We had a conversation with a guy today and it went something like this:
"Hey I saw you hauling some lumber the other day. Whatcha building?"
"We bought a rental house and I was fixing a safety hazard." (Concrete step at entry. 6" tread, 9" risers)
"Ah. I don't do repairs at my rentals."
"Really?"
"Yeah, I rent to druggies. Whatever is there is what they live with. They don't complain."
I just can't wrap my head around it. Renting to druggies is his plan. And he's proud of it.
Being a "slum lord" has very little to do with cash flow. The lowest class properties generally have the highest cash flow in the industry. The reason they do not waste money on upkeep is because the tenants generally destroy everything nice. Minimum repair to meet code keeps the money flowing and the class of tenants have little grounds to complain... or choice..
Actually yes, London is "San Francisco" level expensive, actually worse. The tenets were almost exclusively low income retired or immigrants . They call it "social housing" in the U.K.
https://qz.com/1007903/the-catastrophic-consequenc...
Affordability is relative. I was just in a webinar where they were offering investment in a new modular apartment they are building in SF. 250 sqft for $2500 a month. They had to get an exemption to building codes because the square footage is so small. They sell it as the solution to affordable housing. Of course I noticed they are selling at $10 a sqft as opposed to the neighborhood average of $7.60. But apparently the tenets are going to be bad at math and look only at the monthly cost. They may be right because city hall is all for it and they didn't notice it would actually be less affordable per sqft.
Shrug
I'm glad city hall is going to "allow" it. If a renter is willing to pay $10/sf because the net result is $2500/month (for 250SF) that should be their decision. If the'd rather do that then pay less per SF (but more in absolute dollars) for a 400SF (or whatever the minimum is) that's up to them. Drives me crazy that the government can dictate the size of where people CHOSE to live.
I have been GOP my entire life, but there is a real need for building codes, because without them some people will race to the bottom. So,yes, it is for us to judge, there are minimum standards and they should be enforced
Being "GOP" has nothing to do with this. If you truly believed in free markets, you would understand that the government is rarely (if ever) the most efficient mode of accomplishing anything. Building codes are not needed, safe housing is needed. Codes don't stop true slum lords (obviously), it is simply another intrusion into private property rights. Something the "GOP" should probably oppose.
I reference the Oakland fire as building code are needed to help ensure safe housing.
Having said this it seems strange that I can keep my old small windows that met code when built (but no longer meet egress code) but if I replace them I need to meet the new egress code requiring larger windows. So my choice is old, poor, crappy, energy inefficient windows or larger (supposedly safer for egress) energy efficient new windows that require new framing, drywall, paint, etc. Clearly new energy efficient windows of the same size would be an upgrade and no more dangerous than the existing windows. I was tempted to keep the old windows in the bedrooms and replace all the other windows.
Funny you mention this. I owned some 1940s fourplexes with old windows. I replaced one building with brand new energy efficient windows of the same size. Got busted because I didn't get a permit first. So I said "f it then" and left the other building with their old crappy windows.
For me it was a duplex. The contractor would not install the windows not to code. So my choice was to find a contractor that would be willing to install not to code and risk a fine, not do the BR windows, or do new framing to enlarge the BR windows (the most expensive option). I went with the most expensive option but it did irk me that I would be OK leaving the old windows but making the unit nice I could not use the same size windows. Using the same size (old size) windows was not making the units less safe than it currently was.
The code certainly discourages upgrading small bedroom windows which leaving the old windows is less efficient, less nice, and does not provide the egress to current code. Basically my point is the same size new windows (which would not be to current code) would still be an improvement over the old windows that also did not meet egress code.
I come from the "tenants" view, I have no idea per say about real estate investing, YET, but am working on it. Fortunately, I have not been in the position many times where my only options were the "slum lord" type of landlord, but I have had a few. In some cases, not all, they do seem to me to be taking advantage of certain groups of people. In regards to these types of "tenants" from my experience they can fall into certain categories. 1. you have the ones who just don't care. they will tear up a place quick and expect the landlord to fix it, and they are the ones who are costly and generally make people not want to give others a break anymore. those types of tenants are a pain I'm sure, I've seen those kind often enough. the other group 2. may not be able to afford the going rents for one reason or another. these are the ones who do try to make sure the property is taken care of while they are there, and in some cases they do try to improve it. they may be new to an area, which can cause problems esp if they come from out of state or something so that can cause problems with rental histories etc.
There are building codes that can be enforced but alot of times the people renting from these "slumlords" do not or cannot report these infractions because they are outright afraid that they will lose their homes and then not receive their deposits back, which mostly they won't because the landlord will keep it to "repair" the home, which they then don't do as well as give the tenant a bad reference which keeps them from qualifying for a better home.
I read that California recently started a program to tackle narcotics dealers & gang members by suing the landlords who house the criminal activity. That's a quick way get a landlord to clean up their act =]
I've seen the city come in like some "protector" of the poor taken advantage of tenant. They force an order to do xyz or sell. That happens. The property is cleaned up. The neighbors cheer. The rents are raised. And guess what. Those tenants who were living there (which was their best option as proof by the fact that's where they chose to spend their rent) are now homeless or off to find something worse.
Read The Housing Boom and Bust by Thomas Sowell. Dr Sowell is a Stanford University economist describes this situation perfectly. Government regulations often do not help the poor, but curiously often end up lining the pockets of those who make the regulations. Like the way easy access to government college loans have driven up the cost of college.
I've seen the city come in like some "protector" of the poor taken advantage of tenant. They force an order to do xyz or sell. That happens. The property is cleaned up. The neighbors cheer. The rents are raised. And guess what. Those tenants who were living there (which was their best option as proof by the fact that's where they chose to spend their rent) are now homeless or off to find something worse.
Read The Housing Boom and Bust by Thomas Sowell. Dr Sowell is a Stanford University economist describes this situation perfectly. Government regulations often do not help the poor, but curiously often end up lining the pockets of those who make the regulations. Like the way easy access to government college loans have driven up the cost of college.
I know very well about Dr. Sowell. He's awesome
I totally understand the investment opportunities of being a slumlord, mobile home vs small house, and other methods of renting to the poor or druggies. My beef is that I live in a small home neighborhood that was bought up during the lender/bank auctions that followed the last real estate and mortgage crisis, almost entirely by absentee landlords, many whom have never even visited our town of 4,000 residents. Often these absentee landlords rent to anyone answering the for rent sign in the window; no proper vetting, just 1st, last, and a sizable deposit.
This style of renting fits the "rent to drug dealers" schemes that I have read in this thread......haha.....that's exactly what is happening to our "affordable" neighborhood. I have some new county code-breaker neighbors that are meth dealers as well as NVMOS (no visible means of support), breaking windows, fixing with tape, and lots of traffic. As another expert on this forum said in a different thread, "you have to take it to the landlord's door" and I did.
Eviction process is in effect and I have offered, and been taken up on, my help in interviewing future tenants for this absentee landlord. In another house across the street and a few doors down, I repeated this method, brought it to the landlord's door, and those crackheads are on their way out as well.
So the point: enjoy your slum-druglording, however expect a lot more grief if you do not consider the neighbors, the community, and the tenacity of neighbors tired of being treated without respect to fund another person's little RE empire and cash flow.
@Thomas S. I could understand not making crazy improvements but druggies can file lawsuits too. I would want to know it was safe and everything is in working order at least.
I invest in low income housing and am often called a slumlord by everyone except my tenants because they know I’ll fix stuff and take care of them in a pinch so I have their respect , however I do understand this niche and I wouldn’t over improve the property because it will get torn up and in the end will not make me money and yes, I’m doing this for money not because I’m hellbent on helping the community . You can get rich buying cheap properties up and renting them to low income people over several decades . The guy I bought some distressed apartments from collects about 30k in cash every month door to door like Santa clause going across town one house at a time . He’s a multi multi millionaire and never fixed up or improved his stuff . I don’t think it’s a good business model but I can’t argue with his results either !
I invest in low income housing and am often called a slumlord by everyone except my tenants because they know I’ll fix stuff and take care of them in a pinch so I have their respect , however I do understand this niche and I wouldn’t over improve the property because it will get torn up and in the end will not make me money and yes, I’m doing this for money not because I’m hellbent on helping the community . You can’t get rich buying cheap properties up and renting them to low income people over several decades . The guy I bought some distressed apartments from collects about 30k in cash every month door to door like Santa clause going across town one house at a time . He’s a multi multi millionaire and never fixed up or improved his stuff . I don’t think it’s a good business model but I can’t argue with his results either !
Just realized how old this thread is. Not sure which keyword alert I had that made this show up 🤦🏼♀️
Make repairs for what? Most likely the $hit tenants are the ones who broke it because they wreck anything and everything in sight. These tenants will rip out a faucet and sell it. At least the landlord says "Nope, I'm not fixing anything. Want it fixed you get it fixed since you broke it. Want a new toilet, you buy it since you sold the one that was there".