Investor · Atlanta, GA · Member since 2017 · 184 posts · 204 votes
This question is one I pose to anyone who has an opinion on the topic.
Obviously we're all here because we like something about the idea of REI and passive income. As the process goes, we find a "good deal" in some area, maybe make an improvement or 2 to the "deal", and if all goes well, we sit back watch the fruits of our labor grow through rental income, increased property value or equity. Now, multiply this by 100... 100 of us have found 100 deals, made 100 improvements, and raised 100 property values.
Boom. We just gentrified an area. A community that used to live there can no longer afford to be where they've grown up because there were a lot of good "deals" for investors to take advantage of and help our families and bolster our investment portfolio.
Granted, we may not have intentionally displaced a community, but collectively, we do. We just saw an opportunity and took advantage.
The question(s) I pose:
Do you think gentrification is an issue?
Do any of you ever struggle with the reality that we collectively price people out of their communities?
Do you ever think of it that way?
Do you ever feel bad about contributing to the gentrification of communities?
What are the alternatives?
This is just a philosophy question and some things that I think of, not pointing fingers or trying to be accusatory, or maybe I am. Just wanting to get a conversation started!
Rental Property Investor · Fort Collins, CO · Member since 2015 · 128 posts · 327 votes
7y
"Gentrification" is not wrong.
A neighborhood is either desirable or expensive or undesirable and inexpensive. It can move in either direction for a variety of reasons.
Maybe a community loses its industry and there are no more jobs, so prices go down, but it's still a bad place to live because there are no jobs and no future. Maybe hot new industries come to town and the opposite happens.
Maybe crime goes up, and people who can afford to leave move away. Maybe crime goes down, and people who used to avoid the neighborhood start moving in.
The list goes on and on.
Suppose we have a low-cost area that is in reasonable commuting distance from high-paying jobs. Why is it low-cost if it's so well-located? The obvious answers include crime and dilapidation. There are two ways things can go from here: The conditions improve and the prices go up, or the conditions stay lousy and the prices stay low. The "anti-gentrification" crowd tells you that price increases are immoral, but are they really ok with crime-ridden slums? Of course not. They promote magical thinking - the idea that we can get rid of crime and fix up the buildings without increasing the prices, even though the only reason that the prices were low was the conditions!
All of this without even mentioning that everyone who OWNs in a "gentrifying" neighborhood wins the appreciation lottery.
Shorter commutes are more green. It's better for society as a whole if the people working the high-paying jobs live near them. People doing little to no work don't have any particular reason to prefer one area to another, nor should we pander to them. The idea that you are more entitled to live in a particular area if you "started out there" has terrible implications and quickly becomes oppressive.
Finally, of course, the elephant in the room is identity politics. Most ant-gentrification rhetoric usually stems from toxic identity politics. People who get very angry when Identity Group A is displaced by Identity Group B don't care one whit when the opposite happens somewhere else. At best, such people are consistent in supporting the displacement of "richer" people by "poorer" people, or at least those they imagine to be so, while opposing the displacement of "poorer" by "richer." But adding emotional rhetoric doesn't change the facts above.
There is no good reason to keep crime in place, to keep dilapidation un-remedied, or to maintain filthy hovels when better alternatives are available.
Real Estate Broker · St. Louis, MO · Member since 2017 · 380 posts · 195 votes
7y
@Evan Parker
I had an old football coach teach that had a saying he used at every practice he said “Men, you either get better or you get worse, there is no in between”.
As I made the decision to leave corporate after many years of thinking I had “stayed the same” I realized all of the opportunities I had missed to start building financial security. It certainly now was clear what my old coach had preached.
I would argue that principle on anything. If a community isn’t getting better it’s getting worse. So when we look at “gentrification” we must also consider what the opposite effect would be. I don’t think there is even a specific term for it, call it “urban decline” or whatever you will but it’s been going on for a long time in my community and certainly others across the country.
I was born and raised in St. Louis MO and lived here my entire life. Prior to the 1950s our city was home to nearly a million people and now population levels are around the 300k level and still in decline. This city has seen a 65% decline in population which is the largest in North American history.
This has lead to vacant buildings and housing. Decline in real estate values. Decline in rents. The vacant properties become eyesores and present dangers to nearby residents. Many of the properties you could not give away for free as they aren’t worth anything. Our city has now been notoriously labeled over the last decade or so as one of “the most dangerous cities”.
My mission is to improve this city. We are doing this in one part by rehabbing houses and apartments. We want to make our city a great destination for tourists and a beautiful safe place to live for its residents whether they are home owners or renters. We also provide low income housing through our section 8 rentals. I don’t believe this to be a bad thing and would welcome any feedback from you all. Thank you.
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
7y
If I lose my job or can't afford to live where I currently live when I retire I must move. I can't blame anyone and nobody cares. I'm now displaced too.
People that rented homes in now gentrified areas had years and years of opportunity to buy affordable homes but didn't.
What about areas that were once beautiful and became garbage areas? Nobody cares. They only care when they see a landlord doing good for themselves and the tenants are of a better income class.
A big part is jealousy. Like I said before, if I can't afford to pay my bills I must leave my home and my credit is ruined. If a tenant can't pay rent they get evicted.
Investor · Atlanta, GA · Member since 2017 · 184 posts · 204 votes
7y
@Renay Reese
I'm in the same boat as you honestly. I feel "bad" in a sense that it sucks that the people in the communities didn't own the properties and instead rented them for extended periods, or whatever the situation. But I don't feel that bad.
I view our REI gentrification as many others here, which is an improvement to the community.
The main way that I personally plan to keep "balance" and/or give back is through education. That's the only way.
As the saying goes "If you knew better, you'd do better." The problem is, many don't know. So I expose people to the "better" thought process and they do with it what they will.
Beyond that I can't and won't take much responsibility for what someone chooses to do or not to do with the information provided.
If you're thirsty, I'll point you in the direction of the water jug, but you'll have to pour it yourself.
Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 726 votes
7y
We have some of these issues in Denver right now. But it's not really due to investors. They are expanding Interstate 70 and building a new facility for the stock show and events Denver hosts in January.
Some cities however have issues with abandoned or nuisance properties. St Louis spends $15,000,000.00 a year managing these properties. That includes demolishing them. The Mayor of St Louis would prefer to sell these properties to investors at $500-1000.00.
Gentrification isn't a bad thing. It's inevitable. Cities will change overtime. They need to evolve, redevelop and maintain value.
Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
7y
@Evan Parker the next question. You asked are there community investments that can be done prior to displacement to uplift the individuals that are impacted by the crime, dilapidation, or filthy hovels?
Jobs- why are manufacturing jobs going to place you need to drive to? I see it in MA all the time entry level manufacturing being attracted to the suburbs. entry level manufacturing jobs teach basic job skills. showing up, taking direction, etc.
A hand up not a hand out for these communities. I ask my son why in todays economy his able bodied 20 something friends from the heart of Worcester MA are getting public assistance. He will tell you they don't know how to go to work. They do know how to work the system. They live in these neighborhoods. They don't need education when they get to 20, they need it much sooner and need to carry their weight in society. I am not sure how you do that because the underground economy is supported by many social programs like section 8 where if they work illegal jobs are their best choice because they don't decrease assistance.
Transportation. I can't wait to see what true self driving ride share does to some of these areas.
Should there be focus on building skills within the dilapidated communities to improve the area? yes, but the question is how? in some cases people don't do things because they can't but in some cases they also don't want to. Those aren't skills, they are attitudes.
Buford, GA · Member since 2017 · 50 posts · 13 votes
7y
I look at from both sides of the coin being I grew up in some of the less desirable areas that now view gentrification with a negative connotation and from a capitalist standpoint that you have to seize opportunity. Truthfully with an issue with so many social and economic complexities there is no clear cut answer but I do believe that we all should be trying to leave the a positive mark on wherever we inhabit or do business. I personally will not stop trying to invest due to others who view my ambition as an infringement on their community just being honest.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
7y
@Evan Parker let's imagine there was no gentrification. So in these urban neighborhoods, nobody ever came in and rehabilitated. Instead the neighborhoods deteriorate further. Properties become uninhabitable, windows are boarded up and property fires are rampant. Owners abandon the buildings. The neighborhood becomes a haven for drugs and crime. The entire area is unsafe, so unsafe that police don't even want to visit the area. The people who are stuck living there become the victims of crime and are trapped in unsafe living conditions. The situation gets so bad that the city orders demolition of the entire city block.
We don't need to imagine this because it has happens all the time. Entire neighborhoods get demolished when they fall past the point of rehabilitation. It happens in many cities, here is a recent story from Baltimore:
There is two options for a neighborhood, revitalization or deterioration.
When it deteriorates, it eventually results in disappearance. Even the poor lose, because those who did own a property and tried, found themselves wrapped up in the downward spiral. On the flip side, if the neighborhood is revitalized, owners (even poor owners) benefit from increasing neighborhood value, lower crime and overall better living conditions. It pulls a community up.
The problem is that people have tried to make gentrification a dirty word. They fight against revitalization and try to hold a community down. The result is disastrous - crime, visual blight, unsafe living conditions, abandoned buildings and eventually demolition. We need to talk about gentrifying the residents of these neighborhoods to lift them up. Maybe that is crazy talk, but what if poor people could become middle class? Isn't that better than being held down in a deteriorating neighborhood?
There are options for lower income people. The best option is relocation and moving to affordable cities. It is unrealistic to believe you can live in certain cities on government assistance or with low wage jobs. Even people making six figure salaries can't afford to live in some of these cities. There are many better options across the entire United States. There are safe, clean and inexpensive places to live and raise a family on a relatively small salary. I know because I live in one of those cities.
The problem is people get stuck in a cycle of poverty and even stuck in a neighborhood. Ever heard someone say, "I was lucky I got out". Their talking about their situation and their bad neighborhood is part of that. The idea that these bad neighborhoods are worth saving, in their current state, is the false narrative that needs to be changed.
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
7y
My thoughts:
1. The housing that was formerly affordable was just a placeholder between a community decline and rebound. Without that placeholder, a lot of those homes would have become derelict or destroyed - so there's certainly value in these homes becoming rentals and other low-income housing for a time.
2. I don't struggle with it at all. There's always another option for lower-income individuals.
3. No. The lower-income people who lived in these communities were beneficiaries of depressed prices, which allowed them to live in an otherwise unaffordable area at the expense of people who had to take serious haircuts on their housing prices. That the tables have now turned is just the nature of an ecosystem.
4. No. If anything I feel proud to have fixed up formerly rough properties. I grew up in a ghetto area and lived in a late 1800s brownstone that was top of the line in its heyday - it had an elevator and a grand old lobby! - and was on "Park Avenue" of all places. We only managed to live there because the housing got really cheap because of lots of things - white flight, Newark riots, lack of investment, etc. The area is still rough, 40 years after I moved out of it. So gentrification is not inevitable.
5. The alternatives are strict government control of housing which will be detrimental to society as a whole.
@Evan Parker let's imagine there was no gentrification. So in these urban neighborhoods, nobody ever came in and rehabilitated. Instead the neighborhoods deteriorate further. Properties become uninhabitable, windows are boarded up and property fires are rampant. Owners abandon the buildings. The neighborhood becomes a haven for drugs and crime. The entire area is unsafe, so unsafe that police don't even want to visit the area. The people who are stuck living there become the victims of crime and are trapped in unsafe living conditions. The situation gets so bad that the city orders demolition of the entire city block.
We don't need to imagine this because it has happens all the time. Entire neighborhoods get demolished when they fall past the point of rehabilitation. It happens in many cities, here is a recent story from Baltimore:
There is two options for a neighborhood, revitalization or deterioration.
When it deteriorates, it eventually results in disappearance. Even the poor lose, because those who did own a property and tried, found themselves wrapped up in the downward spiral. On the flip side, if the neighborhood is revitalized, owners (even poor owners) benefit from increasing neighborhood value, lower crime and overall better living conditions. It pulls a community up.
The problem is that people have tried to make gentrification a dirty word. They fight against revitalization and try to hold a community down. The result is disastrous - crime, visual blight, unsafe living conditions, abandoned buildings and eventually demolition. We need to talk about gentrifying the residents of these neighborhoods to lift them up. Maybe that is crazy talk, but what if poor people could become middle class? Isn't that better than being held down in a deteriorating neighborhood?
There are options for lower income people. The best option is relocation and moving to affordable cities. It is unrealistic to believe you can live in certain cities on government assistance or with low wage jobs. Even people making six figure salaries can't afford to live in some of these cities. There are many better options across the entire United States. There are safe, clean and inexpensive places to live and raise a family on a relatively small salary. I know because I live in one of those cities.
The problem is people get stuck in a cycle of poverty and even stuck in a neighborhood. Ever heard someone say, "I was lucky I got out". Their talking about their situation and their bad neighborhood is part of that. The idea that these bad neighborhoods are worth saving, in their current state, is the false narrative that needs to be changed.
Very well said. That is pretty much exactly how I feel on the topic. I often try to shape the word gentrification as a positive thing because it has been so demonized.
While I do think there are select people/groups of people who use the word gentrify to demonize/look down on poor people, I think those people in the minority, but unfortunately are sometimes given the loudest microphone. I want to combat that.
I posted this thread because as a REI, I wanted to start a dialogue, and keep folk talking about it. If you read through the responses, we pretty much all view it the same way (which is what I anticipated), and I believe when we come together to discuss the elephant in the room (considering all the articles, media coverage, Facebook videos, tweets; about big bad gentrification), we can help slowly re-frame the narrative, even if it's just within our personal circle. Maybe we can even increase the amount of people within these communities that can benefit from the inevitable changes.
Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
7y
I cannot understand how people complain about gentrification. The argument is a demonstration of mental gymnastics.
"No one pays attention to our neighborhoods. No one wants to fix the hood"
Hood starts getting revitalized
"You're investing all of this capital, fixing up the place and it's too expensive to live here now! We have options like Whole Foods, Starbucks and crime is going down. Now we can't live here! How dare you try to make a profit after nearly killing yourself to get approvals, permits, new structures built to code!!"
I cannot understand how people complain about gentrification. The argument is a demonstration of mental gymnastics.
"No one pays attention to our neighborhoods. No one wants to fix the hood"
Hood starts getting revitalized
"You're investing all of this capital, fixing up the place and it's too expensive to live here now! We have options like Whole Foods, Starbucks and crime is going down. Now we can't live here! How dare you try to make a profit after nearly killing yourself to get approvals, permits, new structures built to code!!"
It's because many people aren't aware, either willingly or unwillingly, of the "other side" (our REI side) of the process. And from conversation I've been in/things I've read, people don't necessarily want the hood 'fixed' via new retail shops/nicer houses, as much as they do new employment opportunity/community investment from the city. What good is a Whole Foods to the community if the local school system struggles to get funding and has poor resources?
It's a catch 22 circle though, because as we know, city investment for a community through schools, jobs etc are often in direct proportion to the property values of the real estate that makes up the area, through property tax.
In the eyes of many, the city doesn't care about their community (which may or may not be true), so the city doesn't invest, and businesses leave. And then we (the big bad gentrifiers) come in and take advantage of the poor by buying their houses and raising their rent to a price they can't afford.
Now, I'm not saying that last narrative is true, but that's often the narrative that picks up steam.
Flipper/Rehabber · Loganville, GA · Member since 2018 · 25 posts · 10 votes
7y
@Evan Parker
If the original residents have the opportunity to benefit from the increased values, I’m ok with it. If they maintain their property and gain their equity, that’s how it should be. I believe certain areas do not appreciate based on things other than the condition of the properties. When the gentrification starts, decades of slow appreciation is made up in a few years. The original folks should be able to benefit from those years that their property didn’t appreciate properly AND receive some sort of tax benefit that prevents THAT from forcing them out. The problem I have is when all the predatory lenders show up and push products on residents that they KNOW these “customers” can not afford.
I cannot understand how people complain about gentrification. The argument is a demonstration of mental gymnastics.
"No one pays attention to our neighborhoods. No one wants to fix the hood"
Hood starts getting revitalized
"You're investing all of this capital, fixing up the place and it's too expensive to live here now! We have options like Whole Foods, Starbucks and crime is going down. Now we can't live here! How dare you try to make a profit after nearly killing yourself to get approvals, permits, new structures built to code!!"
It's because many people aren't aware, either willingly or unwillingly, of the "other side" (our REI side) of the process. And from conversation I've been in/things I've read, people don't necessarily want the hood 'fixed' via new retail shops/nicer houses, as much as they do new employment opportunity/community investment from the city. What good is a Whole Foods to the community if the local school system struggles to get funding and has poor resources?
It's a catch 22 circle though, because as we know, city investment for a community through schools, jobs etc are often in direct proportion to the property values of the real estate that makes up the area, through property tax.
In the eyes of many, the city doesn't care about their community (which may or may not be true), so the city doesn't invest, and businesses leave. And then we (the big bad gentrifiers) come in and take advantage of the poor by buying their houses and raising their rent to a price they can't afford.
Now, I'm not saying that last narrative is true, but that's often the narrative that picks up steam.
Unfortunately, poor people have been able to live in a highly desirable location for far too long because of the condition of it. Working class people shouldn't have to commute 60-90 minutes to work and that has slowly changed as people (myself included) have said, the hell with this, I want to live close to work and/or in a fun city. I'm going to buy a dump, fix it up and live there. Then more people see that happening and it snowballs into revitalizing a great area.
Poor people stay poor because they lack basic knowledge that's right in front of them. No company is going to willingly open a business in an area with incredibly high crime unless they're incentivized somehow (tax breaks, gentrification going on, big development, etc).
Amazon tried the whole "new employment opportunity" and a certain Congresswoman bartender convinced a bunch of ignoramuses that Amazon was going to "destroy" the "community". That goes to my previous paragraph about basic knowledge. It infuriates me because it speaks to an incredibly ignorant approach when someone is actually trying to help make the area better.
Enjoy your boarded up houses with bars over windows and graffiti then, but don't complain to the town/city about crime, lack of investment, etc because most of them don't actually want it when someone calls their bluff. I see it all the time at Zoning Board hearings.
Real Estate Agent · Pacific Palisades, CA · Member since 2018 · 43 posts · 14 votes
7y
The problem I have with this question is the false assumption that it is those in Real Estate who create the problem. The problem is demand and lack of supply and high demand. Economics 101.
A big part of the problem here in California is incompetence and ignorance.
Here is a quick, off the top of my head list of some contributing factors which OP overlooked:
1. (Many intertwined points here) City Mayor, Council and State Legislature offer benefits to businesses to come. Those businesses bring increased wealth to the cities which bleeds into the local populace by way of spending and demand for goods and services. Workers from around and outside the area strive to work for the higher wages and better quality of life offered, an influx of workers move toward the city. Local businesses and workers thrive and demand more. Without increased housing and multifamily supply, rental and housing prices go up. Here is an infographic illustrating this here in California: https://infogram.com/california-bands-together-1g43mn7yrl062zy
2. City/State governments ignore the increased demand due to more workers in the area. This puts further strain on the existing, insufficient housing supply. Without increased housing and multifamily supply, rental and housing prices go up. Another illustration of the ignorance and incompetence by elected officials to proactively address these problems: https://infogram.com/waning-construction-1h0n25xgryoo4pe
3. City Mayor, City Council and State Legislature promise big benefits(here in CA, Overpromise) to state workers in a bid to buy votes. This strains the budget greatly. Taxes and regulations increase as well as enticements to companies so they come and pay taxes to balance these budget shortfalls. The workers have more money to spend and what happens? They demand better housing accommodations with their increased purchasing power. Without increased housing and multifamily supply, rental and housing prices go up.
4. Overburdensome laws and regulations. The complexity to get new housing and multifamily built has exacerbated the building of new homes and multifamily. This has put downward pressure on the supply of new housing and multifamily units. Some factors:
Local growth initiatives designed to stem the overpopulation of areas
Often misused Environmental Laws pushed by local residents in opposition of new development.
New development opposition and reviews by local residents in the form of hearings, etc.
Redundant governmental reviews by many different departments.
Just a few things which came to mind that exacerbate the already messed up housing supply around the country. Gentrification is a symptom of major problem and to say that those who rehab and build homes and multifamily are to blame for gentrification is, in my opinion, flat out wrong.
Rental Property Investor · NYC · Member since 2019 · 16 posts · 13 votes
7y
I live in NYC. This is such a huge issue here.
We invest in rentals out of state. We replaced the floor because it broke, we put in french drains because there was water damage, but we didn't make it fancy and we aren't going to refinance it any time soon.
Being a good capitalist robber baron means exploiting the most you can out of every resource and damn the communal cost. And now we have melting polar ice caps.
The ex-landlord of one of our tenants set her apartment on fire for the insurance money.
While our tenant and her family were asleep in it.
He didn't care, he was just trying to extract the greatest value out of the property that he could. It just made good business sense... if you don't value humans.
So much of our family's wealth is due to luck, it feels wrong not to share. We are white and present as middle class, but I grew up on welfare and government cheese. Even spent a summer homeless when I was 12.
I don't want to burn the house down. I want to make a safe shelter for locals from the storm. Which is why, last week, we signed up to accept Section 8 vouchers and this week are looking at properties in the "good" school district that we hope will appeal to Section 8 families.
I am sure BRRRR can be done thoughtfully and compassionately, but real estate investing in that manner exploits resources that others don't have access to at a greater rate (thanks to leverage) than even "traditional" (the last 150 years of) real estate investing does.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
7y
What I don't get is whoever said prime physically located RE is always going to be cheap or not expensive eventually. I know some politicians think it is a right or something. It is not.
Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
7y
Gentrification is a major topic of discussion in New Orleans. We have high poverty levels, high crime, and a substantial blighted housing problem. Usually with landlords and flippers painted as the "bad guys". Which is such complete and utter insanity that I can't even fathom what people are thinking. Sometimes gentrification can result in higher rents for some areas. That is the one and only part I can understand. But with high poverty usually comes high crime. I don't believe all the people who complain about being "priced out" of their neighborhood were fine and happy with half the houses on the street being abandoned and used for drug deals.
But, as much as people complain about the rising rents in NOLA, they don't know the big picture. Quite frankly, NOLA has a soft rental market. The average vacancy is 70 days. For example, all of my rentals are in safe, but less desirable areas because they are further out from the core. As such, my rental prices are substantially lower than "average" rents, when looking at the city as a whole. Yet, despite the fact they are also in good neighborhoods and great condition, I get very few applications each time I have a vacancy.
Here is the biggest piece that makes no sense. NOLA has a huge blighted housing problem. I was at an REI meeting and was told that 5% blighted housing is considered a "crisis" for a city. NOLA is in the double digits, I believe they said 17%. We NEED people to come in and fix houses up! Which is something people don't consider when they're talking about gentrifying. Sometimes it could actually mean lower rent when the gentrifying is focused on blighted housing, ie houses that not have not been in the rental housing inventory for years due to condition.
My other irk is the flooding that occurred after Hurricane Katrina is always given as the reason for the blighted housing problem. Because it's SO easy to blame a natural disaster. Except some of that is false. Katrina did not help, but blighted houses were a big problem before it. Plus, that flooding happened almost 15 years ago.
In addition, as others have mentioned, the complaint about high rents due to gentrification actually just goes along with the natural order of things. Yes, rents go up with time. Yes, as desirable neighborhoods/downtown sprawl spreads out, housing and rent prices go up.
I know picking up and moving to a lower COL area has challenges, especially for those in lower income brackets. But, at the end of the day, people CHOOSE to live where they live. If it's gotten too expensive, then move. Or job hunt for something closer to one's house. I firmly believe everyone is entitled to affordable and safe housing. However what I don't agree with is that people are entitled to that in ANY neighborhood they want.
We invest in rentals out of state. We replaced the floor because it broke, we put in french drains because there was water damage, but we didn't make it fancy and we aren't going to refinance it any time soon.
Being a good capitalist robber baron means exploiting the most you can out of every resource and damn the communal cost. And now we have melting polar ice caps.
The ex-landlord of one of our tenants set her apartment on fire for the insurance money.
While our tenant and her family were asleep in it.
He didn't care, he was just trying to extract the greatest value out of the property that he could. It just made good business sense... if you don't value humans.
So much of our family's wealth is due to luck, it feels wrong not to share. We are white and present as middle class, but I grew up on welfare and government cheese. Even spent a summer homeless when I was 12.
I don't want to burn the house down. I want to make a safe shelter for locals from the storm. Which is why, last week, we signed up to accept Section 8 vouchers and this week are looking at properties in the "good" school district that we hope will appeal to Section 8 families.
I am sure BRRRR can be done thoughtfully and compassionately, but real estate investing in that manner exploits resources that others don't have access to at a greater rate (thanks to leverage) than even "traditional" (the last 150 years of) real estate investing does.
My two cents,
Alia
Thoughts:
1. I'm pretty far left, at least on this board. That said, in the United States, most people who stay poor refuse to see or take advantage of the opportunities right in front of them. This is mostly true of native Americans (not Native Americans, the original inhabitants of this continent), who in my opinion (and sadly to say) are soft and lazy relative to a good part of the rest of the world. Why is it that immigrants, with little language skills and no advantage of birthright, can come here and in short order own businesses, rentals, etc? A friend of mine is from Mexico. He owns 4 Mexican restaurants locally. I have known him 25 years. 20 years ago he was a waiter in his brother's restaurant, which was actually only partially his brother's restaurant. This guy also owns about 6 or 7 rentals, with no mortgage. He speaks reasonable English but 25 years ago you could barely understand him. No education. Not particularly good looking, just average. No amazing physical skills. Nothing that should be an advantage except a willingness to work hard and learn. My experience with Americans that are against the immigrants is that they don't want to compete with them because they (Americans) do half the work at twice the money and a quarter of the quality.
2. You can own rental property and be a good citizen. If I didn't buy the houses I did, collectively with other investors in my area, there's a good chance they would have continued to decline into dereliction. Not only did I spend a lot of money to make them habitable, I made them aesthetically pleasing, and then I screened the occupants so that good people moved into the neighborhood rather than bums or drug dealers. You could also present an environmental argument in that my homes are occupied by people who otherwise would have to drive longer distances to work, thus increasing pollution & resource depletion. If we wanted to do things based on what makes the most sense, people that don't have jobs and no place to go on a daily basis should live in the hinterlands. That's kind of what happens with gentrification.
3. The story above about the landlord setting a place on fire with a tenant in it - well, that's just horrible either way, but I believe that's more of an outlier. There's certainly still slumlords out there, but I can tell you that at least in my area there are far more landlords caring for their stuff these days than just letting it fall into disrepair.
4. I have empathy for the poor - I grew up ridiculously poor, in a ghetto area, and spent stretches as a kid homeless and without basic amenities (electricity, hot water, telephone, etc) so I know what it's like, but it doesn't change the fact that there are options and ways out. Having a worse starting line position is no excuse for not running a race in the first place. I like to think about the Jamaican bobsled team (a true story even though embellished by Disney) or the Chris Gardner story.
5. Luck: where preparation meets opportunity. Yes, I'm lucky to be born in the United States. And to be white here. And to be a male. That's all fate that I had no control over. My daughter's ex was also white, and male, and born in the United States, *and* didn't grow up in severe poverty. He died of an overdose the other day. Life is what you make of it.
Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
7y
Very few communities can keep a constant status quo for long. They either start to grow and become desirable areas or decline and become undesirable. This notion of the perfect community where everyone has great jobs, great incomes, great infrastructure and business but affordable houses and communities where prices never go up is a Utopian view and unrealistic.
There have been many many cycles of gentrification of areas and cities. Every major city in has gone through this cycle pretty much every generation or two. This cycle, I forget the name of it, basically cities started out with the rich being the only ones living in the down town and the poor being in the out skirts and suburbs. Then the rich start moving out of the city and gentrifying those areas. Forcing the poor to move closer into the cities. Then the rich decide, at some point, to move back into the cities. Raising the prices and forcing the poor back out to the suburbs. The cycle just keeps going and going and still happens today. The key thing that makes this cycle actually successful is that when cycle comes back around it usually doesnt effect that exact same areas over and over again. Gentrification, and different levels of gentrification, occur in different areas of the city and the suburbs. So the cycle spreads and spreads all around. More or less equalizing around. When this doesnt happen is when you start getting in to class segregation. Just think of the south side of Chicago. Now theres more than just this cycle that has forced that area into constantly being poor for so long but thats a completely different topic (you can thank all the past people that had good intentions but very shortsightedness & with a bit of racism from the time). This cycle can also occur on a micro scale as well. Just look at SoHo in NYC. A century ago it was considered the slums of NYC. Now its one of the priciest areas.
To sum it up gentrification, in and of itself, is not bad. It ebb and flows with the economic cycles. The bad part of it happens when it gets too focused on a small group of areas and, in turn, ignores others. This is were we, as REI, play the biggest part since we are the ones that decide where this happens (for the most part).
Real Estate Agent · New Orleans, LA · Member since 2015 · 145 posts · 127 votes
7y
@Jennifer T. I agree with everything you're saying. It's insane to me that I get the rents that I do in neighborhoods that I would have never considered 10-15 years ago. But, I don't do AirBnB and I generally don't raise rents except after vacancies. I fix (important) things as soon as they inform me. I do buy underperforming s*** properties in neighborhoods adjacent to hot neighborhoods. I do call code enforcement on vacant lots with piles of mattresses and tires and houses that are blighted. I do take an active interest in the neighborhoods and residents. I give them my information. I talk to them when I visit. I love New Orleans even though she makes me feel like an abused spouse that just can't leave "She didn't mean to send me a $5000 water bill. She just had a little too much to drink."
Anyway, to answer the original question, I think about it a lot and how it impacts the community. I do what I can to make money, but not take the neighborhood for every penny that I can squeeze out of it. The tenants trust me, the neighbors seem to like me, and I try to improve the area through civic engagement. I think everyone wins. As far as some of the renters getting displaced is concerned, NOLA does not have the insane commutes that some cities have. To work in the city and live in the "outlying" areas means about 15 minutes of additional drive time. I'm not losing sleep over this.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
Yes I think gentrification is a thing and yes it’s a good thing because it makes my dumpy property worth a lot more . Do I care that it displaces yadda yadda ? No I don’t , atleast I’m being honest .
look I’m doing this to get rich not change the whole world or even the individual . That’s his personal responsibility to change himself , not mine . My responsibility is to be a good productive citizen and provide for my family . Capitalism is a good thing . God gave it us and It brings up everybody -IF -your willing to put the effort in to claim your cut .sadly 50% of society thinks they are owed something these days and refuses to do their fair share . I have no pity for the sluggard who won’t work , notice I didn’t say “ couldn’t” work .
