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

citylab.com

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

#141

Post by bequanna »

AlexTWithBeard wrote: post #117
scarface74 wrote: post #79

Earlier quoted context omitted.

You can’t kick people out immediately if they don’t pay their rent. It’s been awhile so I’ve forgotten all of the terms. In my relatively landlord friendly state, it is a long process. 1. You have to give them a written notice and they have 7 days to pay rent. 2. Then you have to go and file an eviction notice with the court and wait up to another week for them to send a notice to the tenant. 3. Then you have to wait…

Exact rules depend on the state. In NY a typical eviction process takes about half a year.

In MN we can have someone out 2-3 weeks after filing the eviction. 6 weeks, tops.

Court date 1-2 weeks after filing, Sheriff escort off the property 1-3 weeks after court date. But, it almost never gets to that point.

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

#142

Post by pmiller2 »

pytester wrote: post #38
justinalanbass wrote: post #19

Earlier quoted context omitted.

Actually... According to the research source landlords do charge more due to increased risk: "Because landlords operating in poor communities face more risks, they hedge their position by raising rents on all tenants." https://www.journals.uchicago.edu/doi/abs/10.1086/701697

>Because landlords operating in poor communities face more risks >Since losses are rare , landlords typically realize the surplus risk charge as higher profits The author of this study appears to be confused as to what risk is. Behind a paywall unfortunately, so it's difficult to tell if he's just made two contradictory assumptions in his abstract or if there's something deeper going on. I suspect slumlords actually…

Since you haven’t read the article, how do you even know what their definition of “loss” is?

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

#143

Post by mhuffman »

pmiller2 wrote: post #127
mhuffman wrote: post #101

Earlier quoted context omitted.

There is a sense it this new socio-political climate that we live in, that people should not invest to actually make money, but only use what money they have to make other people's lives easier or better. I am not saying that this is a terrible goal, but it is wildly unrealistic for people that are not billionaires. Sadly, however, this ends up in accusations of exploitation, both because of these (imo unreasonable)…

> wildly unrealistic for people that are not billionaires. Bullshit. Someone with an invested net worth of $10M exclusive of home value can generate an income of $300k using a conservative safe withdrawal rate of 3%. Anyone making $300k as an individual with a paid off home has more than enough money to be comfortable anywhere in the country, with no real need to invest further. $10M net worth is a large, but not abs…

> wildly unrealistic for people that are not billionaires.

>> Bullshit.

Ok, "wildly unrealistic for people that are not double-digit millionaires!".

My intent was that it was a small amount of people in that group.

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

#144

Post by bequanna »

DataWorker wrote: post #14
spo81rty wrote: post #11

I think you also have to take in to account the higher risk of renting to lower income individuals. They are more likely not to pay. They are probably also more likely to trash the place.

I think you don’t understand “take more profit.” That means they have considered those costs and still they “take more profit” even considering those costs. That’s what profit means.

...and the reward for taking greater risk is greater profit.

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

#145

Post by bequanna »

magnetic wrote: post #42
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…

Is there a public database of section 8 rentals/properties?

It doesn't really work that way.

Any landlord can decide at any time that they will accept Section-8 for a given apartment. If they do accept and a tenant that receives Section-8 assistance is interested in moving into the property, the property must pass a standardized HUD inspection before payment is made from HUD to the landlord.

Re-inspections typically occur annually.

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

#146

Post by mgleason_3 »

dls2016 wrote: post #110
zaroth wrote: post #82

It’s a well known fact that as property value rises the yield on rental income decreases. A $180k townhouse can rent for $1600/mo but a $1.8m McMansion isn’t going to rent for $16,000/mo. The economics of this has to do with marginal utility mainly and nothing to do with exploitation . There’s also the calculation of fixed rental costs which derive a larger portion of the monthly payment the lower the payment gets. I…

> The economics of this has to do with marginal utility mainly and nothing to do with exploitation. That's vacuously true when you simply ignore the existence of exploitative landlords (aka slum lords) who fail to maintain their units because they know that vulnerable populations lack the resources to fight back.

So, it’s the existence of “slum lords” that causes the higher profit margins?

Interesting. So, if you buy a home in an area with lots of slum lords, the you make more? Seems like there would be a lot of money pouring into slum lord areas. Seems like that would drive housing prices up...and either rents would have to go up or profits would fall.

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

#147

Post by pmiller2 »

angel_j wrote: post #116

In California, you must have a special license to do almost any business, but be a landlord. You need a license to do people nail's (nail technician). And in some cases, there a special taxes applied to that industry (like legal cannabis). Landlording needs this (not nail techs). Keep up your certification, provide quality living conditions, and pay extra tax to offset the housing problem. Furthermore, we should have…

Landlords do need business licenses in some California jurisdictions, FYI.

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

#148

Post by bequanna »

TheBeardKing wrote: post #10

A guy I used to work with once told me that instead of buying a $100k rental house, you should buy three $30k rental houses. We're in a LCOL area, and him and his wife easily made over $200k in salary alone, so why he spent his free time managing all those rental houses is beyond me. He had over 20, and managed them all himself.

I have 29 myself. I self-manage my properties and work a full-time remote job.

A few weekly calls during the workday. A few evenings or weekend daytime meetings with prospective tenants or maintenance staff each month. So, ~$1 to 1.5k per hour of work. Not a bad paying side gig.

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

#149

Post by iguy »

FireBeyond wrote: post #137
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…

If you think the payday loan industry is not -immensely- profitable, you're wrong. It's an exceptional thing to get into, either running or investing, if you have lower ethical boundaries.

Well, are you really claiming that the cause of high interest rates on payday loans is poor morals? Unusual greed? Which mysteriously descends on all who enter the trade, every time?

That's the whole reason I used the example of loansharks, as I thought everyone understood by now that even if the angels ran that trade, such loans would be very expensive. But see below for other arguments against this bad-morals argument.

I've never seen numbers, but given the abundance of competing outfits, I'd expect that it looks roughly like any other business, once you account for all the costs. It could be a little more profitable if distaste drives some potential competitors to stay out. It also seems like a great front business for laundering, but I wouldn't guess that's a large proportion.

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

#150

Post by pmiller2 »

mhuffman wrote: post #143
pmiller2 wrote: post #127

Earlier quoted context omitted.

> wildly unrealistic for people that are not billionaires. Bullshit. Someone with an invested net worth of $10M exclusive of home value can generate an income of $300k using a conservative safe withdrawal rate of 3%. Anyone making $300k as an individual with a paid off home has more than enough money to be comfortable anywhere in the country, with no real need to invest further. $10M net worth is a large, but not abs…

> wildly unrealistic for people that are not billionaires. >> Bullshit. Ok, "wildly unrealistic for people that are not double-digit millionaires!". My intent was that it was a small amount of people in that group.

True, but you can cut those numbers by ~50% and still be very comfortable in most, if not all places in the US. According to https://dqydj.com/net-worth-percentile-calculator-united-sta... there are over 3 million households with a net worth over $4.5M. Relatively speaking, that is a small number, but, collectively, the good those people could do if they came together would be immense. Of course, this will never happen.
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