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.
This is a very important point and a large reason I got out of landlording. To be successful you have to be tough as nails and evict people when they can't pay their rent for totally understandable reasons. And if you're not emotionally prepared to kick out a mother and son because they lost their job because they couldn't make it to work because of a hurricane your returns won't justify the extra work renting takes over just throwing it into mutual fund.(especially at the hourly rates most of us make)
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.
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.
I suspect a majority of renters actually aren't aware of the legal protections they have nor do they have the legal resources at their disposal (or even state of mind or time, in many cases) to fully take advantage of them.
On the other hand, some probably do and some probably do take full advantage of their legal rights.
Aggregate margins would probably be a lot thinner if every person being evicted took full advantage of every legal right they had though.
Similarly, the landlords who are straight and honest about the process and don't take advantage of this probably take in lower profits than the ones who don't.
I don't understand the point you're trying to make. Is your claim that even a person trying to be a maximally fair landlord of low-income property has to be a "slumlord"? How is this not a meaningless definition of the term?
The point is that people will see you as an exploitative, greedy slumlord (per the article) unless you open your books to them, and even then I'm sure people can find something objectionable, since the definition of 'fair' varies.
>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.
Not a landlord, but know a few - all who do it as a side gig or who started out that way. Everyone tries to be nice up to the point that it makes financial sense.
Say I get into the landlording business as a side. I have a simple equation: I need to make X amount of profit to make the time investment worth it. The alternative is I invest that time in my regular career and try to climb the ladder. If I make less than X a year as a landlord, I should just sell the property and focus on my career.
For people with well paying jobs (e.g. engineers, SW, etc - and I don't mean SV salary - just the usual for, say, a Mechanical engineer in any major city), many/most of the higher income neighborhoods are pointless - they simply cannot make that X amount from them. That leaves the lower income neighborhoods.
Now if they do their work well and pick the right places, they may be making 1.2X (you'll always target making higher than X). Then at times they decide to be "less evil" in the way you think. They're willing to lower their profit down to X. But often that's still not "nice enough" in the eyes of many, and you'll still need to evict, etc.
So they face two choices: Be viewed as somewhat evil in other's eyes and keep the property, or sell it and just stick to the career. In both cases, the tenant suffers.
Landlords can't fix this problem. Legislation can shift the market dynamics. If you want change, don't waste time shaming landlords.
I also didn't mention the obvious other factor: Landlords want to spend Y hours a month on this business. Trying to help tenants who are in trouble suddenly increases the number of hours they spend. That automatically increases the threshold X, pushing their existing business into a zone where it isn't worth the time. And after all that, many/most of those tenants will never really recover.
I have a few coworkers who got into the landlord business and quit after some years. Hearing their complaints, some of them were nice.
A local radio show did a really nice piece where they followed a low income semi-homeless family around for a year and learned their history. The family was fine for a number of years, but as it happens when you are low income, you cannot afford to have a safety net. They had some stressful events, and things cascaded, and they became homeless on and off. After a number of years of this, they managed to get really good housing assistance (state/city - don't recall) - I think almost a 2000 square foot house to live in, albeit in a crappy neighborhood. But their lives changed greatly for the better.
While I was listening to the show, I couldn't think of anything landlords could do to help them. The tenants weren't irresponsible people - they just had life events. Government helped them out, but that has its own problems - for every one they properly help out, many can't get help - not enough tax dollars to go round.
Years ago, before I started thinking of business, I would express sentiments like yours to businessmen - that life isn't all about profits, and they could still have a good life with a lower margin. A common response was they're trying to make a living, and not give charity. When I finally analyzed it from the math above, I see the point. If I can make more money by quitting the business and working in industry, then insisting I stay in the business and make less really is charity. It's pretty much always the case that the person who is suggesting a lower profit margin does not run a business and has a relatively secure, decent job. A lot of businesses, even when making high margins, are suffering existential crises. Yes, the money is good now, but 2 years from now I may be out of business. There's less volatility in a regular job.
tldr: No easy solution, and the current situation is mostly a result of ordinary people doing ordinary (and not greedy) things. I can only see legislation helping.
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.