Make Money as a Slumlord
Make money as a slumlord? Okay, I got your attention, but
I really don't recommend that anyone endanger their renters with
unsafe housing. Much of what is called slumlording though, is
simply providing reasonable housing for those with low incomes.
It benefits the renter and the landlord.
Why Do Renters Want Dumps?
Tenants rent not-so-nice places because they can afford them.
A house that needs paint, has rusty hinges on the doors, and
a dirt driveway, cost less to buy, and therefore can be rented
for less. Anything major that the landlord does to improve it
results in higher rents, and possibly drives the renter away.
This often happens. A few years back my own town enacted rental
regulations. The fifteen pages of new rules included many non-safety-related
requirements, like a minimum of window surface-area, to allow
natural lighting, bedroom square-footage requirements, and no
peeling paint.
These things are done in the name of low income renters, but
the result is always the same: higher rent. Add to that the regulations
against mobiles homes, and low income families are moving further
away from town and jobs. I mention this to let you know that
if you offer an ugly, but safe and affordable rental, you are
providing a real service.
Why Invest in Low Income Housing?
If a nice two bedroom house costs $130,000 and rents for $800,
an old mobile home on a lot will probably cost $45,000 and rent
for $500. Notice that the house costs nearly three times as much,
but the rent you get isn't even doubled. This means more cash
flow from the mobile. This is why beat-up old houses and mobile
homes (on land) are such good investments.
You will have more risk and management problems with
low income housing. Repairs will come up more often, and rent
will be late more often, on average. This is why you deserve
a higher rate of return on your investment. If not for the higher
return, who would provide low-cost rentals?
Treat your tenants well, and make your rentals safe. Then
you can honestly enjoy a good return on your investment - even
if some want to call you a slumlord.
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