't feel bad about raising the price of some luxury good no one needs just because.

I'm also biased against dave ramsey because i think his investing and student loan advice is unacceptably bad considering his background and the authority he has.

[Eyemd356]

Error

[Turf Doc]

Communism didn’t mix so well with Christianity either.

Communism & Socialism sound nice and appeal emotionally but never work as intended.

You can be a capitalist without being a jerk.

I would argue that the golden rule is something every business owner should use.

Many do and it creates a loyal customer following, and it genuinely makes life better.

If your costs increase (inflation) and you need to raise prices, ok.

If your costs increase and you don’t mind losing $ and can afford it and you don’t increase prices, ok.

Dave is not perfect, but he does help people.

He has helped a lot of people and he does way more good than bad.

He helped me tremendously in 2005 when i was in too much debt and did not have a plan or understand how dangerous debt can be. There was no WCI. I had 300k in student loans consolidated at 6% and just bought a house i did not need (another 300k of debt at 5.5% for 30 years) and was unfocused, disorganized and had no direction.

He gave me a plan. Not a perfect plan, but a simple plan that made sense and it was needed.

His investing advice is suboptimal (he should recommend a bogleheads 3 fund portfolio based on age and risk tolerance in my opinion) but he is a good guy IMO.

I know he gets a lot of hate.

He will get a lot of hate here (just watch) but overall two things:
1. He really helped me. Huge!
2. He does way more good than bad.

It's totally reasonable to raise costs if your costs increase. I think that raising the rent on good tenants just because you can, and raising it enough that your tenants need to move, is not as reasonable if you want to be a "good christian". I think it's tough to be a "good christian" if you're concerned about maximizing your money imo, and if you're in the business of providing shelter it's even trickier. I wouldn't feel bad about raising the price of some luxury good no one needs just because.

I'm also biased against dave ramsey because i think his investing and student loan advice is unacceptably bad considering his background and the authority he has.

[StarTrekDoc]

Nothing about religion on capitalism.

Good stewards of their company/business can possibly be related. I'm not sure if HomeGoods or Chick-Fil-a have better satisfaction/retention and customer satisfactions because their religious underpinnings. I'm sure sad when I want my spicy chicken on Sunday from Chick-Fil-a though; but happy their workers get a day of rest.

Raising rent isn't one of them. Slum lord? Probably more the flavor of 'doing what's right'.

In today's society in America, 'religious' really doesn't fall square on many traditional teachings, and certainly 'love thy neighbor' rings hallow across much of pandemic America.

So no-- religion, not associated with capitalism whatsoever.

People simply can be ruthless capitalists -- full stop.

[blippi]

point isn’t that christians are uniquely flawed. i fall short of my morals on a daily basis. when vfsax ticks up i imagine that the somali fishing enterprise i am funding caught a cargo ship that day.

it is to be mindful of when your actions fall short of your religious/moral beliefs (high standards in the case of most religions) and consider other ways of doing things, rather than rationalize those actions in order to keep doing it.

i think the ideas above about compartmentalizing religion and economic is a form of rationalization. can’t pause your religious beliefs when at work. don’t get a pass on morality, as the red shoe investor would say.

[VentAlarm]

With all due respect, I believe history is quite clear that for many centuries Christians were forbidden to charge interest. Please check Wikipedia under ‘Usery’. It’s unclear whether it’s a good idea to argue theology in a personal finance site but that is the express topic of the post about Ramsey and Christianity. I was raised in a devout Christian household but am now an atheist. Personally I have much more respect for the gospels than for the later theology of prosperity.

That says it is morally wrong to charge exorbitant interest. I think we can all agree that loan sharks and payday lenders are unethical.

That doesn’t negate the clear story of making interest in the Bible.

[Tangler]

Respectfully, as a Christian, I think you’ve made an incorrect assessment on nearly all accounts. There is nothing against a free economy and capitalism in the Bible. No mental gymnastics necessary. But you do need to understand the stories told.

I think you’re greatly misunderstanding the context of Jesus and the merchants. He flipped tables because of a couple reasons, none had to do with selling something or making profit. The people I’m question we’re selling animals to be sacrificed for the atonement of sin at the steps of a holy place. They were ripping off poor people for the forgiveness of sins. It wasn’t strictly that a business transaction occurred, it was how and where it was occurring that was the problem. Jesus was a carpenter - by definition, he participated in building a product and selling it. Pretty hard to make an argument that he is against selling a good or service for a price.

I’ve never heard of Christians being unable to charge interest. I think you have this confused with Islam. Quite the opposite is true. There is a parable of different servants getting different sums of money from their master while he is away. Two put the money to work and multiplied it. One buried it. The two that had more when the master came back we’re favored and the one who buried it was not, because he had used his money unwisely.

There’s a lot in the Bible about being a good steward. We believe all we have is a gift from God and we are only stewards. Similar to what Ramsey was talking about, if you are charging under market rent, you are not being a good steward.

And finally, someone doing something awful in the name of Christ means they are applying the faith wrong, but that the faith is wrong. The transplant surgeon who burned his initials into a patients liver means that he sucks, not that liver transplantation is wrong.

I told you there would be some hate.

VentAlarm, what you say is true, but honestly you are probably wasting your time even entering into a discussion here.

Same for me.

I am all for free speech.

I think it is fine for people to say what they want but I find it interesting how negative the mainstream media and society has become towards Christianity.

It is almost a badge of honor to say something derogatory.

I think that is sad.

My opinion is that most people are good.

Most Christians are good. Our founding fathers were christians and although not perfect they were pretty good people trying to do good work.

We live in a really great country founded on christian principles.

No group or person is perfect. All people should have the freedom to practice all religions in this country, free from persecution.

That is not true for many countries.

I find it extremely interesting that some people who feel they are: "tolerant" and progressive are quick to be very negative.

They are very quick to say negative things about people in rural America who are christians or who disagree with them politically, and whom they do not really know.

They would be outraged if someone said something negative about a muslim family but they are quick to say negative things about christians.

Live and let live. Golden rule.

Dave is not all bad. He helps a lot of people. He helped me.