Several years ago — as I was clawing my way out of debt — I did a dumb thing and subscribed to Newsweek. I didn't subscribe for just one year — I subscribed for four. As penance, I wrote an early GRS article about how having too many magazine subscriptions is un-frugal.
Recently, though, I've come to love my Newsweek subscription. The magazine underwent a radical re-design last month, and jettisoned all of the stupid pop culture stuff and bite-sized pablum. Suddenly it's a magazine filled with long, thoughtful articles about Things That Matter.
This week's issue, for example, contains a great story from Daniel McGinn called “The Accidental Slumlord”.
In 2005, at the height of the housing bubble, McGinn visited Pocatello, Idaho to write a story for Newsweek about how investors were buying rental homes in unlikely locations. A year later, McGinn decided to join the fray. In 2006, he spent $62,750 for a two-unit rental in Pocatello. He lives in Massachusetts. McGinn bought the property sight unseen.
McGinn's current Newsweek story describes his recent visit to Pocatello to meet his tenants, and his realization that he isn't a landlord — he's a slumlord. The property he owns is a run-down mess. What's brilliant about this article is how he's able to not only portray the financial dilemmas he faces, but also the financial situations of his tenants.
Plus, McGinn isn't a ruthless capitalist. He's a real guy with a real heart who had hoped to purchase an investment property that might make him a little money. He's conflicted. He's you — or me. When one 66-year-old tenant complains about the lousy carpet in his home, McGinn doesn't just ignore it (which would be the sensible thing to do from a purely monetary perspective). He buys new carpet.
Financially speaking, this $213 purchase is pure stupidity: it doesn't add to the property value and will hurt this month's cash flow. But it seems a small price to pay to improve the life of a rock-solid, longtime tenant — and, of course, to assuage my guilt over owning such a run-down property.
My discomfort grows stronger as I spend the morning with Bill, Sarah, Will and Rose [McGinn's tenants]. It's easier being a landlord from 2,450 miles away, delegating to my property manager all the tough decisions about rent increases, late-payment penalties and potential evictions, and relating to the tenants only as faceless names on leases.
Taking a final look around, I can't help but compare the dingy bathrooms to mine at home, with dual sinks in a granite counter and a deep whirlpool tub. Earlier I'd joked to a friend that my visit to Pocatello felt a bit like Robert Kennedy's tour of impoverished Appalachia. But after watching Will and Rose's son crawl across the foul carpet, I'm reminded instead of a JFK quote: life is unfair.
McGinn's article is typical of the new Newsweek. It eschews the superficial approach that used to typify the magazine, and instead gives the reader something complex and meaty to chew on.
This is real personal finance writing.
[Newsweek: How I became an accidental slumlord]