Slumlord
From Wikipedia, the free encyclopedia
A slum lord (also spelled slumlord) is a derogatory term assigned to some landlords, generally Absentee landlords, who maximize profit by spending little on property maintenance, often in deteriorating neighborhoods. They may charge lower than market rent to tenants. (As many of these neighborhoods are often populated by poor minorities, the term ghetto landlord has also been used.)
The phrase slumlord first appeared in 1953, though the term slum landlord dates to 1893. [1]
Normally, a landlord will properly maintain the property (which can be costly) to attract higher rents and more desirable tenants. In addition, the well-maintained property, once the landlord decides to sell, will command a higher price from buyers.
In contrast, slumlords do very little maintenance on their property (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 who might not pass background checks in order to live in the higher rent areas). Slumlords of this kind typically prosecute many evictions.
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. 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 taxes 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 6-8 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 claim slumlords leech away what little wealth the poor have 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.
There's no doubt that 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 writes, "...the slumlord, regardless of his motives, helps the poor make the best of their bad situation."
