Rental property, according to conventional real estate wisdom, is bad for neighborhoods. As a general rule of thumb, I'd tend to agree. Rental property can often have a destabilizing effect on a community.
It all depends on how the property is owned and managed, however. A large number of absentee landlords is generally bad news, as they have little interest in a community beyond their cash flow. But the homeowner who is also a landlord can play an important part in the revitalization of "transitional" neighborhoods, particularly historic ones. Some homeowner/landlords may end up with a considerable rental portfolio. Some may only own the house next door or across the street. Others may have a share or two in a partnership formed to rehab a particularly problematic property. But, unlike the typical absentee landlord, they all have a very real stake in the property's upkeep and the actions of its tenants, since both impact their own quality of life as homeowners in the neighborhood.
Indeed, their stake in the neighborhood is likely how they ended up landlords in the first place. The house next door goes up for sale and, unwilling to gamble on what can sometimes be a fickle market (particularly early in a neighborhood's transition), they snap it up. The process increases local control of a community. And, as the resulting rental property is typically better maintained and managed than most absentee owned property, it nudges that "transitional" neighborhood another step towards viability, increasing the odds that the next house on the market is sold to a homeowner, not a landlord.
That new homeowner, by the way, might just be an existing renter. In a transitional neighborhood, well-managed rental property tends to attract grad students or twentysomethings fresh from college. The very things that the conventional market sees as a drawback often draw them: diversity, affordability, convenience to downtown. And those same factors often lead them, after a few years as renters, to start shopping around for a place to buy.
The UT professor landlord of these two homes in Parkridge, for instance, figures she's eased about half a dozen tenants into home ownership within the 'hood. Most of them grad students, they may not have rented these particular houses, but they did appreciate the sort of amenities these Knox Heritage award-winning homes have to offer: hardwood floors, elaborate woodwork, clawfoot tubs. And, with rents running as little as $650 for three bedrooms, they certainly appreciated the price. And, thanks to the affordability of a transitional neighborhood like Parkridge, they were able to stay—as homeowners.