[Dave_TRS]

The solution for me was buying cheap houses in Detroit. For $30K you can buy a house that nets you $500 a month ($800/month rent minus expenses) so for example if you save $150K from your job that buys 5 houses yielding $2500 a month (or if you had $300K savings, $5K a month). That was the way I was able to replace at least part of my income and venture off to the land of not having a salary to free up time to pursue other projects.

[paganel]

That's a 20% yield if I'm not mistaken, there's got to be some catch to it.

Are those people renting a $30,000 house with $800 per month able to get banking services (and mortgages)? If not, I would feel like a dickensian landlord renting those houses to them.

[poulsbohemian]

Before we call Dave_TRS a slumlord, consider another perspective: The renter needs a home but can't afford the $30K to buy a house. $800 would be a basement apartment where I live, and about half the cost of what I hear studio apartments are going for in the nearest major city to my location. Dave_TRS is providing a service to the market at a price that isn't exploitative and the renter has a roof over the heads and everybody wins.

[deleuze]

Even at a 10% interest rate and 0% down, a $30k mortgage is only $263/mo. This person is basically admitting that they are extracting value off the backs of the working poor due to unequal access to the banking system. I cannot imagine admitting being a slumlord on a public forum. And people wonder why people hate landlords.

[poulsbohemian]

If he got a loan, it wouldn't be 0% down because it would be on investment terms not residential terms. Chances are a $30K house needed improvement before it could be rented, and rentals are seldom free to run either -- there's ongoing maintenance, there's the carrying costs between tenants, etc. Calling the parent poster a slumlord without facts when your account is just a few hours old is pretty lame.

[Dave_TRS]

I wondered if there was a catch too so I started by buying one, and then expanding from there only after I saw it could work. It does feel strange buying the houses for so cheap, but I wouldn't say I feel any guilt or regret about the prices of the Detroit market. The price is what it is so I don't fault myself for getting a deal. As for $800 a month, for a freshly renovated 3 bedroom home I think the tenants aren't doing too badly either.

To the question about banking services, it's just not profitable to give mortgages on 30K homes for banks so they don't bother generally.

[sfkdjf9j3j]

Huh, that's pretty interesting. How much time did managing the properties take up?

[Dave_TRS]

I have a business partner who is from Detroit (but doesn't live there), and still has some family there. So they are a fallback when there is a true emergency. For day to day property management and maintenance we have a network of contractors that we found on Craigslist or through referrals. Some of them stole from us or did bad work, but we didn't rehire, so eventually we developed strong relationships with reliable people.

[coffeemaniac]

I appreciate your honesty but I am not willing to pursue this as I feel it directly perpetuates a lot of historic inequality.