Hesitancy to Invest - is it Morally Right?

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Hesitancy to Invest - is it Morally Right?

Nick Kenrick
Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes

Hi all,

I've done a little bit of real estate investing - I currently own 3 single family rentals in Indianapolis. I also own my primary residence and plan to convert the garage into a studio. I'm doing fine and see opportunities to grow my portfolio, but the housing affordability crisis has been bothering me lately and has got me questioning if scaling is a morally acceptable thing to do in this climate.

For the longest time, owning a home was the only way for blue collar workers to achieve the American Dream. With interest rates rising and no real decline in demand, it's becoming harder and harder for regular folks to own their own place. And now regular folks who are hoping to afford their own place have to compete with institutional capital and hundreds of out of state individual investors who can afford to take some losses for long-term appreciation plays.

It's just gotten harder and harder for the little guy and I'm wondering - is there more we as real-estate investors should be doing to help? Are we partly to blame? Or are my concerns overblown?

Thanks in advance.

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Jeremy Horton
Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes
3y

Absolutely it's morally right to provide decent affordable housing - I provide good housing and restore old run down properties

It's not my problem if someone can't afford a house - it's not a "right" as many would have you to believe. Some people have bad luck and have just been dealt a bad hand. Many more take advantage of social assistance and continue on a path of horrible decision making. 

If anything blame the government for meddling in private market affairs.

Is it right I pay 24-32% in taxes while many people pay none? Is it right I pay for other people's housing, kids they can't afford, food stamps, college degrees?

I have 0 moral hesitancy when it comes to my properties - I'd own the entire city if I could. 

I actually had this come up recently - had to evict a lady. The court shuts down over Christmas, so it took an additional 3 weeks to get her out. She can't afford her rent, yet she can afford alcohol and cigarettes. I'd have evicted her Christmas eve, if I could have. 

The ONLY people I genuinely feel for are the kids of these people. Simply because they are innocent and cannot help themselves like a full grown adult

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  • Account Closed
    Rental Property Investor · Tacoma, WA · Member since 2023 · 14 posts · 14 votes
    3y

    I often think about the moral implications of investing in real estate as well. I think the fact that you even consider whether or not it is morally right means that you will be a more thoughtful, caring, and fair landlord - something that is definitely a benefit to the community. At the end of the day, people need a place to come home to. RE investors as a whole collectively improve the quality of housing available to our tenants. We take properties that need help, clean them up, and then provide a better place to live in for those who rent.

    4Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    @Mark Cruse It's so easy for people to criticize others isn't it? I just find it astounding that anyone could accuse you of anything evil regarding gentrification. Heck, it's the most positive thing in the world...you take a rotting, decaying neighborhood that was once beautiful, and you spend your money and you take the risk to make it whole again. Otherwise these one-of-a-kind neighborhoods would be lost to drugs/gangs/progress and end up as cookie box condos, their glory and wonder forever gone...

    I've specialized in gentrification and I know it takes a huge set to go into these neighborhoods and throw down your money. No one else does it except the brave few - or I always wondered if I was just stupid? ( A lot of people on here would no doubt agree :-)

    I know you well enough from these forums to know you do things right. The OP needs a mentor like you...I ain't got enough patience...

    Next time someone gives you grief about this gentrification nonsense, let me know, I'll gather some cowboys and head back to Bmore....

    3Reply
  • Jason Drager
    Clive, IA · Member since 2022 · 8 posts · 10 votes
    3y

    Bear in mind, I've not come off the sidelines of REI yet (so limited knowledge), but...

    Perhaps offering your properties as "rent-to-own" would give your residents a pathway to home ownership, while providing some form of return to you for your investment, and help ease your morality concerns?

    3Reply
  • Danielle Layne
    Member since 2022 · 26 posts · 20 votes
    3y

    Personally as an investor, I’m looking to buy off market distressed properties or homes that are no longer affordable to the homeowner(s). Nobody except maybe other investors wants the properties I’m looking for. I’m helping homeowners without disturbing the market that typical home buyers are looking around at. Hope this helps!

    3Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Jason Drager:

    Perhaps offering your properties as "rent-to-own" would give your residents a pathway to home ownership, while providing some form of return to you for your investment, and help ease your morality concerns?

    That's a good idea, as long as it works financially for the investor. What the wokies forget is that ultimately we must run a business in order to help others....
    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    3y
    Quote from @Bruce Woodruff:

    @Mark Cruse It's so easy for people to criticize others isn't it? I just find it astounding that anyone could accuse you of anything evil regarding gentrification. Heck, it's the most positive thing in the world...you take a rotting, decaying neighborhood that was once beautiful, and you spend your money and you take the risk to make it whole again. Otherwise these one-of-a-kind neighborhoods would be lost to drugs/gangs/progress and end up as cookie box condos, their glory and wonder forever gone...

    I've specialized in gentrification and I know it takes a huge set to go into these neighborhoods and throw down your money. No one else does it except the brave few - or I always wondered if I was just stupid? ( A lot of people on here would no doubt agree :-)

    I know you well enough from these forums to know you do things right. The OP needs a mentor like you...I ain't got enough patience...

    Next time someone gives you grief about this gentrification nonsense, let me know, I'll gather some cowboys and head back to Bmore....


    Thanks for those encouraging words. Actually, I´ḿ quite used to that kind of stuff which is sad. LOL. In actuality, some are harmed by gentrification but so so so many people do benefit. Several people who remain there build generational wealth and enjoy a thriving environment. There will always be people who feed off every negative aspect and lash out at others, blaming them for their circumstance. Still its truly sad when someone who loves his community like me and have done so many things to improve it is accused of teaming up with elite racists to harm it. Have to take it in stride but I may need your cowboys eventually. LOL.  I concur that you need a pair to go over there and make it happen. In that context only it is an elite group. lol 

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Mark Cruse:

    And that's what goes unnoticed by the masses and the uneducated. So many more people win than lose when good investors like you play the game.

    2Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    3y

    Lol.  Posts like this have me ready for Galt's Gulch.  WHAT. HAPPENED. TO. AMERICA????

    0Reply
  • Nick Kenrick
    OP
    Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes
    3y

    Hey all, I really appreciate the great discussion and ideas here. There were a lot of great actionable ideas - like considering lease options, rent to own, buying 1 bedroom condos/studios, or even getting into the developing game that I think directly address my concerns.

    Ultimately, I've had a lot of hesitancy and I've struggled to discern if it's truly a moral quandary holding me back or if I'm just making excuses to sit on the bench. I think ultimately the points about us doing a better job than the government and being able to give back to our communities better really highlight a lot of the positives that us investors bring. So this helps a lot.

    I mentioned these concerns to my cousin once, and he said "it sounds to me like you haven't had a bad tenant yet". He's right. I sometimes have a hard time accepting the reality that not all people are looking to better themselves, and that a lot of people are out there to make a quick buck and don't care who they hurt. If I'm fixing otherwise unusable properties and renting to good people and being decent, I'm doing a lot more good than harm.

    Thanks again all.

    6Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Nick Kenrick:

    Hey all, I really appreciate the great discussion and ideas here. There were a lot of great actionable ideas - like considering lease options, rent to own, buying 1 bedroom condos/studios, or even getting into the developing game that I think directly address my concerns.

    Ultimately, I've had a lot of hesitancy and I've struggled to discern if it's truly a moral quandary holding me back or if I'm just making excuses to sit on the bench. I think ultimately the points about us doing a better job than the government and being able to give back to our communities better really highlight a lot of the positives that us investors bring. So this helps a lot.

    I mentioned these concerns to my cousin once, and he said "it sounds to me like you haven't had a bad tenant yet". He's right. I sometimes have a hard time accepting the reality that not all people are looking to better themselves, and that a lot of people are out there to make a quick buck and don't care who they hurt. If I'm fixing otherwise unusable properties and renting to good people and being decent, I'm doing a lot more good than harm.

    Thanks again all.

    Take this as it's meant...you are a) too young, b) too booksmart, nor real-world smart, c) have very little clue as to what it takes to do this RE thing.

    Your game-on is to either back out and go sit at a desk, or jump in and do this. Do it your way though, you can be a good person and do Real Estate. And get away from the current woke BS, it is poison....be your own man.
    2Reply
  • Jared HottleBusiness Member
    Real Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
    3y

    It is true that owning a home has traditionally been considered a key component of the American Dream, and that rising interest rates and increased competition from institutional and out-of-state investors have made it more difficult for regular, or "little guy," buyers to afford a home. As a real-estate investor, it is up to you to decide how you want to approach this issue. Some options may include investing in more affordable housing options, working with local organizations to promote homeownership, or advocating for policy changes that make it easier for regular buyers to afford a home. Additionally, it's also important to consider factors that might affect the market such as the economy, interest rates and local regulations.

    It's also worth noting that the concerns and blame is not solely on the real estate investors but a complex issue that is affected by multiple factors and stakeholders.

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    1Reply
  • Jon A.
    Investor · Brooklyn, NY · Member since 2022 · 158 posts · 118 votes
    3y

    @Nick KenrickYour questions are legitimate, but you're probably not going to find much sympathy for your ideas on this site. I will say this - the impact that you and your three homes have on your local housing market are rather insignificant wrt housing affordability. But if you're seriously concerned about this issue, you should consider starting a non-profit that fixes up houses and sells them to first time homeowners. There's nothing that stops you from doing that.

    1Reply
  • Adah N.
    Investor · Atlanta, GA · Member since 2020 · 294 posts · 142 votes
    3y
    Quote from @Nick Kenrick:

    Hi all,

    I've done a little bit of real estate investing - I currently own 3 single family rentals in Indianapolis. I also own my primary residence and plan to convert the garage into a studio. I'm doing fine and see opportunities to grow my portfolio, but the housing affordability crisis has been bothering me lately and has got me questioning if scaling is a morally acceptable thing to do in this climate.

    For the longest time, owning a home was the only way for blue collar workers to achieve the American Dream. With interest rates rising and no real decline in demand, it's becoming harder and harder for regular folks to own their own place. And now regular folks who are hoping to afford their own place have to compete with institutional capital and hundreds of out of state individual investors who can afford to take some losses for long-term appreciation plays.

    It's just gotten harder and harder for the little guy and I'm wondering - is there more we as real-estate investors should be doing to help? Are we partly to blame? Or are my concerns overblown?

    Thanks in advance.

    You could also offer section 8 in your properties. Make sure you screen like you would any other tenant. It gives an opportunity to good tenants to live in an area where they otherwise could not afford
    2Reply
  • Bob Anthes
    Rental Property Investor · Port St Lucie, FL · Member since 2019 · 150 posts · 79 votes
    3y

    @Jeremy H. So well said!

    0Reply
  • Kerry Noble JrPro Member
    Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
    3y
    Quote from @Nick Kenrick:

    Hi all,

    I've done a little bit of real estate investing - I currently own 3 single family rentals in Indianapolis. I also own my primary residence and plan to convert the garage into a studio. I'm doing fine and see opportunities to grow my portfolio, but the housing affordability crisis has been bothering me lately and has got me questioning if scaling is a morally acceptable thing to do in this climate.

    For the longest time, owning a home was the only way for blue collar workers to achieve the American Dream. With interest rates rising and no real decline in demand, it's becoming harder and harder for regular folks to own their own place. And now regular folks who are hoping to afford their own place have to compete with institutional capital and hundreds of out of state individual investors who can afford to take some losses for long-term appreciation plays.

    It's just gotten harder and harder for the little guy and I'm wondering - is there more we as real-estate investors should be doing to help? Are we partly to blame? Or are my concerns overblown?

    Thanks in advance.


     Ive definitely thought this is well! Prime example when i got into real estate about 4...5 years ago.....46218 was a war zone and you could get rent read properties for 40K all day....now those properties are triple that in cost and its still the most dangerous zip code in the state.........but if people cant afford to live in 46218 thats a problem. just my 2 cents!

    1Reply
  • Quincy Lockett
    South Holland, IL · Member since 2017 · 376 posts · 432 votes
    3y

    @Nick Kenrick

    I agree with @Jay Hinrichs

    From my experience in real estate investing there is no “affordability crisis.” There is a shortage of modern 3 bath 2 bath homes w/2 car garages and basements selling for 150K in good suburban neighborhoods. When people at the margins finally get approved to purchase, they generally don’t want the affordable homes.

    1Reply
  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    3y
    Quote from @Nick Kenrick:

    Hi all,

    I've done a little bit of real estate investing - I currently own 3 single family rentals in Indianapolis. I also own my primary residence and plan to convert the garage into a studio. I'm doing fine and see opportunities to grow my portfolio, but the housing affordability crisis has been bothering me lately and has got me questioning if scaling is a morally acceptable thing to do in this climate.

    For the longest time, owning a home was the only way for blue collar workers to achieve the American Dream. With interest rates rising and no real decline in demand, it's becoming harder and harder for regular folks to own their own place. And now regular folks who are hoping to afford their own place have to compete with institutional capital and hundreds of out of state individual investors who can afford to take some losses for long-term appreciation plays.

    It's just gotten harder and harder for the little guy and I'm wondering - is there more we as real-estate investors should be doing to help? Are we partly to blame? Or are my concerns overblown?

    Thanks in advance.


     Basically you're asking if it's moral or ethical to run a business. Short answer: yes

    You are not responsible for what people can or cannot afford and the present macroeconomic conditions. By owning rentals you are simply trying to earn a profit through a voluntary exchange between you and a tenant.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Bruce Woodruff:

    @Mark Cruse It's so easy for people to criticize others isn't it? I just find it astounding that anyone could accuse you of anything evil regarding gentrification. Heck, it's the most positive thing in the world...you take a rotting, decaying neighborhood that was once beautiful, and you spend your money and you take the risk to make it whole again. Otherwise these one-of-a-kind neighborhoods would be lost to drugs/gangs/progress and end up as cookie box condos, their glory and wonder forever gone...

    I've specialized in gentrification and I know it takes a huge set to go into these neighborhoods and throw down your money. No one else does it except the brave few - or I always wondered if I was just stupid? ( A lot of people on here would no doubt agree :-)

    I know you well enough from these forums to know you do things right. The OP needs a mentor like you...I ain't got enough patience...

    Next time someone gives you grief about this gentrification nonsense, let me know, I'll gather some cowboys and head back to Bmore....


    but criticism for gentrification is alive and well. I was one of the first builders to build new construction in what was a traditional all black neighborhood of Charleston SC.. There was a very large article in the local newpaper about the locals being priced out and pushed out.  But no mention of the same locals that own the homes that prices were held down Because of no growth.. And now I build and sell ( at the time a 375k new build) circa 2015  now you cant buy a lot for less than about 200k and all the homes are 400k and above and most are owned by Black families so who benefits ??
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    1Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y

    For the most part I believe us mom and pop investors help renters.  We improve neighborhoods and have a heart.

    It's the institutional hedge fund and syndications that place stakeholder value above all else.   They refer to rent raises as 'stabilizing the property '. 

    When I sell singles and doubles, it has always been to a local first-time buyer.  I sell 1 to 2 per year and have a short list of current and former renters of ours who are saving their money right now.   I sell by owner at a price net of commissions  to maximize value for them going in and have no gotchas or shady stuff.  

     But selling commercial apts, I'm like every other greedy schmuck.   I sold 2 to out of area syndications last year, letting 2 or more duke it out auction style.   

    Investor to investor larger MF sales are harder to protect the tenants and I consider these sales as my legacy reward for years of battle in the trenches.  Give back as you can.  Good discussion 👍



    6Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    3y

    @Nick Kenrick I'm offended by your post. Have you even been in a position in life you've had to rent? Some of us didn't always have an option to buy a house right away or live comfortably with mommy and daddy until we had enough money. 

    I'm thankful for the landlords that provided me an opportunity to rent a property.

    (edit: I reread the original post 5 times. I'm still not sure if the original post was real or if he's trolling all investors)

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Jon Kelly:

    @Nick Kenrick I'm offended by your post. Have you even been in a position in life you've had to rent? Some of us didn't always have an option to buy a house right away or live comfortably with mommy and daddy until we had enough money. 

    I'm thankful for the landlords that provided me an opportunity to rent a property.

    (edit: I reread the original post 5 times. I'm still not sure if the original post was real or if he's trolling all investors)


    This ^^^^^.  The OP is a San Jose resident so very wealthy by default. I thought possibly troll as well, but could just be looking for those 'First World' problems as is common nowadays. And this is most certainly a 'First World' problem...

    2Reply
  • Jason Kern
    Real Estate Broker · Portland, ME · Member since 2016 · 63 posts · 55 votes
    3y

    Providing housing is a great way to help people. We'll always need rentals. So, create an income or some personal wealth if/when you have the chance and then give back in a way that resonates with you ethically and morally. I like to deliver food for our local pantry and volunteer to build houses. 

    0Reply
  • Jared Trindade
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 214 posts · 293 votes
    3y
    Quote from @Nick Kenrick:

    Hi all,

    I've done a little bit of real estate investing - I currently own 3 single family rentals in Indianapolis. I also own my primary residence and plan to convert the garage into a studio. I'm doing fine and see opportunities to grow my portfolio, but the housing affordability crisis has been bothering me lately and has got me questioning if scaling is a morally acceptable thing to do in this climate.

    For the longest time, owning a home was the only way for blue collar workers to achieve the American Dream. With interest rates rising and no real decline in demand, it's becoming harder and harder for regular folks to own their own place. And now regular folks who are hoping to afford their own place have to compete with institutional capital and hundreds of out of state individual investors who can afford to take some losses for long-term appreciation plays.

    It's just gotten harder and harder for the little guy and I'm wondering - is there more we as real-estate investors should be doing to help? Are we partly to blame? Or are my concerns overblown?

    Thanks in advance.


     If you aren't ripping people off, treating them poorly, managing your tenants awfully, or lying to them- there is nothing morally wrong with it. Using the tools you have inherited and/or created to continue accumulating assets in life should be goal. There's no morals attached until you are doing something shady, or not doing something you know you should be doing. Many people find fulfillment in donating, and giving back as they begin to acquire wealth above their living requirements. That's a moral thing to do, it wouldn't be moral to lie about donating to charities for tax writes off though would it? 

    Never be embarrassed for doing well for yourself, money is nothing to be ashamed about, especially if you are earning it fairly, legitimately and in good ethics. 

    3Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    3y
    Quote from @Nick Kenrick:


    Ultimately, I've had a lot of hesitancy and I've struggled to discern if it's truly a moral quandary holding me back or if I'm just making excuses to sit on the bench. I think ultimately the points about us doing a better job than the government and being able to give back to our communities better really highlight a lot of the positives that us investors bring. So this helps a lot

    As God is my witness, as God is my witness they’re not going to lick me. I’m going to live through this and when it’s all over, I’ll never be hungry again. No, nor any of my folk. If I have to lie, steal, cheat or kill. As God is my witness, I’ll never be hungry again.

    That's the attitude you need, Nick.


    0Reply
  • Nick Kenrick
    OP
    Investor · San Jose, CA · Member since 2019 · 15 posts · 38 votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Jon Kelly:

    @Nick Kenrick I'm offended by your post. Have you even been in a position in life you've had to rent? Some of us didn't always have an option to buy a house right away or live comfortably with mommy and daddy until we had enough money. 

    I'm thankful for the landlords that provided me an opportunity to rent a property.

    (edit: I reread the original post 5 times. I'm still not sure if the original post was real or if he's trolling all investors)


    This ^^^^^.  The OP is a San Jose resident so very wealthy by default. I thought possibly troll as well, but could just be looking for those 'First World' problems as is common nowadays. And this is most certainly a 'First World' problem...


    Yes. I paid rent through college and my entire adult life until I closed on my personal residence last year at 30 years old. Given that most of that rent was paid in San Jose, I've probably paid more in rent in my life than both of you combined. I won't deny that I'm privileged, but it hasn't exactly been a cake walk.

    I don't mean to offend. You're not wrong - this is in many ways a first world problem. But Silicon Valley has a massive homelessness and affordability crisis. I've seen it first hand too many times and I don't want to cause issues in markets I invest in. This isn't meant to be accusatory or to say that investors are to blame, I'm just trying to do my part.

    0Reply
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