03.21.14 Book Review: Building Wealth with Inner City Rentals

The last book I reviewed, I didn't realize the author was on BiggerPockets. This time I know the author is, because that's why I bought it. The book is Building Wealth with Inner City Rentals: Success the Catalytic Landlord Way by Al Williamson.

I love Al's philosophy and definition of a catalytic landlord:A rental owner who assumes a leadership position in a troubled community to quicken the pace of neighborhood revitalization. I believe, as Al does, that I can make a differencewhile making a profit. The goal and opportunity is to leave a neighborhood (and people’s lives) better off than when you found it.

I’ve been involved in my troubled community for over three years. It’s sobering that the landlord driven neighborhood revitalization process could take five to ten years; I want faster results.But I have been a consistent advocate, nudging the neighborhood in a more orderly direction and sticking around to help the changes become permanent.

“Disorder” is a general term for litter, graffiti, drug dealing, not enforcing rules, overgrown lawns,

dilapidated homes, etc. It makes people feel uncomfortable and chases away honorable tenants. I’ve been hearing the term “Broken Window Theory” a lot lately, which claims that crime can be

discouraged by reducing disorder. Taking care of little things helps prevent larger problems from occurring and can tip a troubled neighborhood towards restoration. Along those lines, I’ve been partnering with the police and neighborhood association to rapidly remove stray shopping carts and graffiti.

It helped to rethink my role as landlord. Many landlords paint themselves as victims of the low income issues, but landlords have a lot of leverage that they can use to improve a struggling area. The number of renters outnumbers the number of owners and leaves landlords as the biggest stakeholders. Landlords can pressure other landlords, don't get fatigued as easily as residents, don’t face issues with retaliation, and they have the biggest financial incentive to get involved (increased cash flow and increased property values).

I learned that my target neighborhood is in the Lag stage, where things have significantly improved, but still has a stigma and attitude of not wanting to live there by the outside community. Although, in some sense I feel like we are maybe settling for a safe neighborhood instead of a great neighborhood. Regardless, I need to focus efforts on improving the image of the neighborhood, mostly to outsiders.

I already knew, but this book put into words how important it is to buy on the boundary. Our property on the edge of the revitalizing area is our least hassle property. Weekly inspections of the exterior of properties are also key; I need to step up my game a bit to make sure the properties reflect the standards I’d like to hold others to. It also pointed out that a landlord needs to be viewed as a dominant player. With eight scattered units I don't control enough ground, so I need to team up with larger landlords.