Anti-Gentrification Measures a Potential Boon for Landlords

To counter the gentrification effect, what might happen in this particular downtrodden Austin neighborhood area is that the current lower-income homeowners will dodge being ousted through gradual gentrification by selling the LAND beneath their home to the city itself. Thus effectively removing themselves, and the land their home sits on, from the rising values of that area’s property tax base (the value of the home itself, a deteriorating asset, will continue to be taxed as it was before).

I will ignore the obvious problems this will cause in terms of social responsibility (if you don’t pay into a system, do you even care if it improves or is efficient? Wasn’t that part of the reason why the neighborhood fell into shambles in the first place? If you wanted to care, would you have a reasonable basis to do so after signing away land rights?) and the middle-class burden-shuffling caused by ALL tax subsidies, and simply look at this from a Landlord’s point-of-view.

If flippers know that a certain area will remain fairly worn due to the inhabitants opting to sell the city their land but keep the shanties atop, then those speculators would rightly assume that the future taxes collected in that area would remain low, and likely fall. Schools would remain poor, infrastructure would continue to deteriorate, and the police would likely change little in how the neighborhood was treated (like non tax-paying outlaws, more than likely).

So few flippers would bother because they typically sell to young families who are looking for their dream home (if they aren’t selling to each other, but I’m talking about the eventual target market). No one wants to pay premium bucks to live a shanty town that has no upside for schools and an atrocious criminal record.

But I believe it would STILL be a good investment, if the price was right, for someone to go in, raze some shacks, and build multi-unit dwellings. Apartments or large-scale developments aren’t necessary. And low-income/section-8 isn’t necessarily the way to go either. For small parcels of land, I’m thinking duplexes or quadplexes, tastefully designed and appointed for those downtown-working DINKs or hip singles who want the urban amenities but need a small lawn for their two Boston Terriers.

If single-families didn’t move in all over the place and drive property values up, it would simply end up being a solid, easy to rent, hip cash flow property that might command a tight premium for its close proximity to amenities.

And maybe a slight discount for its proximity to crime and destitution. Maybe.