Setting up a rental is actually a lot of work that is upfront and has a ton of risk. You also need to pay taxes, so it's not based on effort at steady state. Steady state is based on cashflow management.
This ignores that major developers can absorb a lot of risk and aggregate. It also ignores that foreclosures on ordinary people can be snapped up by banks and developers. It also ignores that tax abatements are very popular and often extremely undeserving. Near where I live, tax abatements are granted regularly and come out of the school budget.
If the housing market keeps going up, where's the risk? You'd have to be the dumbest man in NYC real estate to lose money like the president's son-in-law. Small time landlords are a slightly different ballgame, but it's still bizarre that we allow individuals to speculate on where people live and and extract money from the less wealthy in this fashion.
EDIT: Also, what other job requires work up-front, but then nearly none? Landlords are famous for terrible upkeep. Even in communities where problems are generally fixed, most of the time, the landlord just collects a check until a problem pops up. They only have to work for rare serious problems and for managing move-in move-out.
EDIT2: The craziest thing is that we see that they do this and still collect 25%+ of ordinary people's incomes for an invisible service that is merely holding intellectual property. It's as though people pay to live in a castle keep with no services, pay the local lord, and justify giving 25%+ taxes on top of what you give to the actual democratic government (typically less to much less) because the lord is somehow a great symbol of the economic system.
