All Forum Posts by: Megan S.

Hi @Caleb Webster and @Jeff Stephens!

I own a property in NE, too, near 12th and Ainsworth (though I'm doing some long-term traveling with my partner and reside in Brooklyn at the moment)! I actually drove by the house you mentioned in your post during a recent visit to Portland because I, too, was interested in it!

I agree with J that I'd be surprised if they accepted an offer $50k below asking, even if it's all cash. But who knows? I also agree that when I look in Portland (via Redfin), I always ask myself if I could add another rentable unit to make it cashflow better. (Did you see this one pop up this weekend? It's being sold by a friend of a friend and I wonder about that garage and how much work it would take to turn it into an ADU - https://www.redfin.com/OR/Portland/6125-NE-Beech-S...)

I bought in 2013 at near-market price (I found my house through a friend, and negotiated a slightly discounted price because I didn't use a realtor). I lived in my home for 3 years until we started traveling, and have been renting it since early 2016.

I'm also new to REI and am looking for a second property, in Portland or elsewhere (I've been looking at places in upstate NY while I'm over on this side of the country).

Just wanted to say hello, and Caleb - if you have any questions I can answer or if you ever want to talk through anything (even though I'm quite the newbie myself), hit me up! Happy hunting!

Hi @Erik Haugen! Thanks for raising these important questions. I'm a little late to the party on this thread, but I'm interested in the same basic questions: is there a way to be an ethical (or, in my words - "socially responsible") real estate investor, and if so, what are the rules I should set for myself to make sure my financial goals are in line with my core values? Because if they're not, I KNOW I'm going to be unhappy.

I'm from Portland, OR, where there's a "housing crisis" happening. For the past 5 years, it's all anyone has been able totalk about. My friends are generally a low- or middle-income crowd: many of them are artists (for instance, they're professors and practitioners of art), or they work for non-profits, or they're school teachers, etc. The ones who have been able to stay either have partners who make significantly more money, or they were able to buy their homes back in the 90's or early 2000's.

I, too, was a low-income earner up until about 2011 or 2012 when I became what I would consider a middle-income earner. Because I was so used to living frugally, and because I didn't have any college debt thanks to hard work, scholarships and help from my parents, I was able to save more than enough for a down payment on a house in just one year of earning not-that-much (I think I made $40-$50k?). I bought a home in 2013 just as the housing market was starting to get super hot. I got lucky, because after two failed offers I found a house through a friend of a friend and was able to make a deal before it was listed.

The house, which has a separate rentable basement unit, now NETS me $1800/mo. (I no longer live in Portland).That is enough for this frugal girl to LIVE on! And now that I see what’s possible, of course I want to do it again! And again! I love the freedom a passive income provides.

But the anti-landlord vibe in Portland has been enough to make me question the ethics of buying and renting more property.

It would be easy for me to tell myself a story about how anyone could do what I did if they were smart enough, or worked hard enough, or were frugal enough, etc. And certainly, there would be some truth to that story. But I’ve also come to recognize that not everyone has the advantages I’ve had in my life. Not everyone is “like me.” Frankly, not everyone has the brains to get scholarships, or to ace grad school to land that middle-income job (let alone a high-income job) that would allow them to save up that down payment. Some people have more difficulty with math/finances than I do (and lord knows some people are a lot better at them than I am!), or have mental health difficulties, or experienced/are experiencing trauma in their lives, or experience subtle or not-so-subtle racial or sexual discrimination when they look for housing, or are going through a devastating illness, etc. etc. etc. Basically, some people, through no fault of their own, have a MUCH harder life than I’ve had so far.

So, as someone who has been so fortunate in life so as to be in this position where I get to actually contemplate buying a SECOND house (or multi-family unit, which is what I actually want to do), I feel it’s my responsibility to really research and understand if and how I can buy another property (and another one after that) in such a way that I am truly impacting society in a positive way.

People like @Thomas S. who say things like “tenants have the option to live anywhere they choose” and “there is no emotional attachment to a building” are, in my opinion, grossly oversimplifying. Of course some renters have a strong emotional attachment to the homes they rent! Some don’t, sure, but of course some do! And of course some people cannot just pick up and move down the street, because they don’t make enough money to rent a place down the street at market rates! So, sure, they will be forced to find something cheaper, and maybe it’s a long ways away from the neighborhood they’ve lived in for decades. And maybe that’s okay, maybe it’s just capitalism (for the record, I don’t think capitalism is a perfect system). But maybe it’s not okay? As owners, we get to grapple with that.

And I guess I just wanted to chime in here to say: I haven’t figured out the answer yet (although I think it’s either #2 or #3 in your list of options, perhaps combined with some active engagement in housing policy-making at the local level) but I wanted to encourage you not to blindly accept overly simplistic answers to your important questions. Keep digging! Read some books to educate yourself! Keep asking for advice from people you trust (pastor, family members, friends) and weigh what they say. For what it’s worth, I just started reading a book called “A Right to Housing” (https://www.amazon.com/Right-Housing-Foundation-Social-Agenda/dp/1592134327) to better educate myself about housing policy in the U.S. in the past century. I find it’s a nice complement to the other types of books I’ve been reading about “how to get rich quick with real estate!” J

Good luck out there!

@Joe Splitrock - 

I think I'll refrain from responding to many of your comments, but I will say that I totally, 100% agree that my property is not "welcome to all" in the sense that it is not accessible to those who can't afford it (i.e. those with low income).

@John Lenhart - Yep, totally agree about providing screening criteria (see my post just above yours!).

Re: advertising - I'm not 100% sure I understand your question, but I'm basically advocating for the inclusion of a standard "fair housing"/"we don't discriminate" statement. Yes, of course it should be obvious that I won't discriminate against you, but *in practice* illegal discrimination still happens all the time. So it's just a way of saying, explicitly, "I'm one of the good guys who will treat you fairly! If I wasn't, I wouldn't add this statement to my listing, seeing as how I'm not legally required to do so!" :)  

Does that make sense?

@Chris Purcell - Here's an example of being explicit about who is welcome to apply:

"People of all genders, sexual orientations, races, ages, income sources, religious and political affiliations are welcome to apply."

This doesn't mean you can't also list your screening criteria and be explicit about who will be turned away (also a good idea).

@Alan DeRossett - Great tip about testing the water. I've been eyeing Newburgh, NY as a potential next investment spot and it's had some major water contamination issues in the past...

@John Lenhart It’s great to read your thoughts – thanks for chiming in!

I especially appreciate your comment on “not setting your tenant up to fail” (in terms of income requirements, etc.). I hadn’t thought about it from that perspective before. 

@Joe Splitrock - Thanks for your thorough critique!

Sounds like you and @Thomas S. and @Chris Purcell feel similarly on a lot of these. I appreciate your feedback.

To respond to your thoughts...

2. I would argue that sometimes the problem is poor money management on the part of a tenant and sometimes it’s unanticipated and unfortunate circumstances (loss of a job, illness). I’m certainly not claiming that the former never happens, nor that it happens less than the latter. What I’m suggesting is that, as a policy, landlords offer tenants who “get into a jam” information about resources in their communities to help them through acute financial hardship in addition to executing the lease as-is (evicting when rent stops coming in). This way, tenants who fall into the “unexpected life circumstances” group get a little help (a tiny bit, really, as I’m not advocating that a landlord hold their tenant’s hand through this process, but simply provide information) figuring out how to stay in their home.

I appreciate you sharing about your past experiences with this practice. Any additional thoughts on the above?

3. “As far as stating all people are welcome to apply, isn’t that a given?” I believe the answer to this question is a resounding “no,” especially depending on where a unit is located and the political/racial/socioeconomic profile of that neighborhood or city. (For evidence of this, I recommend listening to a portion of Episode 512 of the This American Life podcast – skip to the 5 minute mark! https://www.thisamericanlife.org/radio-archives/episode/512/house-rules.) Plus, it’s such a little thing, really, to add an “all are welcome” message to a listing – it takes no time at all. So why not do it? I agree, by the way, that being clear about application/screening requirements, including background and credit checks, is good practice.

4. Others have mentioned this, and you could be right – it may do no one any good to advertise a “class A” property at an org that works with section 8 tenants, for instance. However, if my rates comp out well (i.e. if they qualify as “market rates” for a particular neighborhood), I believe they may still qualify for section 8 rental assistance, even if they’re significantly higher than units in other neighborhoods? I’m not sure about that, though, as I’ve never been through the section 8 approval process in my city.

5. I actually don’t do yard maintenance myself, save for the few times a year I visit my rental and want to get dirty (I love yard work!). I’m advocating for landlords to pay to have a professional take care of the yard. I believe this cost should be built into the rent. As I explained in my post, it took a long time for me to come around to this opinion, as I’ve had many tenants over the years express great enthusiasm for taking care of the yard, but it rarely works out. And when the yard looks ******, the whole neighborhood suffers. So I think the responsible thing to do, as a landlord, is to invest the resources to keep the yard looking nice regardless of tenant action/inaction.

6. Great point – I can see how the wrong combination of neighbors and tenants could mean a lot of headache for the landlord. Good to set appropriate boundaries. And, perhaps sometimes, an initial meet-n-greet between tenants and neighbors could help to establish a direct line of communication between them (so the landlord doesn’t have to play middleman/woman too often)? Or would this feel like over-stepping to you? (I could see it being appreciated OR feeling awkward/unwanted by a tenant/neighbor.)

7. You’re right – who knows if it will make people happy? But I know it would totally delight me, and I enjoy doing it, so I thought other landlords out there might, too. :)

8. Just to be clear, I charge upfront move-in costs (first month’s rent and a security deposit). It’s last month’s rent that I allow tenants to spread out, and I do this because 1st month + security is already quite hefty in my area and want my rental to be accessible to people who perhaps don’t have a ton in savings (rent for my upper level unit is $2150, so with a $1000 security deposit and 1st and last month’s rent, move-in costs come to $5300!). It’s a balance between charging enough to make sure a tenant is serious about staying (and paying rent), but not charging so much that you become inaccessible to people who would otherwise make great tenants.

Regarding what tenants want – I think you’re absolutely right! Maybe these should be added to my list. They seem more like “good landlord” practices (generally) than “socially responsible” landlord practices, though? What do you think?

@Alan DeRossett - So cool! I just love this idea. Maybe I'll ask my Portland tenants if they'd like any fruit trees planted!