I get rental-market data at holiday dinners from my out-of-town children and from the national media. For instance, from a December New York Times article—WITH RENTAL DEMAND SOARING, POOR ARE FEELING SQUEEZED—I learned that a nanny in Washington, D.C., pays $828 per month for a one-bedroom apartment. My 26-year-old son reported that he was paying $700 per month for a room in a house in Los Angeles. My 29-year-old daughter and her husband were paying $1,500 for a two-bedroom apartment in Chicago. They all considered themselves lucky.
I own and manage apartments in Cleveland. Some of my suites are efficiencies, known as studios in other parts of the country. An efficiency is a small rectangle; the living room doubles as a bedroom. A Cleveland efficiency has to be the cheapest high-quality apartment you can find. Itll run you $485 per month in a safe neighborhood. I wonder sometimes why my children tolerate out-of-town prices. Cleveland has coffee shops, too, and a good orchestra.
Jim, a 24-year-old New Yorker, just moved to Cleveland to study with me for a street-level MBA. He wants to learn about real estate in the real world, not in an ivory tower. What part of New York are you from? I asked.
Waverly Place? I spent a week crashing on a couch there in 1972! I said. (I lasted three weeks in New York before returning home. I was a mamas boy.)
Near Waverly Place.
Jim has always lived in an apartment. That seemed odd to me. He said, I cant even get started investing in New York for less than half a million. I think New York is one big Ponzi scheme. Cleveland is so uncool its cool.
I showed Jim a few efficiencies. One was occupied. The tenant, Brian, a self-employed artist, had just moved to Cleveland from Toledo and was already late with his rent. I have $750 tied up in PayPal right now, which they wont release for some reason, he said. His paintings were dark, with thick black lines like Franz Kline. Brian said he had no relatives who would talk to him and nobody in town to help him. He didnt have the rent. I evicted him. Then he paid—this, after he was legally evicted. So I let him stay.
Then he got behind on his rent again. I said, Modigliani didnt pay his rent, either.
The guy who did the long faces.
Brian thanked me for letting him stay until the end of the month. He moved and left a wall of splattered paint, like the drop cloth around a Jackson Pollock painting. In the bathroom, Brian didnt use a shower curtain, so the floor was water-logged and wrecked. The mini-blinds in the living room were gone. Brain needed more natural light for painting. The kitchen was in decent shape.
Brian left one painting behind. I didnt want Late Rent, the painting, staring at me for years, so I told the building manager to take it. Several weeks later, the municipal court bailiff approached me in the courthouse and said, Your man Brian knocked over a couple shelves in Discount Drug Mart and is in jail, under psych observation, for a couple weeks.
I wondered where he went, I said. (I was at the court for another eviction; another tenant in a $485 efficiency.) I was with my building manager, Steve. My New York apprentice, Jim, was out looking at a medical office to buy. Maybe he figured dentists would be less hassle than artists. I told Steve, Brian, the tenant, was OK. I liked him. He had mental problems.
Everybody has mental problems. Brian is mentally ill, Steve said. There are always two sides. Steve has been a building manager for decades.
Brian sold paintings in Germany on the Internet, I said.
Everybody is a star on the Internet, Steve said.
Youre right. As my dad always said, were not a social work agency.
Right, Steve said.
I am the gatekeeper for the working poor. Pay me or you dont get a roof and refrigerator. Would I charge $828 per month—like in Washington—if I could? Yes. So would you. You dont sell your old car for less than top dollar, do you? Four-hundred eighty-five dollars per month for a clean efficiency is cheap, except when you dont have $485. Eight-hundred twenty-eight dollars for a rundown one bedroom in Washington is outrageous, unless you happen to live in Washington.
I told my adult children and Jim the apprentice, If you want to live in Washington, youll pay the price. Real Estate 101: Location, blah, blah.