American landlords derive more profit from renters in low-income neighborhoods • Hacker News Board

Re: American landlords derive more profit from renters in low-income neighborhoods

#51

Post by iguy » Sat, Mar 23, 2019, 3:45 PM UTC

tzs wrote: post #46

mruts wrote: post #26

This is such a ridiculous article. Of course landlords are going to charge a premium in poor neighborhoods, because their risk is higher. They need to match the market's risk adjusted returns, so they need a higher return to balance out the higher risk (volatility) and match the market's Sharpe ratio. This isn't "exploitation" this is an efficient market that is working as it should. Moreover, there is a reason landl…

If risk is higher, wouldn't expenses also be higher? And wouldn't the higher expenses due to the risk offset the higher rent charged due to risk, so there wouldn't necessarily be much effect on profit?

But the article doesn't seem to have a measure of profit. They look at rent and purchase price, and later throw in something for maintenance.

If they actually had the books, and could count how many employees were needed to deal with stuff, and how often the rent was unpaid, etc, then they would be justified in talking about profit.

Re: American landlords derive more profit from renters in low-income neighborhoods

#52

Post by closeparen » Sat, Mar 23, 2019, 3:47 PM UTC

stoic wrote: post #39

iguy wrote: post #9

Earlier quoted context omitted.

It seems they literally define "exploitation rate" as rent over purchase price. Then later they add in some estimate of costs of repairs. But it would be much more interesting to actually see the books. I'd bet a lot of money that the tenants in expensive neighbourhoods are much more likely to pay on time, every month, and to leave when the contract is up. And in addition, the labor in dealing with each tenant is pai…

I wonder why you still managed to use the term "loansharks" when trying to defend their quite obviously predatory business practices. "Higher interest rates" doesn't even begin to define the exploitation of these people who are desperate for cash. The rates for these loans are on the order of 400%, which makes the comparison laughable. It's almost like saying "the US national debt is $22 trillion, which is more than…

So why doesn’t one of these greedy lenders steal market share by writing payday loans at closer to normal rates?

Re: American landlords derive more profit from renters in low-income neighborhoods

#53

Post by satokema » Sat, Mar 23, 2019, 3:50 PM UTC

krapp wrote: post #37

eli_gottlieb wrote: post #33

Earlier quoted context omitted.

Funny how we have two fresh accounts posting in this discussion, one of which insists that the study authors must have an "agenda", and another of which gives an "aside" that exploitative slumlords "are almost all involved with (((close-knit religious groups)))". Sounds like the ruling class is a bit agitated that we're noticing what's going on, and wants to misdirect our attention.

I mean, one or both of those accounts could be your own alts, as far as anyone knows. I don't think the "ruling class" are so concerned about people "noticing what's going on" that they sent shills to create a couple of green accounts to post on Hacker News. That the rich exploit the poor is not exactly a shocking revelation to anyone. Certainly, you're not helping keep things focused by implying shills and saboteurs…

the "ruling class" would probably be not really interested in dealing with housing at all and would be more worried about people pointing out the lack of diversity at top C-level positions at major influential corporations.

Re: American landlords derive more profit from renters in low-income neighborhoods

#54

Post by kgwgk » Sat, Mar 23, 2019, 3:53 PM UTC

pytester wrote: post #48

patio11 wrote: post #29

Small scale operation of rental properties may be the most common small business in America, so if one actually believes this thesis then one has an easy option to compete down the differential while feeling good about oneself, with very low capital and expertise requirements. Prior to doing so, I would advise one to ask landlords what their experience has been in the neighborhoods you want to sink $X00k into.

>one has an easy option to compete down the differential while feeling good about oneself Would you really feel good about yourself evicting somebody on to the street who hasn't kept up on their rent because they lost their job at Walmart? It's difficult to argue that it isn't a necessary part of protecting your investment.

The point is that, according to that narrative, you could be "less evil" than the other landlords. You can afford to "protect your investment" less than they do and it would still be a "good investment" (just not "an exploitative great investment"). You would be offering a better option and that should be enough to feel good about yourself.

Re: American landlords derive more profit from renters in low-income neighborhoods

#55

Post by Retric » Sat, Mar 23, 2019, 3:55 PM UTC

ratsmack wrote: post #41

bluedino wrote: post #30

I’d bet this has to do with vouchers. If you qualify, a city will give you a predetermined amount for rent assistance and then you cover the other 20-30%. Landlords know this. The housing assistance organization guarantees the payment. http://www.hacm.org/doing-business-with-us/section-8-landlor... This causes section 8 landlords to inflate their rents. If a regular person had to pay for the apartment, there is no wa…

> ... are not maintained ... Section 8 housing must be maintained to minimum standards which are well defined. If not, the renters can report the facilities for being deficient.

That’s not a contradiction. The minimums are low enough to qualify as a dump.

Re: American landlords derive more profit from renters in low-income neighborhoods

#56

Post by HyperTalk2 » Sat, Mar 23, 2019, 3:57 PM UTC

krapp wrote: post #44

kjbfojbejib wrote: post #12

Can confirm, I work for a company that helps landlords finance the purchase and repair of rental properties. In certain very LCOL urban areas around NYC and Philadelphia, we have individuals with tens of millions of dollars of property spread out among ~$150k buildings. They inspect their portfolio with armed bodyguards, and they very often own other businesses in the same neighborhoods that throw off money in small…

>An an interesting aside, these individuals are almost all involved with close-knit religious groups to which they contribute great deals of capital. Before an edit, the above comment referred to "close-knit religious groups" surrounded by triple parentheses[0]. These are used by white supremacist and anti-Semitic posters to denote or refer to Jews. They are not, to my knowledge, an idiom commonly used in any other c…

If you had just left the issue alone then everyone would assume his comment was referring to malevolent Christians. As a Jew I find it disappointing that you have chosen to echo the antisemitism he was smart enough to retract from the discourse. These ways of thinking need to be censored and entirely destroyed. Delete your comment immediately.

Re: American landlords derive more profit from renters in low-income neighborhoods

#57

Post by pytester » Sat, Mar 23, 2019, 4:02 PM UTC

kgwgk wrote: post #54

pytester wrote: post #48

Earlier quoted context omitted.

>one has an easy option to compete down the differential while feeling good about oneself Would you really feel good about yourself evicting somebody on to the street who hasn't kept up on their rent because they lost their job at Walmart? It's difficult to argue that it isn't a necessary part of protecting your investment.

The point is that, according to that narrative, you could be "less evil" than the other landlords. You can afford to "protect your investment" less than they do and it would still be a "good investment" (just not "an exploitative great investment"). You would be offering a better option and that should be enough to feel good about yourself.

>The point is that, according to that narrative, you could be "less evil" than the other landlords. You can afford to "protect your investment" less

So, don't kick out people who don't pay their rent immediately?

Sounds like a recipe for achieving all of the "acclaim" for being a slumlord with none of the actual profit...

Re: American landlords derive more profit from renters in low-income neighborhoods

#58

Post by nilskidoo » Sat, Mar 23, 2019, 4:03 PM UTC

I'd say that's the standard actually. Landlords steal whatever they like, including deposits, because with most of these situations the tenants are too busy finding the means to continue existing to have any to spare for litigation.

I am not surprised by how many HN commenters seem to still have their rents sorted by their parents. Landlords are predominately thugs.

Re: American landlords derive more profit from renters in low-income neighborhoods

#59

Post by sokoloff » Sat, Mar 23, 2019, 4:10 PM UTC

tobylane wrote: post #7

Simon_says wrote: post #5

Well, yes, that's the way the efficient frontier in the risk-yield curve works.

Efficiency in markets usually at least implies closely following the truth, as I understand it. Is the risk higher at the low end of the market?

My family was a small-time landlord while I was growing up. We had more fires (plural) and totally thrashed rentals in 2 low-end houses (one SFR, one duplex) than I can remember. The SFR we had to totally rebuild twice over the course of perhaps 15 years. One tenant busted out every single piece of drywall because he was mad about being evicted after not paying rent for 6+ months. Another solved the problem of "please pickup any dog waste in the yard" with the genius plan of not letting the dog outside. Ever. The subfloors were soaked when she moved out. It wasn't just carpets that needed replacing, but all the way down to the joists and all the electric and HVAC outlets from rust.

Non-payment is also a real thing. The time commitment is higher on the lower-end properties (chasing payments, higher turnover, more damage on turnover [often well beyond security deposit, especially since the tenants know they can skip the last month or two's rent because evictions take longer than that and maybe justify themselves "since the landlord already has the security deposit and we need to save up for the next place's deposits anyway...")

People who think there are excessive profits in low-end rentals should totally disrupt that market by buying up all these cheap and easy-money properties and renting them out to undercut the market. Be ready to lose your ass financially, though.

Re: American landlords derive more profit from renters in low-income neighborhoods

#60

Post by krapp » Sat, Mar 23, 2019, 4:15 PM UTC

HyperTalk2 wrote: post #56

krapp wrote: post #44

Earlier quoted context omitted.

>An an interesting aside, these individuals are almost all involved with close-knit religious groups to which they contribute great deals of capital. Before an edit, the above comment referred to "close-knit religious groups" surrounded by triple parentheses[0]. These are used by white supremacist and anti-Semitic posters to denote or refer to Jews. They are not, to my knowledge, an idiom commonly used in any other c…

If you had just left the issue alone then everyone would assume his comment was referring to malevolent Christians. As a Jew I find it disappointing that you have chosen to echo the antisemitism he was smart enough to retract from the discourse. These ways of thinking need to be censored and entirely destroyed. Delete your comment immediately.

Calling out anti-semites or their methods is not echoing anti-semitism. I've edited the actual parens out but I'm not deleting the comment. People are free to flag it if they disagree.