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Stable Housing Leads to Strong Towns

In his 2017 book Evicted, Matthew Desmond follows eight families in Milwaukee as they struggle to keep a roof over their heads. Its scenes of hope and loss remind us of the centrality of a stable home, without which nothing else is possible.

Having lived in Peoria for 20 years and managed residential real estate for the last 15 years, so much of his book rang true to me.  The book follows families as they get evicted from their homes and the consequences on their own families, the landlords, and their community.  He could’ve very easily written this book while following families in Peoria. 
A person’s socio-economic status does not make them a good or bad person or tenant.  Affordable areas of town do not necessarily mean they are bad.  The biggest determining factor is stability.   Stability helps crime.  Stability helps schools and small businesses.  Stability allows for high quality, meaningful lives.  So how can we as a community do better in this area? 
We all know what’s expected of a tenant – pay rent on time and take care of the property.  

So what is the role of a rental owner and property managers in providing stable housing?

Rental owners must have the ability and willingness to maintain a property in a condition that will attract quality tenants.  I appreciate the choice to invest money locally and not send it to a mutual fund in a far away city.  But let’s have the proper view.  It is a long-term investment. Housing is also a highly personal investment.  As a community, we must put people over profits and consider how our investment is impacting the community as a whole.  

Property managers must connect the right tenant with the right home.  This is done through advertising and showing the property so that it is seen by as many people as possible.  It also means screening tenants in a way that sets people up for success, not failure.  Renting to a tenant that cannot afford the rent will inevitably result in high turnover, which is costly to everyone.

In Summary

A commitment to stable housing helps everyone in the community, from the bottom up.  

Today, as was the case in the days of Jeremiah’s Jerusalem, many cities boast of their wisdom, power and wealth.  We boast of our universities, our political seats of power, and our Fortune 500 companies. 

My prayer is that my city – our city – in the words of that great prophet, “…boasts not of our wisdom, power, and wealth.  But boasts instead of our steadfast love, justice and righteousness.  For these are the things that please the Lord.”

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To Buy Or Rent: That is the question!

Why is renting a great idea for many people?

We’ve all heard the benefits of home ownership – tax breaks, privacy, and building equity over time through appreciation and paying down your mortgage.  If you know you’re going to be in an area for 10-20 years, owning a home makes perfect sense.  It’s likely your home value will rise and you’ll have a nice nest egg to use at retirement.   

So what are the major benefits of renting vs. buying?  

1. Flexibility – Today’s work environment requires flexibility.  Most people don’t stay at the same job or in the same city for an entire career like they used to.  Careers are likely to take us to different cities.  We’re also likely to change careers a few times.  It is much simpler to move at the end of your Lease than it is to sell your house.  
2.  Predictability – Since owners are required to make most major repairs and maintenance, it’s easier to make a budget and stick to it when you’re renting.  
3.  Time – What is more valuable than our time?  Not having the burden of maintenance and repairs means tenants are able to better budget their time.  Many people enjoy spending their weekends on vacation rather than working on maintaining their property.
4.  Liquidity – Responsible home ownership requires a significant down payment – tens of thousands of dollars – and often a mortgage that won’t be paid off for 15-30 years.  You may be building equity, but you’re as liquid as a brick.  Many seniors choose to sell their homes and rent.  Some do it to downsize, but many choose renting later in life in order to realize the equity they have built up over the years.  If they stayed home owners, they would never be able to enjoy that nest egg they spent decades building up.   

So who are the people that benefit from renting?

  • Professionals that are required to move frequently
  • Young people that are still saving for a down payment
  • Seniors that are downsizing and need liquidity
  • Empty nesters that love to travel and not maintain a home
  • Recent relocations that are taking their time to buy as they figure out their new community

In Summary

Consider this, an asset is something that puts money in your pocket.  When you own your primary residence, the only time this happens is when you sell it.