Low Income Housing Investments
Low income housing will often give you a better return on your investment than any other type of income
properties, and it doesn't mean being a slumlord.
low income housing, real estate investing, real estate
Low income housing providers get a bad rap. Be ready to be called a slumlord if you invest in it. 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.
<B>Why Do People Rent Ugly Homes?</B>
Not-so-nice places are rented because they are affordable. When a house needs paint, has old rusty hinges on
the doors, and a dirt driveway, it costs less to buy, and therefore can be profitably rented for less. In fact,
anything major that the landlord does to improve it will result in higher rents, and possibly drive the renter
This often happens due to local regulation. When my own town enacted its first rental regulations, the
fifteen pages of new rules required many landlords to spend money to upgrade their apartments and other
rental properties. They included many non-safety-related requirements, like a minimum of windows, to
allow natural lighting, bedroom square-footage requirements, and no peeling paint or cracked plaster.
Regulations like these are done in the name of low income renters, but the result is always the same: higher
rent. Combined with the regulations against mobiles homes, these laws force low income families to move
further away from town and jobs. I mention all this to let you know that if you offer an ugly, but safe and
affordable rental, you are providing a real service.
<B>Why Low Income Housing Investments?</B>
When an average two bedroom house in a small town costs $130,000 and rents for $800, an old mobile
home on a lot will probably cost $45,000 or less and rent for $500. The house costs almost three times as
much, but the rent you get isn't even doubled. In other words, the mobile gives you MORE CASH FLOW.
That is why old houses, run-down apartments, and mobile homes (on land) are such good investments.
Maybe you think you'll have more risk and management problems with low income housing. Well, you're
right. Small repairs come up more often, and rent will be late more often, on average. But this is why you
deserve a higher rate of return. I wouldn't recommend investing in low income housing if you didn't get a
higher rate of return.
Let them call you a slumlord. Just treat your renters well, and make your places safe. Do these things, and
you can enjoy a good return on your investment in low income housing.
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