It wasn’t long after I’d bought my investment condo that I was called a slumlord for the first time (jokingly by a friend’s father). I think most people who rent out real estate get called this at one point or another, and it’s a popular view of people in the business of providing housing.
A slumlord is a property owner who rents the property “as is” to poor tenants, then provides minimal (or no) maintenance to the unit (while doing everything possible to collect rent). In some ways I feel that my current landlord is a bit of a slum lord (it took her 2.5 months to replace a broken dryer, after MANY messages from myself and the other tenants, and she blew me off when I had a insect infestation shortly after I first moved in).
PERSONALLY, I wouldn’t be interested in offering this type of housing, but in many ways I don’t have a problem with those who do. Anyone who can afford properly maintained housing will do so. The slumlord offers low-cost housing to people with low-income or poor credit. As a tenant, I could certainly pay more and get a nicer place, but I’d rather have lower rent (and am willing to accept a “less responsive” landlord).
Many governments in developed countries have made typical slumlord behaviours illegal, which led to landlords not offering housing to tenants who would typically be renting such accommodations. The reaction to this was to then offer incentives to get landlords to provide such house (Section 8 in the US, or the Canada-Ontario Affordable Housing Program in my neck of the woods).
There is a desire that the poor be provided with middle-class style accommodations, which is fine as a desire, but for this to happen SOMEONE has to pay the difference in the rent rates. Either it will be landlords (losing money on low income tenants), or the tax payers (in the case of Section 8 style programs or community housing). Since it’s difficult to force people to become / remain landlords if they don’t want to (they’ll just move capital to more lucrative investments if housing becomes over-regulated) the tendency is for these things to become an entrenched part of the bureaucracy.
W5 (a Canadian investigative news program) did a show called “Canada’s worst landlord” (links to video from the actual program on the right hand side), which was about Toronto Community Housing (where a friend of a friend works). They are able to provide disgusting conditions for their tenants which would never be tolerated if it was an individual or company providing them, but *is* tolerated because it’s government housing. Unfortunately I think this is the inevitable direction community housing drifts in.
Because there’s such a dim view of slumlords (and the term is applied so broadly) and regulations, I can’t understand why ANYONE investing in real estate offers low-income housing. The tenants will often have time and resources (free legal aid and whatnot) to enter into disputes with you, the law often provides them with a great deal of protection (which is often one-sided), and society won’t even appreciate the service you are providing (I’ve never heard of anyone being lauded for providing low-income housing, the view is usually that they’re exploiting the poor). By targetting middle / upper class tenants you avoid these issues entirely.
The counter-argument would be that since it is a pain-in-the-butt, fewer investors will be trying to purchase such properties (or offer them for rent) and it will be a more lucrative investment. I have my doubts overall, but even if that was the case, it wouldn’t be a worthwhile trade-off for me.
Do you have any slumlord experiences? If you were investing in real estate, would you consider offering low-income housing? Do you have any personal experiences (good or bad) doing so?