- A major NYC landlord told Bloomberg this week that he’s selling off the bulk of his properties.
- He says the shifting political power of tenants and increased costs of being a landlord is why.
- He’s opting in for the “security” of other types of investments.
Renting out homes — and dealing with the people who rent them — is no longer a low-lift situation for one New York City landlord. So, he’s getting out.
Ben Carlos Thypin told Bloomberg this week on the “Odd Lots” podcast that he’s pursuing an “orderly liquidation” of his properties.
As a commercial landlord in addition to a residential one, he’s still going to have to compete with the businesses that operate out of his buildings, but he’s happy to start getting rid of the baggage that’s cluttering his investment portfolio, he said. This might be shocking to the nearly quarter of Americans who believe that real estate is the best way to build wealth.
Thypin told Bloomberg that being a landlord gives him less bang for his buck than it used to: That’s because of the increased costs associated with owning and renting out property, he said, but also because of a “growing class of renters” in the 21st century who are mobilizing politically against landlords — namely, groups that fight for “just cause” evictions, against rent hikes, and for other tenants’ rights issues.
“There’s a growing political coalition to agitate for these measures,” he said.
The number of tenants in big cities is growing, and renters now outnumber homeowners in 41% of the zip codes in the 50 largest cities in the US, according to a recent RentCafé report. However, growing renter advocacy over the last few years has hardly been translated to widespread meaningful reform, tenants’ rights groups told Insider.
“To argue that the ‘golden age’ of landlords is over implies that we’ve seen real, meaningful changes in law improve protections for tenants in landlord-tenant relationships, which simply is not yet the case,” Ben Martin, research director at Texas Housers, a non-profit advocating for affordable housing in the state, said.
Power is slowly shifting from landlords to renters
When directly asked by Bloomberg about whether there ever was a “golden age” for landlords, Thypin pointed to research showing how policies in the 1950s helped create a boom for property owners.
“What you had was this coalition formed of homeowners and conservative interests, both business and otherwise, teaming up to pare back rent regulations where they existed, banning them where they didn’t exist, and generally implementing a set of policies that discriminated against renters either directly via things like property tax policy or indirectly because most renters at that time were of some sort of marginalized status,” he said.
“Homeowners became this very powerful political bloc,” he added.
But the dynamic flipped as home ownership moved out of reach for younger generations entering adulthood, he said.
“You have this growing class of renters. You have increasing rent burdens. Evictions are destroying lives just like foreclosures are,” Thypin described. “And most crucially, this crisis is now including people from that very powerful political bloc, so far as people of my generation, who would have been homeowners 30 years ago, are now not going to be homeowners or if they are, they’re going to pay much more for it.”
He also said that we are currently in a “resurgence” of the rent regulation and tenant protection movements.
But tenant rights leaders told Insider that although Thinpin accurately assesses the growing body of tenants in the US, their power hasn’t challenged that of major landlords in a meaningful way.
“The reality is that the balance of power remains heavily weighted to landlords — consider tax breaks and sweetheart policies benefiting landlords exclusively,” Roisin Isner, the director of activism and operations at the San Francisco Tenants Union, said.
But Shanti Singh, the communications and legislative director at California’s Tenants Together, said that Thypin largely makes the points that she would have herself: Namely, that politicians are more attuned than ever to renters as a voting bloc, but not in a way that has impacted landlords’ profits in a meaningful way. She also agrees with her point that tenant provisions such as “good cause” evictions and rent stabilization aren’t broadly implemented.
She added that real estate policies tended to target the creation of new properties, rather than protecting tenants in existing ones.
“Real estate lobbies have their cannons lined up to support those reforms,” she said. “When it comes to protecting the renters who are going to live in that housing, old or new, the real estate cannon is pointed squarely in our face.”
A disappearing middle ground for real estate wealth
In addition to the changing demographics of home ownership, Typhin told Bloomberg that the amount of profit one can get out of being a major landlord is simply not the same anymore.
He predicted that only “certain types of players in this business” are going to continue to rake in “above-average returns,” while everyone else would make “utility or bond-like” returns.
Typhin said that there’s more security in just directly investing in stocks and bonds in the first place. He said these days, he’d rather buy Treasury Inflation-Protected Securities (TIPS), a Treasury bond set up to protect investors from inflation.
In addition to having more security, it’s just less pressure than having to pay to make an appealing property, he said.
“The people who are going to be the relative losers in this scenario are landlords who have been riding rents and don’t add much value.”
