Actually... According to the research source landlords do charge more due to increased risk: "Because landlords operating in poor communities face more risks, they hedge their position by raising rents on all tenants."
>Because landlords operating in poor communities face more risks
>Since losses are rare, landlords typically realize the surplus risk charge as higher profits
The author of this study appears to be confused as to what risk is.
Behind a paywall unfortunately, so it's difficult to tell if he's just made two contradictory assumptions in his abstract or if there's something deeper going on.
I suspect slumlords actually yield higher profits because of basic supply and demand - slumlording is a market, after all, that most would find it distasteful to get in to (who wants to evict somebody who lost their job at walmart on to the streets?).
It's sort of like the "low salaries for teachers/charity workers" effect in reverse - there are certain kinds of work (or investments) that people can be proud of and certain kinds that they aren't.
"Risk" sounds more laudable than "there's a restricted supply of investors who are prepared to be assholes to protect their investments, though.
This paper might argue that the risk/reward ratio is lower than other similarly risky investments, which would substantiate the article's argument that landlords are greedy and generally bad. But good point, the abstraction of risk is something like a veil used to make landlords and investors sleep at night.
>Since losses are rare, landlords typically realize the surplus risk charge as higher profits
The author of this study appears to be confused as to what risk is.
Behind a paywall unfortunately, so it's difficult to tell if he's just made two contradictory assumptions in his abstract or if there's something deeper going on.
I suspect slumlords actually yield higher profits because of basic supply and demand - slumlording is a market, after all, that most would find it distasteful to get in to (who wants to evict somebody who lost their job at walmart on to the streets?).
It's sort of like the "low salaries for teachers/charity workers" effect in reverse - there are certain kinds of work (or investments) that people can be proud of and certain kinds that they aren't.
"Risk" sounds more laudable than "there's a restricted supply of investors who are prepared to be assholes to protect their investments, though.