Do Landlords Have Neighborhood Obligations
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
Do Landlords Have Neighborhood Obligations
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Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
14yIf you're smart you will, regardless of the value of the property! Neighbors can make your life miserable, government can kill you and both can destroy any hopes of equity.
37 Replies
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes14y
If you're smart you will, regardless of the value of the property! Neighbors can make your life miserable, government can kill you and both can destroy any hopes of equity.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
Bill Gulley I agree, but do you think the obligation is equal. I think the low income landlord have a bigger role to play - they a obligated, as de facto leaders, to take on issues associated with low income communities.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes14y
Yes, I very much dislike slumlorads. Low income properties are just that usually due to location and neighborhood. Taking the lead and revitalizing an area is the very best way to improve your property values.....I'm a big advocate of turn around neighborhoods.
- Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes14y
I have owned low income apartments before. The owner is generally trying to make the property work and fix the constant damage the tenants cause. Deferred maintenance is a sign of how much effort the landlord is already spending on operating the property.
At the end of the day everything boils down to ROE. If it makes sense to improve things more owners will do it. If you are operating buildings in rent controlled areas or other gov-mint-laden environments you can expect to get slums because the politicians don't understand basic economics.
- Residential Landlord · Indianapolis, IN · Member since 2010 · 592 posts · 138 votes14y
I think a landlord has just as much responsibility to the neighborhood as any other homeowner. I think that may be more in a higher end neighborhood because there is a higher standard. In the higher end neighborhood though, the landlord would not be able to fall behind because the neighbors would complain and government officials would be involved quickly. In the lower end neighborhoods, there are lots of homes with deferred maintenance, and any one home does not stand out. Landlords will play an important role in these neighborhoods to improve them.
In any neighborhood, the landlord must maintain a clean and habitable home for their tenants.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
@Bryan Hancock, I always appreciate your ROE prospective. I agree, when gvt caps your rents that squashes the reward we get from restoring the innate value in low income areas. It only makes financial sense if you use gvt loans to purchase or improve the rental.
But in non "gov-mint-laden environments" I would argue that the orderliness of the neighborhood caps a landlord's appreciation potential. And, the wisest thing a landlord could do, even before addressing deferred maintenance, is to find a way to contribute to the community.
- 14yBrian LevredgePro MemberInvestor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
What exactly does "contribute to the community" mean? Its phrases like this or words like "fair" that are nebulous and tend to have varying definitions (and large ones at that) from one person to the next. I personally think that people tend to live in the nicest place that they can afford. In other words, many tenants themselves don't feel that obligated to a neighborhood if they don't have to be.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
@Brian Levredge thanks for weighing in. You've caught what I was getting at. Tenants often don't care and the neighborhood will decline unless owners step up. "Contribute to the community" is my quick phrase to mean raise to the occasion. If the neighborhood association/watch need some funds for their event, then contribute financially. If there's a drug dealer across the street, it means to get all the neighboring owners phone numbers and apply collective pressure. If there's litter everywhere all the time, it means leading by example and getting others not to tolerate - but pick up litter.
There are case study after case study showing that once owners start to care others start to care. I know I'm an activist landlord - I believe that passive landlords should stay in well-to-do neighborhoods. Low income neighborhoods desperately need landlords/managers to be leaders.
As I step off my soap box (sorry for getting so worked up), let me add that being an activist landlord in low income neighborhoods is the most profitable position to operate from. - Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes14y
Al,
I agree with your standpoint that low income neighborhoods are the most profitable to operate out of and that high income areas are much better for passive investment.
I have the benefit of living in a very transitional neighborhood, we have nice, renovated houses next to dumpy apartment buildings (with large fences separating of course). I see this as a phenomenal opportunity to not only acquire properties with high appreciation and rental potential, but also contribute to the neighborhood and community by cleaning up some of the blighted properties.
In 5-10 years when I'm ready to be more hands-off, I'll dump my proceeds into some rentals in the higher end areas and head to the beaches :)
-Mike
- 14yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Contributing to the community can mean a lot of different things to a lot of different people and we have to remember it all starts with our particular property. If the property is not well maintained, then how can we expect the community to be well maintained. I'm not sure if the responsibility grows or lessens with the value of the property and neighborhood. When going beyond our property, and I think you are, and then you add the moral obligation to help others (a rising tide raises all ships), then I think there is some sense of responsibility to give back and help out. To what extent that makes a difference really depends on the neighborhood. There are countless threads on here about neighborhood revitalization gone wrong, but that does not mean you don't try to some extent.
- Investor · Statewide, MO · Member since 2011 · 814 posts · 425 votes14y
I don't think landlords are obligated in any way to contribute to the surrounding neighborhood in which they operate. They're required to abide by the same minimum standards as everyone else. However, it is simply good business and the right thing to do in my opinion. My answer may sound like one from a slumlord, but I can assure you I'm far from it. The units I manage tend to shine a bit more than the remaining housing stock (rentals and o/o's) in the neighborhood and I like that. I always try and make the neighborhood better with everything I do. I have been told my units are "too nice" for the area and clientele by inspectors.
The comparisson to higher end neighborhoods makes me feel like we're like we're teetering on a class warfare argument. If I had tenants selling candy for a fundraiser in a high end neighborhood and in a low end neighborhood, I'm going to buy the candy at both homes and not because I like candy. It's good business. They're renting from me, supporting me, so it's foolish not to be good in return.
In higher end areas, deferred maintenance and especially slumlording aren't tolerated. In lower end areas, it's equally wrong, however much more accepted.
Al, you make an interesting point as to landlords absorbing the costs of some neighborhood functions, that if approached as a pm, seem worth considering. However, I'd look at something like this as good business more than an obligation. - Property Manager · Indianapolis, IN · Member since 2010 · 1 post · 0 votes14y
When you say "obligated" do you mean it in a legal or moral sense? Or just from the perspective of wise business ownership?
There are obviously minimum legal standards one must maintain, but is there a moral obligation to improve the neighborhood? How far does that obligation extend? You can improve your own property, and you can take steps to improve the neighborhood as a whole, but at what point does this "obligation" end?
And why should landlords be held to a higher standard than the other homeowners in the area? Obviously it's good for business. And yes, any movement does need an instigator. But once you've brought the standards up by improving your property, how much more falls on your shoulders?
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
@Chris Clothier, I suggest different landlording approaches should be used in lower income communities (not lower property values) because they typically are associated with lower owner occupant rates and higher % rental rates. This, as I see it, this condition leads to a lower sense of ownership, leading to apathy, leading to setting an atmosphere for crime to flourish. That’s why I believe landlords in these areas should take additional steps to prevent the area from declining.
From the moral “we are all interconnected” standpoint OR even from the view that it’s a wise business practice, landlords in these areas should address neighborhood needs.Regarding neighborhood revitalization – the best practices for this effort is scatter throughout the web, magazines, and case studies. After reading a few success stories, it is easy to conclude that revitalization efforts work with approached from the inside out. Meaning once the residence want revitalization, then it works. Since I’m trying to start a revolution, I love to argue that the most profitable thing an inner city landlord can do is help their neighbors buck the status quo and work towards revitalize their block. That approach seems to work every time.
@Ed O. – legally you may be correct. And I think you said it best “it’s simply good business and the right thing to do.” Thank you for leading the neighborhood forward. We need more Ed Os.
Let me add that Maslow came up with a hierarchy of needs. His framework shows that people need different things at different levels and only after those needs have been met can they climb up to help themselves and others. I think class warfare discussions are counter productive. However, it is very useful to understand different landlord approaches are required to effective manage/improve properties in different income classes.
@Brad Cobb – Yup, when I say “obligated” I’m not talking legally. I think the extent of the obligation should at least extend as far as your self interest goes. IMO – if you help your block and connect it to a nicer part of town, then that’s your finish line.
“Why should landlords be held to a higher standard than the other homeowners..” I feel, in lower income neighborhoods, landlords should spur on homeowners and other landlords to improve safety, reduce blight, and ultimately improve their own property values. It’s easier for a landlord to encourage another landlord and start a chain reaction. With such great potential to do “good”, it is a shame not to take action.
- 14yMark UpdegraffBusiness MemberReal Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes
I think the problem is that there is no "land lord" anymore. It has been replaced by big business and government backed promises. These land lords are never present and could care less about graffiti or crime. They care about taking money and spending it on lavish salaries, pensions, and benefits. This is what caused the "great divide" in class.
We real landlords are no different than any other individual. However, our obligation comes from the fact that if we ran our business like the federal government we would be bankrupt. We MUST care about our neighborhoods to preserve our investment!
Many of us are drawn to land lording because we enjoy providing housing. As simple as it may sound, it is a great feeling to provide a roof over someone's head. I like it even more when tenants share my enthusiasm in regards to community. It makes keeping the house maintained that much easier because they are eager to help out in whatever small ways they can.
We're not shy about being community activists and leaders, but we're not advertising either. I think the choices a real landlord makes in regards to community is a very personal decision. There are so many different ways that our desire to help manifests itself. Just today, while walking the dog on one fine afternoon I asked an elderly neighbor a few blocks from my house if she could use a hand doing anything. I explained that I had some free time and would love to take care of anything she had that I could help her with. I have no idea why I decided to do that. And it really has nothing to do with the fact that I am a landlord.
Cleaning up a community is more about awareness than anything else. You can't force people to be aware and those that are aware will move if they get scared, feel threatened, or don't share awareness with their neighbors.
Personally, my favorite way to contribute to the community is through the arts. People really connect with the arts, and you can feel their appreciation!
Mark
Updegraff Group Realty4.746 Reviews - Real Estate Investor · NY · Member since 2008 · 313 posts · 87 votes14y
If the tenants or occupants of these neighborhoods don't care about the area why should I? Not saying this is the case with me but I can see how landlords might get this mentality after many years. I take good care of my properties but the tenants don't usually. I keep my my yards garbage free but the occupants of the area use the street instead of a garbage can.
If my house is vacant the neighbors will throw rocks at the windows, steal anything of value and do drugs in my house.
Personally I think the landlord has a responsibility to the neighborhood just as much as the occupants do. You need to get the citizens to stand up and try to make a difference, and the landlord will follow.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
@Michael R. - Since you're in the Big Apple, I'll use a local example for you - Bryant Park.
http://www.bryantpark.org/about-us/press/20091019-cj.html
It's a battle of wills to change behavior and not always easy. As anyone who fights blight will tell you, the person with the most determination will win. Elderly women that have fought the battle have won - I know you will too if you chose to revitialize your block.
- Investor · Statewide, MO · Member since 2011 · 814 posts · 425 votes14y
It seems in my market, inspectors look at investors as people with endless means and harass us with burdensome improvements and nit picking, while letting owner occupied homes continue to slid into disrepair. I recently put a lot of resources into improving the exterior of a home and was harassed to the point of threats of fines and court dates, because my contractor couldn't complete the work fast enough!!! A lot of the work had to be put on hold because of the weather and the inspector didn't care. All the while, neighboring homes, full of blight and owner occupants were ignored.
Higher end homes need less of their owners and landlords. Lower end homes need more of their landlords and their community needs more from its owner occupiers.
I'm sorry if I mistook your remarks for something they were not and appreciate your ability to politely explain my misunderstanding.
As I gripe about inspectors singling out landlords, I suspect it's the only way to force out blight in certain areas. If done properly, including all properties to the same standards. Have you attempted to overcome a blighted area? Could you share your experiences? I'd expect to get a coarse remark if I approached a competing landlord and asked them to make their dumps a little better.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
@Ed O. asked "Have you attempted to overcome a blighted area? Could you share your experiences? "
Yes, I've shared your experience on a personal and professional level. I purchased an apartment building with a clouded title due to code violations. Fortunately I'm a licensed engineer and can stamp my own plans - so that saved me some loot. It was a very frustration time, but 10 years later, I know it was worth the fight.
Cleaning up my building and picking up litter up and down my block eventually gave me enough street cred to take on other landlords.
So that's my recommendation: serve your neighbors first, build trust, then use that trust to get others to want more for themselves and their families. It's a bullet proof system.
Changing the world is hard. Thank you for trying.
- Memphis, TN · Member since 2009 · 8 posts · 14 votes14y
Originally posted by Al Williamson:
Bill Gulley I agree, but do you think the obligation is equal. I think the low income landlord have a bigger role to play - they a obligated, as de facto leaders, to take on issues associated with low income communities.Al, we can talk about this ALL day!
Our properties and the properties of our partners are in low-income areas, mainly because these properties weren't being represented in our local investing group. Our properties are successful because we go into our properties with a servant's heart. Everybody deserves the opportunity to live in a decent home...period! With that being said, we make our tenants accountable and most of them (not all of them..lol) understand that.
Some of the things that we do for our tenants to enhance community is...
1. Provide a monthly newsletter, highlighting tenant success and our appreciation of them.
2. Inform them about community events- whatever we get word of in the community that will help our tenants, we create flyers and inform our tenants. For example, we're sponsoring a community 3 on 3 basketball event in June which will include our tenants participating and creating their own team. Hopefully they will participate.Another best practice that we received from another landlord is giving the tenants $5-of their rent if they donate food to a local drive. Prospective tenants can bring in donated food and have a portion of their application fee waived.
To sum it up, it's all about perspective. Do you want to get just a monetary return on your investment or do you want to see your investment's return maximized through changing a life?
- Investor · Groves, TX · Member since 2009 · 44 posts · 25 votes14y
I have mixed feelings on this. If by meaning that landlords are obligated to 'improve' the community I would probably say no. I think a landlords obligations end at property lines.
However, I do feel that landlords should not allow their properties to be a drag on the community. A property should be maintained to a level at or slightly above the norm for the neighborhood. Basically a landlord should always work to keep his property clean and functional. Landlords/Investors who allow properties to fall into disrepair give all of us a bad name.
- Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes14y
I am taking a hard-nosed approach to this.
The landlord's obligation is several fold
1) This is a business. The landlord should try to keep the property to the letter and spirit of the law. You will get little help from the bank, insurance company, utility companies, contractors or government and most of the neighbors.
2) The landlord needs to manage their own energy and sanity. I have done a number of "community" things and frankly, they were usually more feel good than of true value add. The "one person can make a difference" is similar to the concept that voting makes a difference - if you are not in a swing state, your vote is meaningless. If you don't live there, your efforts should be focused on things that impact your property. Beyond your property - neighbors who blight your immediate area by slovenly appearance or improper behavior. Protecting your tenants from a neighborhood point of view, etc.
3) My nod to neighborhood involvement, is attempting to meet the neighbors when I am outside, but that is often not easy. I have seen homes for years that you never seem to see or meet the occupants.
- Medford, MA · Member since 2012 · 163 posts · 36 votes14y
I've worked to improve the community by attending meetings and participating in various neighborhood improvement activities organized by local community groups. I try to shop local.
I also help by renovating my property, thereby bringing in good tenants to the neighborhood. Such is the beauty of the private sector in achieving public good.
Another thing I have done is pick up trash on the street of one of my properties. It used to be absolutely *terrible*. I would spend a couple hours doing the whole street, and fill 5 contractor garbage bags. Then later in the day someone would have dumped a Burger King bag on the street. But over time the effort seemed to pay off, we don't have the same problem today. I've noticed some other neighbors also do it now, I'm not sure if they saw me do it first but I never noticed that behavior before. Perhaps people litter because they see litter already there, so if you reduce the volume, it slows down new littering. Perhaps a few bad apples moved out. Probably some combination of all of the above.
- Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes14y
I see it my obligation to make sure the property I own is not a burden to the community.
That is, I am responsible to the immediate neighbors to put a good tenant in my unit that does not infringe upon their quality of life . Although I expect the tenant to mow the yard and keep the place clean, I understand it is my ultimate responsibility that these things be done and act accordingly.
I feel no different about my community obligations for my rental property as I do for my personal home. However, I've never been much of an extroverted community activist. Although I agree with the principles of neighborhood activism, I usually keep to myself and don't find any "obligation" beyond my property boundaries. But I am thankful for those who do more than I do.
- Real Estate Investor · Central Valley, CA · Member since 2012 · 8 posts · 2 votes14y
I agree with Jad that obligations end at the property lines, however, if I had a very large interest with many properties in a particular neighborhood I would be more involved. I have some properties in low-income neighborhoods which we bought as shells of former homes. They were used by the homeless and dragged down the neighborhood. We saw potential in rehabbing them and got great deals on the purchase. Rehabbing and trying to improve the property came with many problems. Frequent break-ins, stolen items, graffiti, etc. were commen during the rehabs. It got to the point where the only way we could complete the rehab was to give tenants free rent while we completed the work. Having somebody living there prevented the break-ins. One of my favorite real estate memories is when we were starting one such rehab. We boarded up the windows and put security doors on all the doors. We found one morning that not only had somebody broken-in and stolen the cabinets, appliances, shower heads, etc. they had done so by prying off the security doors with crow bars and stolen the doors! I do my best to give my tenants a nice place to live and ours went from being the worst to the nicer homes on the block. It brings a smile to my face when I drive by and see tenants bbq'ing or kids playing on the lawn. However, my experience in these neighborhoods prevents me from making to many dramatic improvements now. We still do the best job we can, but are cautious about the improvements we do make.
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes14y
Ryan Hellman hope you end up profiting big time on those problem properties.
Paul Morgan yep, trash pick up seems to get the neigbhorhood improvement momentum going in every case study I've looked at. You did make an impression by challenging the status quo. I know you're labor will have a very nice ROI.
Using some basic best practicies in troubled neighborhood is a viable investment strategy - bigger than just a simple business. Those of us that have worked through a nieghborhood turn around can coach others to do so quicker and profit faster (and deliberately or accidently making a difference as well). Let's keep sharing.
Oh, before I'm dismissed as being overly positive, I should share that I've been present (with my 16 month old) when shots were fired, I've shown up at 1am after bad things have happend, and I've been threatened on a number of occasions. It is scary and difficult to save the world, but I chose this investment strategy because it’s profitable and my optimism gives me an unfair advantage. It will likely work for you as well.
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