Ethical Concerns in Low-Income Neighborhoods

Do you think it’s ethical to buy land in low-income neighborhoods with the goal of flipping it for a profit, rather than developing it for the community’s benefit?

Some say this drives up property values and contributes to gentrification, forcing out long-term residents. Others see it as a good investment strategy that can eventually lead to “better” neighborhoods over time.

What are your thoughts on this issue?

Land flippers who buy up lots in poor neighborhoods with no intention of developing them are vulture capitalists. They’re exploiting disadvantaged areas instead of bringing true community revitalization. This kind of speculation drives up property values and rents, forcing out long-term residents who can’t afford to live there. This is gentrification at its worst - profiting off displacement rather than partnering with the community on positive change.

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The following is strictly my opinion only. Please know that you’ll get many conflicting answers because you are correct in your observation of changing communities- however, all communities are handling their change (shift) and reacting in various ways. In 2020, I was laid off from work and returned home after 18 years to take care of my grandfather. Here is my experience:

Speaking from someone born and raised in a low-income community- I think it’s very ethical, especially if you’re willing to keep the rent reasonable for that area according to demographic- or provide it for assistance programs such as Section 8! Additionally, you have a high chance of finding someone from that community that would be willing to forward reliable tenants, or even try to buy your lot :slightly_smiling_face:

However, I am going to be very honest with you sir- some of the citizens of those communities may not see it that way strictly because they have lived in that community For decades with dreams of keeping a tight knit relationship and safe community for their following generations. However, many seem to forget that nothing ever stays the same and everything has an end. As a result, many may see your move as an intent to support gentrification or the like, but you can (should) communicate your intent to help vs. harm the growth/sustainment of the community.

But here’s the thing- and this is just my opinion- there are many people of my generation (millennials) who have left these communities, and there are many who are neglecting their tax bills after their parents die and leave them the house. There are people here in our community, who aren’t contributing to anything themselves- and they still live there!

Sir, I respectfully ask that you attend a Community meeting (I know a few low income neighborhoods that have them near my home) and get a feel for what’s happening. Every community is different… You may find that the area isn’t for you… But you’ll also find people interested in what you’re doing and willing to support.

I hope this answer helps, and thank you sir, for contributing to the growth and betterment of our low income communities.

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Thanks for the thoughtful reply, you raise some valid points!

I just started a charity pointed at this. There are government incentives for every side of these transactions. Beneficial CDC will be a marketplace connecting flippers, banks, CDFI’s, community members. This doesn’t mean that the work is done for free. Wholesalers, rehabbers, lenders, contractors all still need to get paid. But there are opportunities to contribute money that would otherwise go to the IRS and keep it in your area. Think how Opportunity Zones are supposed to work. Following a well worn path that is disconnected from this world.

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@seanjean The majority of the deals we buy are not in “neighborhoods” or even within city limits. It’s rural vacant land that is typically sparsely populated, if populated at all. This asset class is under served by realtors. Why try and sell a vacant lot for $25k, when you sell a house for ten times that value? This is where land investors fill in the gap. We offer an easy button for folks to unload unwanted property that they haven’t been able to sell elsewhere. We provide a needed service. That’s how I look at it anyway.

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