Slum or savvy?
While working on a Broker Price Opinion last week I had to do some research in a pretty rough neighborhood in a city I service.
Now, I used to own investment property and I have managed investment property for family interests since I was 18. I have some pretty interesting stories to tell and my last personal investment story is it’s own blog post. I really do NOT want to own investment property right now, but these homes are selling for $15,000. That isn’t a purchase price, it is a down payment! This temptingly low purchase price got my real estate number wheels turning for a little while and I decided that it would make a heck of a great investment.
Eventually, I snapped out of it and remembered that I am too busy raising my daughters and running my real estate career to be buying up property in need of serious repair (besides there is the little issue of the paying for it). But I got to thinking, for the right buyer: these are a bloomin’ heck of a steal!
I mentioned this to a few people who were incredulous and asked me if I wouldn’t hate being a slumlord. I hadn’t even thought of it that way and still don’t. Slumlords are not people who buy up cheap property, fix them up and rent them or sell them for fair value. Not in my opinion, anyways.
Then Lani brought this article on “slumburbia” to my attention and I started to think about this issue on a more national base and wondered if other places call buying property in distressed urban areas “slumlording”, too?
A conversation with a local agent brought to light that he is purchasing several homes in the same urban area as my subject property and is very excited about the opportunity.
Here is my two cents, tell me if it makes sense to you, too:
These foreclosed homes won’t do anyone any good sitting empty and rundown. They need owners who can inject some cash into repairs and improvements and bring in some good tenants. To me, “slumlords” are people who keep trashy buildings and expect their tenants to pay top dollar. I don’t know the rental laws in other areas, but Massachusetts is VERY VERY tenant oriented and it is difficult to get away with what I would think of as “slumlording.”
What do you think? Are you a slumlord if you buy up these urban bargains or are you kick starting the economy and being a good hard working capitalist?
What would Ayn Rand say?