Now Hiring! Being a Housing Provider IS a Job

In the Soviet Union, the Communist Party decided your job, your salary, where you could travel, and most other important aspects of your life. Go-getters with ambition had to join the Party. Anyone who disagreed with the system was sent to the gulag. Other “features” of the Soviet Union included:

• Owning a business or property was illegal.
• Making profit and building wealth were illegal.
• Supermarkets had a limited variety of items (if they had any at all).
• Innovation in products and technology didn’t exist.
• Rampant corruption at all levels of society.
• The Party controlled arts, culture, and everything on TV.

On the flip side, the poorest and most vulnerable members of Communist regimes were guaranteed a job, a salary, and a roof over their head as long as they swore absolute loyalty to the Party. Only then would the Party provide the bare minimum. As a result, homelessness was almost non-existent.

Living in a capitalist society means that people are motivated to build, create, and grow the economy of our own free will. No one has to force us to do business because we have the possibility to profit. Citizens of capitalist countries take many things for granted, including the right to:

• Own property or businesses and profit from them.
• Use earnings however you want (with minor restrictions). 
• Donate to your choice of charity and political causes.
• Create jobs and employ other citizens to expand your business.
• Shop for a huge variety of goods in stores that are well-stocked.
• Enjoy low prices because businesses are forced to compete.
• Express yourself politically without fear of punishment.

Capitalist society keeps evolving and growing because each individual person is motivated by our own personal gain. People take risks and launch new ventures with the knowledge that they can lose their shirt if they fail but profit handsomely if they succeed. Companies innovate to grow and take market share, allowing employees to earn more money and rise up the corporate ladder. Over time, we can all build better lives for ourselves. That’s the secret sauce of our economy: the profit motive. People can work as hard as they want and earn as much as they can, but this doesn’t come with many guarantees. Unlike Communist regimes, there’s a big gap between the rich and the poor in capitalist economies. That’s the tradeoff. 

Just like most other for-profit ventures in a capitalist economy, the business of providing housing comes with operating costs, margins, expenses, capital expenditures, and nearly every other business term you can think of. Property owners have to pay the taxes, insurance, loan payments, repairs, replacements, materials, licenses, and technology to run their business. They have to maintain their properties, spend a hefty sum on renovations, and invest in new amenities to stay competitive. At the end of the day, only about 6 cents of profit is booked out of every dollar of revenue from rental housing in Washington state.

Lately, some journalists and social media influencers have started to question whether providing housing is a “real job” (The Guardian, Fast Company, Twitter, another Twitter thread). Obviously, these authors have never heard of “property management,” which is the formal term for the business of providing housing. In fact, property management has its own licenses and its own national trade association called NARPM. From complying with the law to maintaining the lawns and everything in between, property management involves a whole range of complex tasks. It’s not just a matter of ‘pass Go and collect $200’ like the board game Monopoly. Nearly 1 million tax-paying Americans work in the property management industry—it’s quite literally their job.

The vast majority of housing in America is provided by private individuals and corporations while less than 1% is either funded by the government or run by non-profits. Our economy needs private people to provide the service of housing for other citizens, especially during a massive housing shortage. While being an owner of property is not a “job” like being an owner of a restaurant is not a “job,” it does come with its own set of responsibilities, risks, and benefits. Owning property is one of the biggest pathways to wealth accumulation offered to Americans. That’s why homeownership is called the “American Dream.”

In America, we allow people to fail. The society we’ve built in the United States encourages Americans to take risks despite knowing we could lose our whole investment. Americans are allowed to make bad decisions, and we often do. 90% of all businesses fail within the first five years. Real estate investing has better odds—only about 13.5% of real estate investments sell at a loss during normal economies, however this figure rises dramatically during periods of economic upheaval like the bursting of the housing bubble in 2008. It’s not uncommon for a rental property owner to fall behind on their mortgage and get their rental repossessed by the bank.

Every responsible property manager knows that they have to maintain a dedicated rainy day fund for when things go wrong. A frozen pipe bursts, a resident’s dog destroys a rental unit, a resident decides to stop paying, insurance rates double—unexpected incidents come with real and significant costs for property owners and managers. That’s the responsibility of being an owner for any type of business. Owners are allowed to profit because they take that risk on their own shoulders. If they don’t deal with the risk, they go out of business.

The key thing to remember here is that if rental owners are not turning a profit, they will close down their business. If owners can’t make their mortgage payments or have to raid their own personal funds to keep their property viable, they will close down the business. Property owners don’t have to put their property up for rent. They will not rent out their property if there is no incentive for them to do so. If we hold a gun up to their head and force them to rent out their properties, we are one step closer to a totalitarian communist nightmare.

In any regular business, when the costs go up, the price of the good or service will also go up. If the price of beef goes up, the burger shop will pass that cost to the consumer and price their burgers higher so that they can continue to turn a profit. If they are forced to eat those costs and aren’t able to turn a profit, they will shut the burger shop. That’s how all businesses in our economy operate. The business of providing housing is no different. If new laws are passed that force housing providers to pay for rental registration, pay business & operations tax, or offer a new service like reporting on-time rent payments to a credit agency, housing providers will pass those costs to the consumer in the form of higher rent. If housing providers are not allowed to pass those costs down to their consumer and not allowed to profit from their rental, they will take their property off the market. 

Lawmakers should take careful precautions to avoid turning Washington’s housing shortage into a full-blown crisis. Our housing shortage is the leading cause of higher rents and rising homelessness. The housing supply will start to decline if we don’t incentivize people to rent their properties and to build new housing. Or we could go the route of the Soviet Union and have the government run a huge chunk of Washington’s housing, but we already have a case study to see how that would turn out.

We can’t make housing more affordable by making it more expensive!