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| Low Income Housing Investments |
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.
Why Do People Rent Ugly Homes?
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 away.
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 |
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safe and affordable rental, you are providing a real
service.
Why Low Income Housing Investments?
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.
About the author:
Steve Gillman has invested in real estate for years. To learn
more, get a free real estate investing course, and see a photo
of a beautiful house he and his wife bought for $17,500, visit
http://www.HousesU
nderFiftyThousand.com
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