I think you don’t understand “take more profit.” That means they have considered those costs and still they “take more profit” even considering those costs. That’s what profit means.
Higher rents effectively function as an insurance policy for these expenses, and your insurance policy is obviously going to overcover rather than undercover. Higher risk (ie variance) investments mean higher returns, for the simple fact that the value of a high-variance investment will be lower than that of a low-variance one with a given expected return, for obvious reasons.
The only reason to be ignoring variance If your goal is shitty advocacy instead of intellectual honesty, which, as others have pointed out, is obviously the case with the authors of this study.
The article did not make mention of this in it's accounting of "profit."
>Since losses are rare, landlords typically realize the surplus risk charge as higher profits
The author of this study appears to be confused as to what risk is.
Behind a paywall unfortunately, so it's difficult to tell if he's just made two contradictory assumptions in his abstract or if there's something deeper going on.
I suspect slumlords actually yield higher profits because of basic supply and demand - slumlording is a market, after all, that most would find it distasteful to get in to (who wants to evict somebody who lost their job at walmart on to the streets?).
It's sort of like the "low salaries for teachers/charity workers" effect in reverse - there are certain kinds of work (or investments) that people can be proud of and certain kinds that they aren't.
"Risk" sounds more laudable than "there's a restricted supply of investors who are prepared to be assholes to protect their investments, though.
When Wilmers and Desmond control for regular expenses in the form of mortgage payments, property taxes, property insurance, utilities, and property management fees
A new roof, flooding from a busted pipe can be considerable expense even including insurance help. Factor in chemical residue from cooking meth, destroyed fixtures like porcelain toilets and sinks, it can be very expensive to rent to unconscientious people (nothing to do with income!).
But there is an overall expected value premium to be paid on low-risk purchases (or to be gained on high-risk purchases)
On average, you will lose money by purchasing insurance. (That's how insurance derive a profit.) However, people are generally happy to do that, because they value the certainty of it, even if overall it's the arthemtically subpar choice.
I expect that you will make profit from the stock market than a CD, even after averaging bear and bull years.
I'd expect that low-income rental are riskier investments, and that landlords are more likely to lose money, but overall the expected value of return is higher. That's just how markets work.