The Economy

The last sentence just doesn’t apply to my town, one of the poorest in Indiana. The city is so bereft of resources it doesn’t enforce any zoning or maintenance ordinances. We have rental properties that literally havesecond-story porches sagging and collapsing. No money to tear them down, either.

We have a large number of Mexican immigrants who work at farms and industrial food factories that often live 10-15 to a rental home. A lot of my wife’s pro bono clients are in living conditions like this and slumlords have all the leverage.

 

Many years ago, a buddy of mine who was always looking to make money without effort stopped by to tell me he was buying some rental properties, and all he'd have to do is sit back and collect the checks every month. I told him I think there's a lot more to it than that because he'd be on the hook for maintenance, repairs, etc. I humored him and rode along to take a look at the place.
As soon as we pulled in, I wanted a tetanus booster. If I remember, there were three janky single-wides and a an old service station that had been converted into two apartments.
"Duuuude! Don't do it. No. Anybody willing to live in these shit holes won't be able to pay you."
"Naaaaa. It'll be good. The checks will roll in."
I called the place Gangs of New York.
It wasn't long until I was going back with him regularly to pick up sets of tires, a Hoveround, Social Security checks, etc. to cover rent people couldn't pay. More than once tenants would offer to use his lawn equipment to do work to cover rent. Well, we'd have to go to local pawn shops to get it back.
He finally unloaded the place. I just said, "Dumbass. I told you so." I never asked if he even broke even on it. No idea what he paid. Sometimes it's best not to have green eyes.

 

Edit:
Out-of-state corporate landlords are gobbling up Milwaukee homes to rent out, and it's changing the fabric of some neighborhoods

 

Just playing devil's advocate, but isn't an empty-nester someone whose kids have left the nest? So at one point, kids did live in those large houses. Should the parents sell the house just because their kids have left, especially if it's paid for and they like where they live?

We're empty nesters. Our house is paid for. We love the neighborhood and our neighbors. My house isn't big (1440 sf) but I sure as hell ain't leaving.

 

This is definitely true in Microville, where so many houses close to campus have gone from owner-occupied to rentals and now have trash all over and lawns that are never mowed.

There was a rental on my cul de sac, just for a year and it was amazing how much it deteriorated. When the owners decided to sell it took 2-3 days for the yard crew guys to get it back to where it could even be put on the market.

 

If transactions costs were zero, you'd probably see more empty-nesters vacating space they don't need anymore ... but they're decidedly non-zero. Selling a median-price home in my neck o' the woods means about $25K in real estate commissions PLUS all the costs involved in packing up and moving.

 

This is probably a stupid idea, but wondering if we might see property “trades” — upsizing owners toss in some extra cash, empty-nesters downsize and potentially come out of it debt-free.

 

And there are long term savings like lower property taxes, less upkeep, lower energy costs.

 

My house is not necessarily a "forever house," and I will sell someday, but I want to hit it at a sweet spot. That day is coming, but it isn't nigh.

 

Asking Ragu legitimately because I don't know...

What's worse?

-- (Relatively speaking) insanely high interest rates in the early 1980s that limited entry into the homebuying market?
-- Insanely low interest rates leading to insane housing prices in the 2020s that limited entry into the homebuying market?

Both seem suboptimal to me.

 

Trying to determine, in the equation X = X, which is the worse side is what's known as a fool's errand.