Does the term "SLUM LORD" bother you?

23 Replies

I was just wondering if anyone on BP or have heard of any investor being called a "slum lord"? Would anyone else take offense to being called a "slum lord". It puts a bad taste in my mouth personally. Below is the story that sparked the conversation for this.

My wife was talking to a police officer at work and it came up in conversation that we do REI. She mentioned about a deal we were trying to work out (C class neighborhood or less). He asked where the area was. She told him and he immediately laughed and asked if we were "slum lords". She took a little offense to it and so did I when I heard it. I have never thought of myself in that light, but obviously others may see us in that way. However, yes the place is not in the best neighborhood. However, I hope to at least provide a nice, safe residence for my tenants at my property. I obviously can't speak on the other landlords in the areas though.

This is the first time I have heard anyone calling us by that term. IMO, I have only had good relations with my tenants. Many of them are very pleased with their stay at my places. Is there a way I can change this third party perspective on my business or have I just been naive in our REI.

@Jim Wilcox Funny you started this thread.. I was just having the same conversation with a partner. I think it's essential to remember why we invest in REI... Yes money is great but, as you mentioned, providing a safe place to stay is a great WHY statement. I recently had a deal fall through in a C like neighborhood in which after thorough reflection, I do not know where the problems with. I came to the conclusion that it was dealing with a out of state 'slum lord.'

 I think it depends on if you are the type of person whom 'cares' what others think. I also think it reflects on how you hold your self to.. The standards and values you believe in. Sounds like your motives are in check, and I don't foresee you as a slumlord.

@Jim Wilcox I' don't think that you should spend a lot of time wondering what people think of you or where and how you conduct your business. People will have their preconceived notions that are often baseless. At the end of the day you need to live with yourself. You know how your tenants are being treated. Sounds like your head and heart are in the right place. Continued success.

Michael

Yeah, people who say that are not investors. What did the guy expect?...that you'd purchase an expensive "nice" home and cash flow off of it? It just shows he doesn't really understand real estate and that he assumes just because an area is not as nice that all the homes must be slums. Close-minded. When you're making cash flow and retiring early while he's still working as a cop, you won't mind the jokes! ;-)

Things like this are going to happen.  Just let it roll off and continue growing your business.

@Jim Wilcox , people often make senseless comments/judgements.  It's not worth my time to figure out why anyone might denigrate what I do.  I have enough to think about with regards to things that actually matter in my life.

When I hear someone say something like that, I make it easy and chalk it up to one of two things: Ignorance or jealousy.  

I had a similar experience when I first mentioned that I had a rental to my W-2 boss.  His immediate reaction was to ask "So your a slumlord?"  He had no idea of the condition or location of the property but did sort of knew that we had recently moved from the home after a 2 year live in rehab.  

The term is used a lot for owners that do not maintain their properties and keep reducing rents to find tenants willing to live in those conditions.  Once there is no more money to squeeze out of the property, these owners will typically sell it with lots of deferred maintenance.

This is not at all how we take care of our properties.  In fact,  we often joke that our tenants live in better maintained homes than we do.  I think when people use that term so flippantly it is really a reaction to their ignorance of the investing strategy.  Almost like it is not a acceptable type of investment.

Part of our mission is to change the general public's view of landlords.  We want everyone we contact to know that rental owners contribute to the community, not take away from it.  I get the feeling you feel the same way.  Keep up the good work!

What makes you a slumlord, or not, is not the neighborhood you invest in.  It is the product you provide.

If you are working in a slum neighborhood, you are not necessarily a slumlord.  If your rentals are crap, you are.

For that matter, you could be working in much nicer neighborhoods and still be a slumlord.  Just look at all the posts on here from people wanting to hide bad wiring or plumbing, or looking for some way to get out of doing necessary maintenance and/or push that maintenance off onto the tenant.  Those people are slumlords, no matter what sort of neighborhood their houses are in.

Don't let what the cop said bother you.  The fact is that his cynicism is well-founded.  Probably many of the people he has met investing in that neighborhood are in fact slumlords.

My wife and I had an extensive conversation about the possible results of acquiring this property. I do not think the cop meant any ill intent with his statement and is only looking at it from his perspective. We were aware of potential crime in the area, just not to the extent he was claiming. I respect his judgement on it because he is the "boots on the ground" law, but we are not going to be swayed because of as Rich Dad, Poor Dad would say "chicken little effect." Yet we do want to have a maintain good persona with all in our community. Who knows, that cop maybe a renter of mine one day. Likewise, if he thinks I have substandard properties he would tend to shy away. We however think the risk is worth the reward and will do our best to keep our tenants safe/happy. The property is not a home run, but is a solid pick up. I thought this topic would make for an interesting insight from others that maybe more experienced than I.

@Nick Britton I guess it was just meant to be.

Thank you all for your insights and comments and my wife and I agree with a lot that was stated by you all.
@Michael Leffelholz @Nicole W. @Michael Noto @Randy E. @Craig Wilcox @Richard C.

Originally posted by @Jim Wilcox :

My wife and I had an extensive conversation about the possible results of acquiring this property. I do not think the cop meant any ill intent with his statement and is only looking at it from his perspective. We were aware of potential crime in the area, just not to the extent he was claiming. I respect his judgement on it because he is the "boots on the ground" law, but we are not going to be swayed because of as Rich Dad, Poor Dad would say "chicken little effect." Yet we do want to have a maintain good persona with all in our community. Who knows, that cop maybe a renter of mine one day. Likewise, if he thinks I have substandard properties he would tend to shy away. We however think the risk is worth the reward and will do our best to keep our tenants safe/happy. The property is not a home run, but is a solid pick up. I thought this topic would make for an interesting insight from others that maybe more experienced than I.

@Nick Britton I guess it was just meant to be.

Thank you all for your insights and comments and my wife and I agree with a lot that was stated by you all.
@Michael Leffelholz @Nicole W. @Michael Noto @Randy E. @Craig Wilcox @Richard C.

 You are worrying too much about something that really won't have much impact on your investment success.  Don't let others preconceived opinions change what you do, how you do it, or where you do it.  I will try to correct some people when they make this comment to me.  I won't waste time if I don't think it will matter to what they think.  I shrug my shoulders and simply say "if that's how you want to think of it" and let it go.  I take pride in my properties, but they are not and never will be "A" properties.  Honestly, "A" properties don't offer strong enough cash flow to advance me to where I want to be financially.  I wasn't born with a bunch of cash to park in real estate.  I have earned what I have invest and I want that investment to earn for me.  That puts me in "B" areas and probably some "C" areas.

When I have prospective tenants act toward me as though they think of me as a "slumlord", I add them to the denied pile.  They are future problems and will never be satisfied.  Let them be somebody else's problem.

They are jealous

@Jim Wilcox

It doesn't bother me at all because there is no truth to it, in fact it is so far from the truth it is ridiculous. Like if someone walked up to me and said that I am a woman. I would be confused because it didn't make any sense, but it wouldn't bother me because it is the farthest thing from the truth.

Let me tell you how I decided to get into investing.

I was looking to buy a secondhand sailboat off craigslist. I called the guy running the ad, who said the boat had all its pieces, but they were scattered across his various investment properties in greater Salt Lake City. So, I visited 3 different properties (two SFR's, one multifamily) which could best be described as seedy. The tenants were not exactly high-class, but had all been there for years, and paid more in rent then I would have ever considered charging. They had nothing but disdain for their landlord, who they said was the most useless flake ever, and only ever came by to camp out in the basements with his kids and occasionally sail. I ended up passing on the boat.

But it was at that point that I realized: this guy probably picked up these properties 15 years ago for next to nothing, nets close to $5k/mo off of them, plus whatever his properties in Florida give him. Meanwhile, with my PhD and non-tenured academic position, I'm fighting in the rat race for the same salary, barely putting away any savings other than what I had from previous jobs and sale of my Austin home at the right time. From a career standpoint, slum lord or not, he has the right idea. And from that moment on I wanted to be a slum lord. 

Granted, I don't have the patience for bad tenants, and I like taking care of my property. So my business model mostly involves class A properties and high-earning professionals who don't want to commit to purchase. But that's a business decision, not a career decision. If you have the patience and balls to remotely manage many low-end units, and you're in it for cash flow, then more power to you. "Slum lord" is not a pejorative in my book. 

We have quite a few properties in "C" neighborhoods, and our properties are still nice. Laminate floors, updated cabinets, granite...etc. My point is, just because you have properties in "C" neighborhoods, doesn't make you a slum lord. 

A slum lord is a landlord who does not take care of his/her property. Let me give you an example. I have a friend who is an investor from out of town and he owns a small apartment complex in the heart of Atlanta. One of the nicest neighborhoods in town. He wanted me to manage the property, so I went out there to do an inspection. I walked into the building and there was torn carpet on the floor, walls of the hall way were patched up (and not very neatly at that), floors uneven, stairs damaged, things were hanging from walls...looked really bad, yet I continued to walk through the building. We went into one unit, another, and my spoke to a couple of tenants who ALL mentioned rats, water coming in through windows, kitchens that weren't functional. I listened, took notes, took pictures and left. I sent all my pictures and notes to my friend. I did not receive the reaction I was anticipating. After seeing the buildings' decapitated condition and my friends reaction to what I had showed, I told him that I could not possibly manage a building like that. That, to me, is a slum lord. BTW, if he got the building repaired and brought into a better condition, based on his location, his rent could increase 150%! But he is OK with how things are. That is a true Slumlord! 

Owning properties in "C" neighborhoods, wouldn't make you a slumlord. It's your attitude towards the tenants, property condition, maintenance and providing a safe and pleasant environment for your residents that makes a difference between an investor who cares and a slumlord. Yes, it's all money driven, but in the long run, it's our philosophy on our business that makes some better than others.

Personally I don't care what people think of an area and the owners. As a owner, I know I have to keep a safe, clean, nice place for the tenants to stay and feel comfortable. My property is a "C" asset and as long as you fix the problems timely, keep it safe and clean, the tenants love it. 

I have made a nice living converting "C" properties into cash cows.  When me personally and my work was unknown by others i never got any comments good or bad.  A funny thing happens though when just the slightest bit of success comes your way the haters and general unhappy people come out to spoil your day.  I have learned to seek this type of disapproval and to learn the thrive in it.  I see it as the real measure if what I'm doing has value, jealousy and these type of core emotions are in all humans.  As investors we need to seek to understand these emotions and harness the power they posses.  

My goal is to control as many slums as the LORD will let me and convert them in to ATM's. Don't you feel almost sorry for "your W-2 Boss" your "brother and sister inlaw" or "who ever" they just don't know what they don't know. 

Jim Wilcox My take on it- who cares what someone who doesn't know you thinks? We all make judgements without knowing the full story. It seems impossible to be successful in real estate, or almost any endeavor when caught up in the opinions of others. My brother and I own mobile home parks, and get that "you're a slumlord?" response all the time. The homes are in better condition than when we bought them, we screen out violent offenders and drugs, and we offer clean, affordable housing. Pay attention to the scoreboard, not the obnoxious crowd with a cowbell.

not this again!

@Jim Wilcox I had a client I would categorize as a slum lord.. now his properties were all in Alameda CA.. he owned 200 plus doors.. most were converted SFR's into 2 and 3 and 4 units... he owned them all free and clear.. his income was easily 150k a month or more.

his holdings I would estimate were worth in the 100 million range.

But when you drove around with him to collect his rents.. ( he self managed) his houses were the absolute worst looking in the city.. tons of deffered maintenance etc etc.. So it was the condition of the homes. not the hood that made him basically a slum lord in my mind now a very rich one.

I met him in my brokerage days I sold him a 1200 acre trophy ranch in Northern CA.. that of course he paid cash for   LOL... I also had the keys to the ranch ( many of my cleints did that for me) and I got to fish his really cool private lakes any time I wanted  lots of benefits being a RE broker to the wealthy.

@Jay Hinrichs I'm honestly kinda surprised that with dumpy rentals, he was getting consistent, on-time payments each month. Or was he chasing his rent a lot too?

I actually like it when people bring up "slum lord".  I just smile and chuckle  but I think everything is funny anyway.  I say, "Well, maybe I am.....  but three of my properties are on golf courses and I only have one that rents for under $1000 so I'm not sure if I qualify."  Or, you can just call them a "wage slave" and tell them to go back to their "cubichell" and leave you alone.

@Nicole W.  google Alameda CA a check out what RE is worth here these tenants were lucky to rent there and he collected rent in person each month.. the tenants put rent in envelope and pinned it to the door... no envelope then he but up a 3 day quite notice.

The only part of this that may mean something to me is the fact that this remark was made by a cop, who may spend considerable time being called out to the area you're investing in. The fact is that in a less-than-desirable neighborhood, you do stand to get less-than-desirable tenants. Even if your properties in soso neighborhoods are in terrific condition, you probably won't be able to get top dollar in a less upscale environment. I do recognize the need for decent housing for ALL tenants, so don't blast me, OK? The question is really Are you prepared for the challenges that are likely to occur in a Class C neighborhood? Don't be deterred by the fact that anyone casually calls you a slumlord; a lot of people envy investors and believe me, in almost 40 years as a landlord, I've been called plenty of names by these folks. 

What's interesting is that the OP is stereotyped and the OP doesn't like it. My company's tenants are routinely stereotyped. They deal with it. After all, some say they live in 'the slums'. They don't, but it's really about perception. So I looked up some definitions.

Slum: 1. a squalid and overcrowded urban street or district inhabited by very poor people.
Squalid: extremely dirty and unpleasant, especially as a result of poverty or neglect.

squalid and overcrowded
urban
street or district
inhabited by very poor people

Of note: the definition does not include the words "crime". My company, by definition, doesn't fit the technical definition because of the words 'squalid' and 'very', as in 'very poor people'. In a big segment of our portfolio, our tenants are generally working poor. The areas of our rentals would not be classified as 'squalid', but are clearly in an urban district inhabited by mostly poor people.

So. If a cop said 'you are a slumlord' to me... that's fine. Cops to a landlord are like system testers are to a programmer. Their job is to deal with "bugs". Society's problems. I've had system testers tell me my programming fixes were "a hack" (that's a derogatory term in a production software environment) and I've had cops tell me I am a slum lord. Neither of these cases bothered me. I know the (technical) definition. I hear and see their opinion.

I could give you a lot of examples on how you change perception. From Cops and tenants. That's another topic.

If someone would call me a slumlord, I'd either silently ignore the person or acknoledge it. Probably the latter. Depending on circumstances, I'd ask questions. My 'call to action'

(unstated to the other person) is to find out if there is actual or perceived state of 'unpleasant' or 'neglect'. I'd find it, if it existed in the first place. Then I'd fix it. And I'd make one step toward improving my company's operation and changing perceptions.

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