Landlords Grow Rich in Their Sleep

“Landlords grow rich in their sleep without working, risking, or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.” – John Stuart Mill, English Philosopher and Political Economist

Let’s break that down:

Real estate investments can provide long-term appreciation, cash flow through rental income, and tax benefits. Those investments can also act as a hedge against inflation as property values and rental income tend to rise with inflation. Because of this, landlords – having invested in real estate – possess a unique ability to amass great wealth without any active contribution, effort, or risk; a reality that often escapes renter’s attention.

With the simple act of owning land or property, they can reap the benefits of rising values – a phenomenon that is largely driven by the collective efforts and resources provided by those who live in the area to improve their homes. A thriving neighborhood with well-maintained public spaces, access to quality education, and a tight-knit sense of belonging all contribute to the attractiveness and worth of the land. Landlords, who had little to no active involvement in the community, ultimately benefit from this when values rise.

This begs the question: should the wealth generated by the land belong solely to the individual who holds the title, or should it be shared amongst those who helped create it? The concept of land ownership and the accumulation of wealth through it has been a contentious issue for decades; the idea of profiting from land ownership has been deeply ingrained in our society.

As society progresses, though, and becomes more aware of the interconnectedness of communities and their impact on the value of land, the idea of individual land ownership and its associated wealth is being challenged. It can be argued that the rising value of land should not solely benefit the individual landlord, but rather be shared amongst the residents.

What are your thoughts?

Whether you’re interested in acquiring more investment property or are ready to buy your first home, our local lenders are eager to help.

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