What It Takes to Be a Landlord

A couple of pros share their hard-nosed approach to buying low and renting high.

The residence at 3809 Shannon Drive in northeast Baltimore has seen better days. Way better, to be honest. A two-story red-brick row house built in 1952, the 900-square-foot, three-bedroom unit has a tiny kitchen, rickety stairs, worn carpets, dingy and obsolete bathrooms, and, most off-putting, a concrete basement floor that curls up at either end in the shape of a half-pipe skateboard run. That's a sign of ominous settling and water damage. The nearest bus stop is a hike of four blocks. No supermarkets or restaurants are nearby. You're five miles from downtown. It feels like 25.

In a city rife with empty and deteriorating homes, no wonder the family of the elderly owner, who moved out last year to live with relatives, couldn't get their original asking price of $119,900 in February 2010. Nor could they attract a buyer when they lowered the price to $99,900 in May, or to $65,000 in October. Once they dropped the price to $55,000 in January 2011, professional real estate investors sensed an opportunity, like bottom-fishers snaring distressed stocks and bonds. So 3809 Shannon is getting a new lease on life.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.