
American landlords derive more profit from renters in low-income neighborhoods - vector_spaces
https://www.citylab.com/equity/2019/03/housing-rent-landlords-poverty-desmond-inequality-research/585265/
======
Lndlrd
Ctrl+F "exploit", appears 24 times in this 13-paragraph article.

> "Defining exploitation as being overcharged relative to the market value of
> a property"

The ratio they've based their narrative on is called GRM (gross rent
multiplier):
[https://en.m.wikipedia.org/wiki/Gross_Rent_Multiplier](https://en.m.wikipedia.org/wiki/Gross_Rent_Multiplier)

GRM is one of many factors when analyzing investment options. Other important
factors include appreciation and expenses (maintenance, property management,
etc). Cap rates are a better indicator than GRM (because they include
expenses) but still not comparable across asset classes due to appreciation
(HCOL++) and unaccounted overhead (LCOL--).

I own both (LCOL oil region, HCOL tech region). If the numbers were equal
anyone would only choose the tech region, because of urbanization and future
expectations for those industries. It's the same reason P/E ratios on tech
stocks are so much higher than on oil stocks. So cap rates are higher on my
LCOL oil region properties (approx 6, vs 4 in the tech region). But that's
just market forces. If cap rates were equal why would anybody buy in the oil
region? Even if you exclude the market's predictions for the future (oil vs
tech), the LCOL has additional overhead (more properties at equal value).

Reducing the conversation to cap rates and ESPECIALLY reducing the
conversation to GRM - relabeling GRM to "exploitation ratio" \- shows these
prestigious authors (MIT & Princeton) aren't interested in answering any real
questions. They're too smart to believe GRM indicates exploitation. They
therefore must have an agenda.

The most interesting question raised is who funded their study, else why are
they spending their time forging this narrative?

~~~
glup
Of course they have an agenda, but I think it's much less nefarious than some
think -- it's that they think housing insecurity is a major problem in the
United States with knock-on effects in education, health, and household
wellbeing. Of course it is a complex issue on how to address this — what
mixture of regulation and free market solutions best serves people -- and I
think the authors land in a position that is more in favor of regulation.

I strongly recommend Desmond's earlier book "Evicted" — houses, while assets
for some, are filled with extremely real people with extremely real challenges
as a result of income inequality (and, moreso, differences in household
wealth). OP is totally correct in noting the importance of returns in drawing
investment; OP is reminded that markets forces can yield exploitative
conditions (as simple evidence, consider colonialism).

~~~
closeparen
Attributing the situations in Evicted to _inequality_ or _differences in
household wealth_ is pretty off base. It's Milwaukee, not San Francisco.
Competition from wealthier households has minimal to zero weight as a factor
in the price of low-end housing.

Rather, a bunch of people have incomes that are below or precariously close to
the carrying and maintenance costs on the cheapest possible shelter. You can
tell that this is a _poverty_ problem and not an _inequality_ problem because
the situation is worse, not better, if everyone falls down to that level.
(Example: we might be legitimately better off in a world where no one is a
billionaire, because billionaires have access to outsized political power that
can harm other people. Money in politics is an inequality problem. I don't
think you can say we're better off in a world where no one can securely afford
good housing).

And if we look at places in the world that deal more successfully with such
low economic productivity, one of things you'll find is a regulatory bar for
"minimum viable shelter" that's more in line with what people living there can
afford.

~~~
RugnirViking
so let me get this straight: We are saying that there are some people who are
doing okay in one place, and in another place, they have poverty.

And this is _not_ inequality?

Honestly though, its been far more clear to me living and working in a country
with much better income inequality how much the state of some places having
rampant poverty and other places in the same country having massive profits.
It seems like a cliché to say, but how is it that in the country with the
highest average salary in the world there is so much poverty?

It's because there is a much sharper distribution: the wealthy few make far
far more in america than they ever do in europe, but everybody else is better
off.

The sharpness of this curve is what indecates inequality to me. I'm sure there
are all sorts of fancy ways economists have quantified this, along with
economic mobility (also shockingly low in the supposed land where anyone can
make it)

~~~
closeparen
Sure, there is inequality. You can remove it by destroying all housing wealth
and evicting every American every month. But that makes the situation worse,
not better. So the inequality is not the interesting or problematic aspect
here.

------
zaroth
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. If management costs
are $100 per month that’s 10% of a $1,000/mo rent.

Finally, there are costs like interviewing, turnover, payment risk, eviction
risk, legal costs, damage exceeding security deposit risk, and trying to
factor this in can dwarf the underlying carrying cost of the property. Some of
these are likely to be inversely correlated with property value.

~~~
mhuffman
This exactly! Also upkeep. Replacing a cheap shingle roof vs a metal or
Spanish tile roof are night and day in costs.

Plumbing is cheaper in a cheap small house with simple layout vs. Sprawling
multi-level house.

Size of grounds (and expected level care) to maintain are different.

It goes on and on, but the gist is that the total net on a cheap house (ie.
houses in cheap areas) is going to be more for the same level of investment.

I don't even see how this is unexpected or controversial!

~~~
zaroth
TFA also makes another good point but somehow makes it sound evil;

 _In low-cost cities, landlord profit rates rise steeply alongside
neighborhood poverty. But in expensive cities, the reverse is true. In
expensive cities, landlords make money through appreciation and gentrification
(which is bad enough for the poor). In lower-cost, more economically hard-hit
cities, they make it on the backs of the poor._

If the home value is flat or even falling, then of course the rent will have
to be higher to provide the necessary return on capital to bother owning the
rental property in the first place!

It’s not like capital is required to be deployed to rental stock in certain
proportions. There is whole world of potential investments, and based on their
risk and return will have a whole world of dollars competing for them.

Rental units that appreciate fast enough are just held vacant in some markets,
so much so that Vancouver had to abundantly tax it to try to stop it.

Rental property appreciation is an absolutely key variable in the
profitability calculation. In many markets it totally dominates the equation
over the actual rental income figure.

~~~
pytester
>of course the rent will have to be higher to provide the necessary return on
capital

Rent is set by supply and demand. There's no law - economic or otherwise -
saying that it is _necessary_ for landlords or anybody else to yield a return
on capital.

In reality if the value of a home is falling or flat landlords _do_ often try
to raise rents in order to recoup losses and sometimes this leads to even
_greater_ losses as tenants leave and it goes unrented. It's a psychological
trap caused by a feeling of entitlement to profit.

This "nightmare" has kind of faded in to distant memory as most governments
around the world have decided to provide indirect wealth transfers to property
owners via QE and low interest rates. In the last 10 years even an idiot could
probably have made capital gains in most housing markets thanks to the
government assistance lavished on them.

>Rental units that appreciate fast enough are just held vacant in some
markets, so much so that Vancouver had to abundantly tax it to try to stop it.

Vancouver is as much about foreign money trying to find a home as it is about
capital investments. A Chinese investor is often okay with a depreciation in
capital provided they have A) assurances that their capital is not at risk of
confiscation by the Chinese state and B) that they have a place to run away to
in case some shit goes down in China.

The headache of renting out the apartment along with the instinctive desire to
own something "brand new and untouched" means that they often leave these gold
bar proxies/emergency safe houses empty.

~~~
FireBeyond
> it is necessary for landlords or anybody else to yield a return on capital.

In my town there is a proposal afoot called The Missing Middle,to improve
availability of medium density / multi family dwellings.

A vocal group is furious. Furor that the economic impact study showed that
their current and predicted home values over the next ten years is expected to
decrease from an 11% year over year increase, to a 7% year over year increase
(still).

The very definition of feeling entitled to profits.

~~~
bunderbunder
This also highlights a simple, mathematically inevitable truth: Homes cannot
be both affordable and a good investment at the same time.

~~~
zaroth
If home prices were perfectly stable, adjusted for inflation, they could still
be a good “investment” in the sense that rents would be much higher, for the
tax benefits, due to artificially low mortgage rates, or as a vehicle for
forced savings.

I do wonder if the average family could afford to own a home, even at 3.5%
interest, if it’s value did not appreciate. And I wonder if the rent had to
cover the entire investment return for landlords, what would that do to
average rental rates?

------
inuhj
"Those are whopping margins, and the reason for this discrepancy is that
rental markets have very different dynamics in expensive cities like New York
and San Francisco than less expensive cities like Milwaukee. In low-cost
cities, landlord profit rates rise steeply alongside neighborhood poverty. But
in expensive cities, the reverse is true. In expensive cities, landlords make
money through appreciation and gentrification (which is bad enough for the
poor). In lower-cost, more economically hard-hit cities, they make it on the
backs of the poor."

In expensive cities the underlying real estate appreciates and you make your
money on that when you sell. The cash flows are mostly to cover maintenance
and property tax but in some hot real estate markets rents won't even cover
operating costs. In stagnant areas the property value is either stable or
decreasing so you make your money on rent.

Low rent, high appreciation properties are attractive to investors who don't
need cash flow. If you need cash flows you have to go the other way. This
isn't surprising to anyone.

------
patio11
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.

~~~
pytester
>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.

~~~
kgwgk
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.

~~~
pytester
>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...

~~~
scarface74
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 for a court date. The tenant can basically say
anything and buy time.

4\. If you are successful, you have to wait for few days to schedule a police
officer to come out and you have two hours to put all of their stuff on the
street. You have to have at least 5 people(?) to move their stuff out.

At any time the tenant can pay the rent and stop the process. If you do
everything right, it can take two or three months and you can’t go into the
property while they probably tear it up.

If you want to recoup your costs, you have to go back to court to get a
judgement and if they don’t pay you have to go back again to try to get their
wages garnished.

Each step comes with fees.

~~~
AlexTWithBeard
Exact rules depend on the state.

In NY a typical eviction process takes about half a year.

~~~
bequanna
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.

------
spo81rty
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.

~~~
DataWorker
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.

~~~
wutbrodo
My parents' retirement fund consists largely of an apartment building, a
substantial portion of which is rented by section 8 (ie low income) tenants.
The variance in cash flow is pretty dramatic, from both an expenses and a non-
payment of rent perspective. Tenant protections are robust enough that, more
than once, they've ended up in a situation where it takes four months of
missed rent + legal fees before a non-paying tenant could be evicted, which is
a cool $10k chopped right off of their income. To say nothing of the
occasional expenses you wouldn't see in higher-income properties: the same
tenant protections mean that units can become almost hazardously filthy before
the landlord can intervene, and when they leave, they obviously don't tend to
clean up.

Higher rents effectively function as an insurance policy for these expenses,
and your insurance policy is obviously going to overcover rather than
undercover. Higher risk (ie variance) investments mean higher returns, for the
simple fact that the value of a high-variance investment will be lower than
that of a low-variance one with a given expected return, for obvious reasons.

The only reason to be ignoring variance If your goal is shitty advocacy
instead of intellectual honesty, which, as others have pointed out, is
obviously the case with the authors of this study.

~~~
iguy
Ah the variance is a good point. In addition to the these higher average costs
(unpaid rent, extensive repairs). Especially since the average landlord is
small, an cannot average over hundreds of properties.

------
bluedino
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...](http://www.hacm.org/doing-business-with-
us/section-8-landlords)

This causes section 8 landlords to inflate their rents. If a regular person
had to pay for the apartment, there is no way they would pay these higher
prices for these dumps.

However, by subsidizing a majority of the rent, the low income people will
live there. The buildings are cheap to buy, are not maintained, boom, lots of
profit for the landlords.

~~~
koolba
> However, by subsidizing a majority of the rent, the low income people will
> live there. The buildings are cheap to buy, are not maintained, boom, lots
> of profit for the landlords.

Also the tax laws of CA in particular actively discourage you from improving
properties. Rent growth is effectively capped whereas property tax growth (a
percentage of property price) is only capped as long as you do not perform
major renovations.

That combination incentivizes renters to remain fixed (" _I 'll lose my years
of rent control!_") and property owners to do the bare minimum (" _Why should
I improve the property if it 'll cost me more taxes and I can't charge
more?_").

~~~
pmiller2
Regarding the Bay Area (as I’m not familiar with other jurisdictions’ rent
control regimes), capital improvements _do_ allow a rent increase beyond what
would normally be the case, but I’m not sure if it justifies the investment.
Just an FYI.

------
JamesBarney
This article is so silly and the answers so obvious.

It's not some exploitative factors driving a difference in rent. It's other
factors driving a difference in price. Every landlord knows you can make more
money in low income areas, and especially with section 8. But they still don't
buy there because those areas are rougher, many landlords or middle to upper
class and don't necessarily understand those neighborhoods, and you have to
deal with more evictions.

And the biggest difference is that low income people can't afford/don't have
the credit/down payment to buy. So there is a lot less competition for
ownership there than a high income neighborhood.

------
TheBeardKing
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.

~~~
coldtea
> _so why he spent his free time managing all those rental houses is beyond
> me. He had over 20, and managed them all himself_

How much time do you believe it takes to "manage" those 20 houses? A month a
year at most.

(Source: have friends with low 10s of houses).

~~~
Gpetrium
That is highly dependent on the quality of renter and quality of your
property. One of the key values of having multiple rental is the economies of
scale, for example:

* Property advertisement - Preparing material and advertising for 1 property can be more expensive than multiple properties

* Material for fixes - Purchasing material for 1 property can be more expensive than multiple properties

* Vacancy - The cost of vacancy for a single rental is higher than having multiple rentals. The other rentals may off-set the cost of the vacancy lot for a period, without requiring external cash flow.

* Experience - Multiple properties will give you the opportunity to experience different issues and allow you to take proactive steps to diminish certain risks.

------
soniman
The price / rent multiple is not analogous to a P/E ratio. Rather, it is
similar to an Enterprise / revenue multiple. The distinction is important
because, as an investor in apartment properties, I can tell you that the Net
operating income margin (roughly analogous to an EBITDA margin for C-Corps is
much, much higher in San Francisco than in other places. For example, the NOI
margin in San Francisco is usually about 75%. In Merced California, it is
about 30%. Once you subtract Capital Expenditures, the 30% is cut almost in
half. Basically what I’m saying is that the net cash flow, after Capital
Expenditures, in many “C” and below locations is basically zero. Thus, the
price has to go very low to entice investors to buy there. This is not
irrational behavior.

------
mjevans
Skimming the article, an obvious solution seems to be overlooked.

Someone is probably a lot less likely to trash/destroy something they own /
are in the process of owning.

Imagine if there was far less rental and much more liquid stock of housing
units in markets?

What if everyone who was renting now could actually "buy" livable housing at
that same level of rent; rather than lining the pockets of others?

~~~
joelhaus
True, but beware the unintended consequences of 2007.

~~~
DangitBobby
2007 doesn't have to happen again. It's possible to both make houses
affordable for people with lower income and not give irresponsible amounts of
debt to people who cannot afford it. It just requires smaller, more affordable
houses to be built. I don't know why, exactly, but as a general trend the
sizes of houses have just been going [up, up,
up]([https://www.google.com/url?q=https://www.census.gov/const/C2...](https://www.google.com/url?q=https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf&sa=U&ved=2ahUKEwj27PXP75jhAhWDnFkKHcvUDtwQFjADegQIBxAB&usg=AOvVaw0dWbE8VHwAGuiTGvS63jHD))
(PDF)! Consider that the [mean, median] square footages of new houses built in
the US had gone from [1660, 1525] in 1973 to [2392, 2169] by 2010. Maybe the
reason people can't afford to buy houses is that no one wants to build
affordable houses.

------
mruts
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 landlords don't fix up properties: taxes and
fines. If you open up the wall, you might discover that your pipes aren't up
to code, and the state will make you replace them at great cost. Also, the
higher the value of your rental, the more taxes you will pay. So landlords are
literally dis-incentivized to invest in their neighborhoods.

Not that citylab would be happy if they did, because then it would be the evil
boogeyman gentrification. You know we live in a screwed up time when people
actually protest making a neighborhood better (see: Amazon and NYC).

~~~
tzs
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?

~~~
iguy
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.

------
scarejunba
If you read _Evicted_ you'll find out what it's like to be a landlord in these
places.

I considered it a bit because of the profit margins but it's a nightmare of a
thing to do. Low income people have a disproportionate number of behaviours
non-conducive to being rented to. They'll do things like put food down the
sink, block it, then wash food in the tub and block that and so on. They'll
smoke in the place and damage it. They'll stop paying rent because they wanted
to treat themselves. Multiply that with the fact that you have to deal with a
large number of them because your margins may look good but your absolute
return is low and you will have trouble every month.

No moral judgment here. Just that it's not free to compete here. I, for one,
do not have the stomach to evict a single mother with four children every
month from my rental property that she's wrecked.

------
hamilyon2
Paying one fourth of apartment cost in rent yearly makes no sense. There
should be something more in play here the analysis is not going deep enough or
simply incorrect

~~~
iguy
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 paid for out of $2000 not
$200 rent, so more is left for the owner.

In other news, payday loans in sketchy parts of town come with higher interest
rates than 20%-down home loans in good neighbourhoods. Does anyone think this
is because payday loansharks are uniquely greedy human beings? They are just
operating a very different business with different costs.

~~~
stoic
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 the average American makes in a year."

~~~
iguy
My point is that a theory that says their business practices follow from moral
failings doesn't explain anything about the world. Some businesses just
mysteriously seem to always be run by bad people.

Conversely, assuming that every businessman is about equally greedy forces you
to look elsewhere. Their loans are almost by definition high-risk, that's why
they are expensive. Low-risk borrowers are a different market.

The fact that we can learn something by thinking about their business does not
mean anything like "defending". It's just that sometimes the lessons are
clearest with extreme examples. We can learn interesting things from studying
drug gangs, pirates, kidnapping schemes, too.

We can also ask questions about whether the world would be made better by
prohibiting loansharking, and I actually don't know enough to have an opinion.
But it's clear to many that prohibiting drug-dealing has had some nasty side-
effects.

------
jryan49
Isn't that how investing is supposed to work? More risk more profit?

------
csomar
The author has one data point and he doesn't even explain: Does this profit
include risk, legal expenses, other expenses? I mean, if the average for these
three classes is different this suggests one of two things:

1\. The free market has failed for some reason; and there exists an arbitrage
opportunity. Buy in poor neighborhoods and sell in middle-class.

2\. There exists some fundamental reason why investors despise poor
neighborhoods: Maybe things are volatile there? Maybe the risk of destroying
the property is higher? Maybe it require more expertise?

------
kjbfojbejib
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 but
regular amounts: laundromats, bars, clubs.

An an interesting aside, these individuals are almost all involved with close-
knit religious groups to which they contribute great deals of capital.

~~~
krapp
>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 context.

If you're going to go there, "kjbfojbejib," remember that editing your post
doesn't also edit people's memories. I assume you were just trying to be funny
but that kind of humor is not welcome here. Nor is that kind of prejudice, if
you were being sincere.

[0][https://en.wikipedia.org/wiki/Triple_parentheses](https://en.wikipedia.org/wiki/Triple_parentheses)

~~~
hejdnrndk
I wrote that comment using a new account to avoid being outed at work. To be
very clear: your accusation is false, there was never any special parentheses,
and I invite an admin to confirm that if they can.

------
AlexTWithBeard
I wonder if it's about low-income or there are other factors like neighborhood
crime rate, education level or the amount of garbage on the streets.

I understand all these correlate with income level, but it would be extremely
interesting to see statistics controlled by income.

------
thegayngler
This is a dumb question. But, where did the data come from used to draw up the
conclusion that landlords make more profit on average from poorer
neighborhoods?

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

~~~
tobylane
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?

~~~
sokoloff
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.

------
_nosaj
Interesting article but the Marxist tangent the author went on was unusual.

One wonders how much of this correlation is affected by more people renting
properties in low income neighbourhoods combined with the fact that its more
economical for landlords to rent low-mid value properties.

------
nilskidoo
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.

~~~
ryguytilidie
Most landlords steal and are thugs. Also most HN commenter's rent is paid by
their parents.

Did you actually have these thoughts or did you read them in some sort of
"Angsty Teen Thoughts" handbook?

~~~
hooph00p
>Also most HN commenter's rent is paid by their parents.

I don't know if I agree with this generalization...

~~~
scarface74
I don’t agree with this. But, I bet you anything that most HN readers do have
relatives they could call on if they found themselves without a job and not
able to pay rent.

------
angel_j
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 non-profit, non-governmental institutions running
low-income housing, not slum lords.

~~~
twblalock
> Furthermore, we should have non-profit, non-governmental institutions
> running low-income housing, not slum lords.

Low-income housing run by governments is infamous for its slum conditions.

