Be a slumlord ? Okay, I got your attention, now the truth. I really don’t recommend that anyone endanger their renters with unsafe property’s. Much of what people call slumlording though, is simply providing reasonable housing for those with low incomes. It is of benefit to the renter AND the landlord.
Why Do People Rent Dumps ?
People rent not-so-nice places because they can afford to. A property that needs paint, has old rusty hinges on the doors, and a dirt driveway – this is a property that cost less to buy, and therefore can be rented for less. Anything major that the landlord does to improve it will result in higher rents, and possibly drive the renter away.
Why Invest In Low Income Housing ?
If a nice two bedroom property on a small urbanisation costs €130,000 and rents for €400, an old apartment will probably cost €45,000 and rent for €250. Notice that the two bedroom property costs almost three times as much, but the rent you get isn’t even doubled. This means the old apartment gives you MORE CASH FLOW. That is why old properties are such good investments.
It’s important to note that you’ll have more risk and management problems with low income property. Repairs come up more often, and rent will be late more often, on average. This is why you deserve a higher rate of return. Otherwise, who would want to provide low-cost rentals ?
Treat your renters well, and make your places safe. Do these things, and you can enjoy a good return on your investment – even if some want to call you a slumlord.