In my city, the assumption is that houses wear out like cars, only slower. The "bad neighborhoods" are where landlords struggle to pull $450/mo in rent, and where the absolute minimum in maintenance is done (i.e. broken window? Plywood it.). When houses in a neighborhood reach about 25-30 years old, the young middle class moves away to the new subdivision farther away from downtown. They sell some of their homes to landlords. This pattern has gone on like a slow motion forest fire for over 60 years, and has consistently ruined the families that stayed put. The "bad neighborhood" keeps expanding into previously "good" neighborhoods.
In this environment, the only landlording strategy that makes sense is to view one's properties as a sinking fund, and extract all you can from them while they last. Maintainance is a waste. You don't want to be left holding a well-fixed-up house when the whole rest of the neighborhood is boarded up. The other landlords have used the money they saved on maintenance to move on to the next subdivision. When the 30-year-old roof starts to leak, you slap some tar on it and extract another month's rent. Investing $8k in a new roof would take years to recover. Interior remodeling is never done.
This within-city depreciation dynamic is not reflected in the metro statistics, because the stats average out the new houses and the old. However, a RE investor had better plan for rents and appreciation to underperform inflation. "Using up" houses and neighborhoods becomes the game theory dominant strategy, and it seems this dynamic makes it very hard to calculate ROI long term, much less plan a retirement.
I know if a big-city or coastal RE investor set up shop here, they would get their clock cleaned. They would drop a significant % of the property's value maintaining a nice property that would eventually be surrounded by drug houses and still only draw $500/mo.
My great aunt stayed in her home till the end. It eventually sold for $5k. Some rookies came in and did a gut rehab that must have cost at least $40k - a very nice job. Their asking price was $50k. They eventually sold for $32k. And that's why you invest the minimum and never fix up old houses here.
