Do Landlords Have Neighborhood Obligations
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
Are landlords obligated to contribute to the community surrounding their rentals? If so, do you think landlords in a well-to-do community have less community obligations than owners in low income neighborhoods?
I think we're obligated and high-end landlords have way less community obligations. What do you think?
If you're smart you will, regardless of the value of the property! Neighbors can make your life miserable, government can kill you and both can destroy any hopes of equity.
It is easier to have a neighborhood pull your property up than the other way around. As an investor you have to be realistic (idealism is a beautiful thing) and need an economic model that will work.
My policy has always been to keep tenants that pay their bills. These people may not live up to my standards but deserve to be able to raise a family in a relatively safe environment.
As an example, I bought a house with sec 8, 3 rambunctious boys and an unemployed mother. Her housekeeping was less than stellar.
My choices were to: 1. Kick her out and remodel the house; 2. Keep her and improve the place 3. Or keep it relatively the same while she stayed, doing what the inspectors required for safety sake.
Had a contractor friend do some work and he believed she kept things poorly because of the condition of the house and if it were improved she would change her ways. I disagreed. It is my observation that people will bring a property down to the level they are accustomed to.
This contractor insisted that if we did some work (leveling kitchen floor, new vinyl, etc) that he could convince her to clean up her act and do a better job cleaning up. I said ok, let's see. My bill was over 3k.
Maybe a year or so later he came back for some other repair and the floor was trashed. He agreed I was right. It was an interesting experiment.
She stayed 13 yrs and when she moved it really was trashed. It took 10 months and over 20k to get it up and running again. It turned out beautiful and have had the best of renters ever since. Gentrification helped in turning the area into a now hip area in high demand.
Long story is that the city did things that propelled the neighborhood into a positive direction. I facilitated in a way that was profitable in the short-term and ultimately the long-term too.
Al,
I think so. We are both in Sacramento. I have some nicer 4 plexes in Midtown but I am looking at some SFR's in Del Paso Hights as the cost per unit is right around $50k. The issues I see in this part of DPH could be helped by a landlord that cared. I am looking at two houses on the same quiet side street that has a significant issue with illegal dumping at an empty lot that is next to and across the street from the two houses. It makes a nice street look terrible. The neighbors hate it but they are mostly elderly and feel helpless. If I buy the houses I will set up cameras and motion lights, put out signs and lean on the county to clean it up and police to patrol it. If the county won't do it then I know a few churches that will take it on as a community service project. If you put up some resistance, the bad element will migrate to a spot with less resistance. I know the local politicians (both incumbent and those currently running) and have little doubt we could fix the problem quickly if I make some noise. You can't fix a whole neighborhood but you can attack each hot spot one at a time and after a few years of doing that you have made significant improvement.
Joe Bertolino Wow, you did a great job of illustrating that a little landlord leadership can focus attention and solve a neighborhood problem. The illegal dumping issue is a lid on property values. If you are bold enough to exercise some leadership to resolve the issue, you will naturally capture higher appraisal values as a reward.
Often neighbors wait for someone else to solve problems that burden their property values. Taking stake in these areas and applying some best management practices really makes for a profitable investment.
Jeff Sielicky your point is well taken. The strategy that I like to tout isn't best for everyone - especially a sfh landlord. If you owned a cluster of homes is a run down areas, then maybe a neighborhood restoration strategy (working with nieghbors beyond your property lines) might make more financial sense. Check out point 4 in my BP article: http://www.biggerpockets.com/articles/3756-4-success-factors-for-profitable-inner-city-investments
Al, I am all for your strategy. It would be great to be big enough to make a significant difference, and to do it quickly. My improvements have been slow but good for the areas I own. It is my opinion good tenants make all the difference. Real low income is a challenge when it comes to improving neighborhoods, from my experience.
How is investing in Sacramento for out of state investors? It is a one day drive from Portland.
Jeff S please give us an update. Have you seen any improvements?
Jad Allen have you changed your mind at all? Do you still feel landlord an not interconnected with and interdependent on the neighborhood surrounding their rental(s)?
In general, is it really a sustainable strategy to not try to leave the neighborhood better than when you found it?
If my house is vacant the neighbors will throw rocks at the windows, steal anything of value and do drugs in my house.
Personally I think the landlord has a responsibility to the neighborhood just as much as the occupants do. You need to get the citizens to stand up and try to make a difference, and the landlord will follow.
I agree.
If residents don't care (or worse), it's not my obligation to intervene and try to get them to stop (literally) fighting, dropping out of school, being derelicts, and so on. That's civic and political leaders who should try to lessen those risks.
It's a landlords job to provide a sanitary, acceptable place to live. My property lines are my problem--- the neighborhood's problems are not my problems. (If street thugs, say, pose a risk to my ghetto property, I'm selling and moving on.)
If I owned a house in the ghetto, I certainly wouldn't be renovating the place like a high-end home. No granite, no stainless steel, etc. Tenants in the hood simply don't take care of those nice upgrades 9 times out of 10. And I wouldn't see that money back when I sold a home in the ghetto. I'm not hiring out professional landscaping in the hood where tenants will trash the yard/house.
I will not put myself, my family, my friends at risk to try to break up a fight in the ghetto between my tenants' neighbors. That's not my job, and bad neighbors in the ghetto made/make their choices.
The people who make blighted areas... blighted.... make their own choices. I don't see a landlord's job as trying to reform thugs.
I'm not interested in attending community meetings.
I'm not going to go out and try to stop juvenile delinquents from gratifying property. Nor will I try to get people who live on welfare for decades to go out and get jobs. Nor will I babysit their kids while they try to find jobs. Nor will I try to stop thugs from fighting each other on the streets. Nor will I clean up the trash that neighbors invariably throw around the neighborhood. Nor am I going to remove graffiti, plant trees, stop loitering, etc. in the neighboring area. That's not my job.
I would keep my property in the ghetto up to a reasonable standard and screen tenants up to a reasonable standard. I wouldn't let my property be a slum building. But, I can't force derelicts, delinquents, and thug neighbors to be anything other than that. Civic leaders, teachers, re habitation centers, and such can take on that role and try. If we "gentrify" one neighborhood, people who choose to be delinquents, thugs, etc. will move on to another area that will be the latest ghetto. People who have nothing with little chance of having a career, etc. don't have a whole lot to lose (in their minds) by being derelicts, thugs, and causing problems. There will, sadly, always be a ghetto and there will always be thugs who make bad choices. I must be jaded.
In a high-end neighborhood, more upgrades on cosmetic things are often expected. Tenants paying thousands and thousands a month are going to expect premium finishes or they aren't going to rent from you.
Wow Jon K. thanks for speaking up. I truly respect you point of view and can appreciate that many who take the traditional, inwardly focused approach to inner city landlording have made good-sized profits.
You drive home the point that there are at least three camps on this topic.
Under certain circumstances, a landlord may chose to pivot and transcend their traditional "job" descriptions and move on to become cash flow managers, resident services agents, and entrepreneurs. The mindset/camp focuses on what can be done and not the minimum required duties.
This outwardly focused approach focuses on creating community benefits that geometrically grow over time. A type of "neighborhood interest" that compounds, snowballs somewhere along the journey
and in both of my experiences in two different neighborhoods in 18 years, leads to larger profits.
The third camp may be somewhere between our two views. No matter what your feeling on how to approach inner city investments, it's a good idea to encourage and support those who are doing the work to make the community better.
It's in our own self interest to pay for a bottle of soda for the community meetings we don't attend or contribute a few dollar to support sports clubs to give youngsters something positive to do. There are tons of ways every inner city landlord could invest $5 per month to make big difference. I'll expand on that later.
The only obligation I feel I have is keeping up with the status quo.
If all the other houses on the block are nicely maintained, I can't keep mine like a section 8 house. The lawn should be mowed at least.
I can understand that. How often are these residents/neighbors taking responsibility for their own lives and neighborhood? That's the problem I have with me trying to fix and/or pay for their mistakes. They choose to be thugs or live off welfare for decades not having a job or getting drunk or vandalizing property,... why should I pay for their mistakes? To fix and literally clean up their mess, whether that's vandalism or litter or worse? Why jeopardize my safety, give away my time and money, etc. when they're making bad choices, don't work, and don't try to improve their own lives and help themselves?
With that said, giving youth options for education and civic involvement is a good thing. Still not something I would do in the ghetto, but their teachers, community leaders, YMCAs, etc. fulfill a good role in this. People who take the initiative to bring themselves up by their boot straps out of the ghetto and work hard I think highly of. I've just seen too many lazy derelicts to want to take the responsibility to improve the ghetto when those people aren't working hard or even trying to improve their own lives.
If I came across a ghetto full of hard-workers making wise decisions and who had great levels of personal responsibility, I would probably then consider getting involved in civic groups in the ghetto and try to help them help themselves. It's helping people who do nothing to try to help themselves are are lazy and entitled who I have no patience for.
I have seen some very hard workers who are dirt poor and trying to work their way up. I'm not suggesting that everyone in the ghetto is an entitled lazy bum or derelict. The hard workers with strong personal responsibility are those I would like to see helped. Those are people who really deserve a "hand up."
I do think there will always be a ghetto regardless... it'll just move down the street. One area gentrifies and improves, the ghetto will relocate since thugs can no longer afford that improved area. Then another ghetto will improve and increase in value, then the thugs will move on to yet another ghetto.
Hey Mike Franco and Jon K. I took some time to consider your points of view. They are much different than my own, but I believe your views represent the majority. Thank you for the lesson.
I think the vast majority of landlords are decent folks that don't want to cause problems for the neighborhood but aren't interested in fixing them either. I think that honestly summarizes the "physics" of the matter.
This exchange has helped me see neighborhood interconnectivity from an entirely different angle. I never looked at it as being the one that feels the influence of the raising wave. I have a lot more to learn about this mindset.
And Jon K, I'm happy that we both agree that those doing the work to better a community should be supported. But could I push and get you to agree that, in general, landlords should contribute a few dollars to those working to better the neighborhood which their property sits?
And Jon K, I'm happy that we both agree that those doing the work to better a community should be supported. But could I push and get you to agree that, in general, landlords should contribute a few dollars to those working to better the neighborhood which their property sits?
If residents themselves aren't contributing, why should I? (Other than our tax dollars that are going to welfare benefits already, as well as property taxes that fix roads, support schools, clean up graffiti, food pantries, homeless shelters, etc.) In true slums, there are rampant poor choices among residents. Sure, some hard-working, responsible residents live there too, but there are tons who are lazy, don't work, keep making bad choices, get drunk or addicted, and don't try to help themselves. I don't want to fix their mistakes over and over and I don't want to spend money when they're not also contributing to the community or trying to help themselves. Our tax dollars are paying for their welfare benefits already. The charities and those also supported by our taxes (schools teachers and the like) do a lot of good-- and our taxes are already supporting at least some of these. I support tax breaks for those who donate to charities. Those who donate to charities are nice people and should rewarded. My taxes and property taxes are my contribution. Local residents should take initiative to fix their own neighborhoods and lives.
Maybe I'm cold and believe that people should be responsible for their own lives-- and in the slums, that could mean 80 hours a week, getting off welfare, educating oneself, skimping by on Ramen and having no TV/phone/cable/other luxury service or goods, shopping thrift stores for clothes, not smoking or drinking (expensive), not going out to eat or to clubs or movies when poverty-striken on welfare, cutting all expenses when on welfare and taking any job that's offered, making wise choices, and moving away from the slums. I can't fix their lives or neighborhoods, and I don't believe I should have to. Our society is rampant with entitlement these days, and that includes too many people spending years on welfare not trying to get a job or education when they could better their own lives.
The teachers and charities and so on that help people in the hood are kind.