Amateur real estate investing
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Abstract
ABSTRACT About half of the rental properties in the U.S. are owned by small- to medium-sized investors, many of whom enter the trade with little prior experience. This paper considers the factors that motivate these amateurs to purchase real estate in high-poverty neighborhoods—an investment that involves high levels of financial risk for the inexperienced. Drawing on in-depth interviews with 93 investors in three real estate markets—Baltimore, Maryland; Dallas, Texas; and Cleveland, Ohio—this paper finds that amateurs decide to become investors due to anxieties regarding their financial position, specifically professional dissatisfaction and a lack of retirement savings. Real estate is particularly appealing because it provides a cultural repertoire aligned with middle class aspirations of independence and self-sufficiency. Consequentially, these ideologies motivate and legitimize strategies of action that allow for sometimes imprudent investments, presenting risks to the investors themselves and the communities in which they invest.