Then we partly agree. I don’t think being a middleman is inherently unethical. I disagree with your tax position, though. Taxes aren’t only between him and Uncle Sam - taxes are ultimately between an individual and the society that those taxes go to support - it’s not just MY tax dollars that pay for roads, schools, defense, a justice system, etc. - it’s everyone’s. So when people dodge taxes, those of us who do pay up have to pay more. (But that’s not really the subject under discussion here so I’ll stop now.)
I don’t think we are in disagreement. But some people might take issue with the writer charging $600 when they know he’s paying $500. I don’t. It works both ways. Say the market turned and the writer couldn’t find a roommate willing to pay $500 or even $400?
Okay, sure. It does work both ways.
Assuming that renting the rooms this way (they aren’t roommates, they are subtenants from the way it is described) doesn’t violate the lease or the law* , it’s legal. It might even be ethical if everyone knows the writer is paying less rent than he is collecting from the subtenants. But I would really be surprised if they knew this. But if they were actually the writer’s friends (rather than random people he found who needed to rent a room) , it’s absolutely not ethical. It’s just not how you treat friends and a great way to lose them. **
* I know that for certain apartments in NYC it’s illegal for the tenant to charge a roommate more than their proportional share of the apartment. So if you have one roommate, you can only charge them half the rent.
** The whole story reminded me of an acquaintance of my husband’s. This group would go on bowling trips together - people who drove would transport those who didn’t, they shared rooms to keep the expenses down, etc. This one guy would always make the hotel reservations. All he did was find out how many rooms were needed and make a phone call - he didn’t lay out the deposits or anything like that. Every year he shared a room and collected half the price from his roommate- until the time when that year’s roommate saw the invoice that was slipped under the door. The bill was $0 - apparently, enough rooms were booked that he got a free room. Instead of dividing the total price by the number of rooms, giving everyone a discount , he took the free room for himself - and then charged the roommate half of the normal room rate even though he paid nothing. He was surprised to find out the next year that no one would drive him, although I honestly can’t understand why that was a surprise. You’ll be shocked to find out that this guy didn’t think he should have to contribute to gas and tolls- after all, it didn’t cost the driver anything additional to take cheapskate along.
Not so simple. Sometimes people keep things secret for reasons involving ethics, and sometimes it’s just about competitive reasons.
I tend to think that the main reason a guy doing this type of middle-man rental business wouldn’t want to say what he’s doing has nothing to do with anything unethical. Rather, it’s because if the landlord and/or the sub-renters found out what the exact deal was, then they would try to cut him out of the deal and make an arrangement for themselves (the roomates would pay a little less and the landlord would make a little more and he would be out). I don’t think it’s unethical to try to forstall that.
As an example, suppose a guy is some sort of wholesaler/distributer and he finds a very cheap source of the product which enables him to make a much bigger markup and still be competitive. Is it unethical if he fails to reveal to the supplier “hey, I’m making a killing by marking this up XX%”? Or if he doesn’t tell the retailers “I’m buying this stuff for a small fraction of what I’m selling it to you for”? I don’t think so. And that’s pretty much what’s happening here.
Of course, a lot of people react viscerally to the idea of someone else getting a much better deal than they are. So as a practical matter it might blow up if these other guys found out about it. But I see that as a practical concern rather than an ethical one.
I don’t think that’s a good analogy, because in that situation 1) everyone involved knows the distributor is buying from the supplier for less than he is charging retailer 2) the supplier and retailer benefit from the existence of the distributor - the retailer doesn’t want to buy a truckload of Item A and the supplier doesn’t want to sell Item A by the individual case of six 3) In cases where the existence of the distributor doesn’t benefit the supplier and retailer , the distributor doesn’t exist. For example, your neighborhood hardware store most likely buys everything through a distributor - but Home Depot and Lowes almost certainly buy direct from the manufacturer, because they buy the much larger quantities that the supplier wants to sell.
In this situation, it appears that 1) Nobody knows that he is paying $X to the landlord and collecting enough more than $X that his rent is free and he makes $100 a month in addition to the free rent and 2) There isn’t any benefit to the other tenants .He isn’t adding any value on a monthly basis - sure , the apartment is furnished, but the other tenants don’t own the furniture and it had been paid for many times over by the $57K additional the other tenants paid over 8 years ( $300 extra a month each over the $500 one-third of the rent would have been). No sane person will willingly pay a $3600 premium per year for 8 years to use furniture they didn’t choose and don’t own - the only way to get someone to do that is to keep that information from them.
Sure. But the point there is that no one knows how much less the guy is paying the suppliers than he’s charging the retailers. And if the guy is in a situation where he’s able to pay less than typical and have a bigger markup than is typical (and still be competitive), then he would not want the suppliers or the retailers to know that. So he would keep this information from them. But it would still be ethical, IMO, despite the secrecy.
My tenants don’t know how much my mortgage is. The described arrangement seems fine as long as it doesn’t violate any subletting clause in the lease and there wasn’t any active deception. (The taxes thing is a separate ethics question, IMHO.)
That’s my landlord opinion. It does seem like it wouldn’t be a nice thing to do to someone you’d describe as a friend. There are many reasons we don’t rent to friends, family, or co-workers.
I think the moral issue comes down to if the roommates are friends or not. If they are friends, then there is the implicit assumption that the rent is being split somewhat equally. If the roommates are not aware that the main person is living free, then they are being taken advantage of. An exception would be if the main person owns the house. In that case, there would be the implicit understanding that there are unequal financial situations in play. But a regular apartment would assumed to be generally split somewhat equally.
The main person may still be entitled to pay somewhat less rent to compensate for being on the lease. They will have to make the rent no matter what. If the roommates don’t pay or move out, they still have to pay the rent and have to do so for the whole term of the lease. The roommates don’t have that liability. They can easily come and go, so they can pay extra for that convenience.
If it’s random roommates, then I don’t see an ethical issue. The random roommates are looking at the rental market and making the decision that this room is the right deal for them for whatever reason. There is no expectation that the main person is on their side or trying to be fair. If the main person gets to live for free by being a landlord of month-to-month renting of rooms to random people, I don’t see an ethical problem.
I don’t see an issue with the main renter charging more than half. S/he’s giving up more than just a bedroom; he’s also giving up his privacy.
No, but they know that you’re the landlord and they’re the tenants, and thus you are presumably charging them a rent that enables you to make some money out of this landlording gig.
If you had told them instead that they were your roommates and all of you were sharing the rent obligations, it would be reasonable for them to expect you were not making any money out of the rent they were paying.
Analogously, if I’m running a restaurant and I charge you $X for your meal, it’s not unethical for me not to tell you how much profit I’m making on that $X charge. All you need to know is that I’m a restaurateur trying to make money and I have the right to set the prices.
But if I say to you “hey buddy, let’s go somewhere for dinner together”, and then after dinner I look at the check and tell you that your share is X dollars, without mentioning that I had previously paid the restaurateur upfront for a prix-fixe dinner for two costing $(X - 10) and therefore I’m making $10 off your meal payment, then I’m scamming you. That’s unethical.
Again, we’ll never be able to decide the ethics of this particular situation unless we can figure out exactly what the letter-writer told their roommates/sublessees and landlord(s) about the arrangement.
The point is that the “main renter” is charging each of the roommates more than half of the entire rent cost. I.e., the “main renter” is actually paying less than nothing for rent, because his/her share of the rent, plus an extra hundred bucks a month, is being funded by the other two residents.
Again, there’s nothing wrong with that arrangement if everybody involved knows what the deal is.
yeah 70 percent of this column is "I rented out my extra property to my relative and im getting screwed over/they’re wrecking the place and the like
But the writer isn’t paying $500. He’s not paying anything at all, and is pocketing $100. And the friends might be fine with paying $600, especially since they’re paying $800 as is.
I don’t think your situation is comparable at all. If I moved into a shared house where one of the roommates was the adult child of the owner, I’d be really surprised if they were paying rent. It’s fairly common for people with enough money to buy a home, rent out one room to their kids for the cost of basically doing all the landlord stuff, and then charge the normal tenants the going rate.
A tenant subletting is unethical, but when I’ve known situations like that - my ex-ex was in one - you get charged less. A lot less, with much smaller deposits. Actually making a profit is taking the piss. And if the renter who was organising it was caught then they should absolutely expect to be evicted and possibly prosecuted for fraud because they never agreed that with their landlord.
Much of the antipathy towards “the middleman” (there is even a Peanuts cartoon about how “everyone hates the middleman”) comes from the secret knowledge traders and merchants often have. That is, they take advantage of costs of production in one place and their “sole source” position in another. Thus could Robinson Crusoe sell 40 pounds worth of “toys and trifles” for about 300 pounds. Keeping the real costs and prices secret from both ends of the deal is what lets the middleman make more money for less effort. Meaning the other two in the deal need to work harder than they would otherwise. Without complete knowledge of the deals, they can’t determine if the deal is a fair one and so long as the merchant has a monopoly or something akin to it, can’t really bargain.
Thus economists have to “assume perfect knowledge” to even begin to argue that “the market” is always fair and equitable.