Slumlord
Encyclopedia
A slumlord is a derogatory term for landlord
s, generally absentee landlord
s, who attempt to maximize profit by minimizing spending on property maintenance
, often in deteriorating neighborhoods. They may need to charge lower than market rent
to tenants
. Severe housing shortages allow slumlords to charge higher rents.
The phrase slumlord first appeared in 1953, though the term slum landlord dates to 1893.
Traditionally, real estate
is seen as a long-term investment to most buyers. Especially in the developed world
, most landlords will properly maintain their properties even when doing so proves costly in the short term, in order to attract higher rents and more desirable tenants in the long run. A well-maintained property is worth more to potential buyers.
In contrast, slumlords do very little or no maintenance on their property and usually do not contract with property management
services (ordinarily, just enough to meet minimum local requirements for habitability), and in turn offer low rent rates to lure tenants who will not (or cannot) pay high rent (and/or who might not pass background check
s should these be required to live in the higher rent areas). Slumlords of this kind typically prosecute many eviction
s.
It is not uncommon for slumlords to buy property with little or no down payment, and also to receive rent in cash to avoid disclosing it for tax purposes, providing lucrative short term income. (Thus, in the U.S., slumlords would normally not participate in government-subsidized programs such as Section 8
, due to the requirements to report income and keep properties well-maintained.) A slumlord may also hope that his property will eventually be purchased by government for more than it is worth as a part of urban renewal
, or by investors as the neighborhood becomes gentrified
.
Some slumlords are more interested in profit acquired through property flipping
, a form of speculation
, rather than rental income. Slumlords with this "business model" may not maintain their properties at all or pay municipal property tax
es and fines they tend to accrue in great quantities. Knowing it will take years for a municipality to condemn and seize or possibly raze a property, the slumlord may count on selling it before this happens. Such slumlords may not even keep up with their mortgage payments if they become equity-rich but cash-poor or if they feel they can sell the property before it goes into foreclosure and is taken by their lender, typically a six to eight month process at the quickest.
Many people have a negative opinion of slumlords, blaming them for declining property values and whole neighborhoods of shanty buildings. They say slumlords leech away the wealth of the poor with little regard to future generations or the local people. In effect, they work in the opposite direction of gentrification
, where landlords try to make appealing improvements to property in order to attract more affluent renters.
Decay is a natural outcome of this strategy but defenders assert slumlords offer a valuable service for those who care more about price than quality. Economist David Osterfield wrote, "... the slumlord, regardless of his motives, helps the poor make the best of their bad situation."
As many of these neighborhoods are often populated by poor minorities, the term ghetto
landlord has also been used. Another type of slumlord is called a retail slumlord and keep shopping mall
s in a bad shape until finally the government buys it or confiscates it.
Landlord
A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...
s, generally absentee landlord
Absentee landlord
Absentee landlord is an economic term for a person who owns and rents out a profit-earning property, but does not live within the property's local economic region. This practice is problematic for that region because absentee landlords drain local wealth into their home country, particularly that...
s, who attempt to maximize profit by minimizing spending on property maintenance
Property maintenance
Property maintenance relates to the upkeep of a property or building and may be a commercial venture through a property maintenance company or a home pastime for example day to day cleaning....
, often in deteriorating neighborhoods. They may need to charge lower than market rent
Fair market rent
Fair Market Rent is a term in real estate that indicates the amount of money that a given property would command, if it were open for leasing at the moment...
to tenants
Leasehold estate
A leasehold estate is an ownership of a temporary right to land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord....
. Severe housing shortages allow slumlords to charge higher rents.
The phrase slumlord first appeared in 1953, though the term slum landlord dates to 1893.
Traditionally, real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
is seen as a long-term investment to most buyers. Especially in the developed world
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
, most landlords will properly maintain their properties even when doing so proves costly in the short term, in order to attract higher rents and more desirable tenants in the long run. A well-maintained property is worth more to potential buyers.
In contrast, slumlords do very little or no maintenance on their property and usually do not contract with property management
Property management
Property management is the operation, control of ususally on behalf of an owner, and oversight of commercial, industrial or residential real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its usable life and condition...
services (ordinarily, just enough to meet minimum local requirements for habitability), and in turn offer low rent rates to lure tenants who will not (or cannot) pay high rent (and/or who might not pass background check
Background check
A background check or background investigation is the process of looking up and compiling criminal records, commercial records and financial records of an individual....
s should these be required to live in the higher rent areas). Slumlords of this kind typically prosecute many eviction
Eviction
How you doing???? Eviction is the removal of a tenant from rental property by the landlord. Depending on the laws of the jurisdiction, eviction may also be known as unlawful detainer, summary possession, summary dispossess, forcible detainer, ejectment, and repossession, among other terms...
s.
It is not uncommon for slumlords to buy property with little or no down payment, and also to receive rent in cash to avoid disclosing it for tax purposes, providing lucrative short term income. (Thus, in the U.S., slumlords would normally not participate in government-subsidized programs such as Section 8
Section 8 (housing)
Section 8 of the United States Housing Act of 1937 , as repeatedly amended, authorizes the payment of rental housing assistance to private landlords on behalf of approximately 3.1 million low-income households...
, due to the requirements to report income and keep properties well-maintained.) A slumlord may also hope that his property will eventually be purchased by government for more than it is worth as a part of urban renewal
Urban renewal
Urban renewal is a program of land redevelopment in areas of moderate to high density urban land use. Renewal has had both successes and failures. Its modern incarnation began in the late 19th century in developed nations and experienced an intense phase in the late 1940s – under the rubric of...
, or by investors as the neighborhood becomes gentrified
Gentrification
Gentrification and urban gentrification refer to the changes that result when wealthier people acquire or rent property in low income and working class communities. Urban gentrification is associated with movement. Consequent to gentrification, the average income increases and average family size...
.
Some slumlords are more interested in profit acquired through property flipping
Flipping
Flipping is a term used primarily in the United States to describe purchasing a revenue-generating asset and quickly reselling it for profit...
, a form of speculation
Speculation
In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...
, rather than rental income. Slumlords with this "business model" may not maintain their properties at all or pay municipal property tax
Property tax
A property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
es and fines they tend to accrue in great quantities. Knowing it will take years for a municipality to condemn and seize or possibly raze a property, the slumlord may count on selling it before this happens. Such slumlords may not even keep up with their mortgage payments if they become equity-rich but cash-poor or if they feel they can sell the property before it goes into foreclosure and is taken by their lender, typically a six to eight month process at the quickest.
Many people have a negative opinion of slumlords, blaming them for declining property values and whole neighborhoods of shanty buildings. They say slumlords leech away the wealth of the poor with little regard to future generations or the local people. In effect, they work in the opposite direction of gentrification
Gentrification
Gentrification and urban gentrification refer to the changes that result when wealthier people acquire or rent property in low income and working class communities. Urban gentrification is associated with movement. Consequent to gentrification, the average income increases and average family size...
, where landlords try to make appealing improvements to property in order to attract more affluent renters.
Decay is a natural outcome of this strategy but defenders assert slumlords offer a valuable service for those who care more about price than quality. Economist David Osterfield wrote, "... the slumlord, regardless of his motives, helps the poor make the best of their bad situation."
As many of these neighborhoods are often populated by poor minorities, the term ghetto
Ghetto
A ghetto is a section of a city predominantly occupied by a group who live there, especially because of social, economic, or legal issues.The term was originally used in Venice to describe the area where Jews were compelled to live. The term now refers to an overcrowded urban area often associated...
landlord has also been used. Another type of slumlord is called a retail slumlord and keep shopping mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s in a bad shape until finally the government buys it or confiscates it.