Posted about 1 year ago

Housing Refugees- a Profitable Opportunity

Refugees are a profitable investment for real-estate investors.  They are hard working, safe tenants who are looking to succeed in our country.  These tenants provide a great return to any investor willing to give them a chance. 

I know due to the current political climate in our country, this topic can be divisive.  Let me try to convince you why this population should be considered.

I have been providing housing for the last 4 years to this population and it has been a positive experience.  I stumbled into this opportunity as I was investing in mid-low income neighborhoods on the West side of the city of Cleveland.  I needed to find a solution to the eviction problem I saw that was killing my profits! I had 3 evictions my first year with approximately the same number the 2nd year (yes I admit some of this may have been that I didn't screen well, but give me some slack! I was new!)  In the last 4 years, in housing this population, I have never had to evict even one family!

Let me try and explain some of the reasons why:

1- They come with a support structure already in place.

When refugees arrive here in Cleveland, but also in other cities in the United States, they are processed through a refuge resettlement agency.  These agencies help their clients start their new life in the United States.  They help them with everything from setting up food stamps to finding jobs to how to keep a house clean(some of our clients have never had electricity before coming to America).  They provide translation services, help them to set up bank accounts, and most importantly, if there is a problem, we can call them and they will help us to resolve whatever the issue may be.  Who wouldn't want a 3rd party to help your tenants be able to succeed in all aspects of life, including paying rent!

2- They are safe.

After the attacks in Paris, many American politicians began calling for a halt in the flow of refugees to the United States until a better way to vet the potential refugees could be found.  I believe this idea comes from a lack of understanding of the current refugee screening process.  The screening process is actually very extensive and takes YEARS to complete.  The process is first started when the refugees themselves file, usually with the United Nations High Commissioner for Refugees.  Their application is forwarded to the State Department where they are screened and vetted by multiple agencies of the US Government.  The FBI and intelligence community are involved in this process and are even required to write an opinion as to whether they would be ok to be allowed into the US.  They then go through many other interviews until finally they are given authorization to enter the United States.  Even after the refugee arrives, there is another safeguard.  If they commit a crime within 3 years (before they get their green card), their status can be revoked and they can be sent back to their country of origin.  In a nut shell, I am confident I will have an individual who I won't evict, because the resettlement process also weeds out the refuges who wont be successful in the re-settlement process.  I have never of a refugee, in the United States, that has committed a terrorist act. 

3- They are hard working.

Refugees come to America to start a new life.  The great thing about our country is that, even if you were born poor, or in their case arrived here poor, you don't have to end up that way.  They are willing to work long hours for average pay in order to support their family.  They understand very quickly, that through hard work, they can save up money and actually OWN a house. This has given us opportunities for land contract(we haven't actually sealed a deal like this yet, but are working on it).   

4- They don't necessarily mind what neighborhood they live in.

Since refugees are new to our country, they don't necessarily have the same views of desirability the we as Americans do.  As long as their house is in good condition and looks nice, they are usually happy.  This has allowed us to buy multiple properties in depressed areas and begin to establish communities.  As we continue to increase the population of a specific ethnic group this makes the neighborhood more desirable leading to my next point....

5- Referrals!!!

Who doesn't like free referrals!!!???  Over the last couple of years, as we have treated these new tenants as human beings, they have convinced their friends to move here as well.  Naturally, they recommend that their friends call our company.  Free advertising is great!  As these families grow, or some of the sons or daughters get married and have families of their own, they naturally look to our company for housing.  (As an aside, I speak French, so that naturally helps with the French speaking community.)

6- Rent

Many people ask me, "How do they pay their rent when they first get here?"  Good question.  Depending on the size of the family, the UN, through the refugee agency, provides up to 3-6 months of rent subsidy.  This enables the family to get acclimated and stabilized while they start their life here.  I won't get into whether the US should or should not give some of this money, but what I will focus on is this.  As investors, we want a stable, profitable rental.  I love this part of providing housing for refugees that I will have GUARUNTEED rent for a period of time.  All of our properties are rented at market rate, so it's not like we are reducing the rent to provide housing.

7- Growing our Real-Estate business in different directions

Some of our tenants have approached us about starting businesses in their neighborhood and they are specifically looking to us to see if we have commercial space.  We have yet to do this, but the opportunity is there for expansion.  I have wanted to expand in this direction from the beginning of my real-estate investing days so this gives me more of an incentive to begin looking for deals in these areas.  I don't know about every other investor, but I want businesses starting in the neighborhoods that I'm investing in!  This only make the neighborhood more attractive to both Americans and newcomers.

8-Evictions

Every investor knows that an eviction is a profit killer for the investment.  We all want to mitigate that risk as much as possible.  As stated above, our company has never had to evict a refugee family.  We have had to shift some around to different units due to unfortunate circumstances, but never actually expel a refugee from one of our units.

9- Giving back

On a more personal note, I feel that when I work with refugees and hear their stories, I am able to REALLY, REALLY help someone.  I know that my country and God have given me so much opportunity, and now I am in a position to help someone more disadvantaged than me.  Who doesn't want to be able to help people AND make money at the same time?  This is a win-win situation for everyone!


Comments (9)

  1. Tiny 1400308066 avatar katherinetowers

    Thank you for the post.  It was quite insightful.


  2. No avatar

    Nice post, I am a social worker and had been considering Sec 8 but this provides a viable alternative for a larger rental (multi-generational family).  In my primary job I have also found refugees respectful and grateful for a safe and nice place to live, once oriented to expectations.  Wish I spoke another language!


  3. Tiny 1400425582 avatar zdnelson3

    Very inspiring, I've been wanting to do more to help refugees for a while and would be a great way to combine it with my real estate business!  Thank you for taking the time to share it.


  4. Tiny 1474342535 avatar daniels189

    This is a great post!  I've seen firsthand the success of this model in Cleveland.  As I see it, this model solves a lot of problems while being very profitable.  Refugees have a place to live and learn a trade, houses/neighborhoods are improved. investors make money.  Love it! 


  5. Tiny 1449256834 avatar xaviern

    great article..can share the names and urls of the refugee agencies you work with?

    thanks


    1. Tiny 1474139869 avatar daryla4

      @Xavier Navas, send me a pm and I'll give you details. 


  6. Tiny 1474139869 avatar daryla4

    @Julie Marquez - We are renting are homes AT market value, but we do purchase them below market value as I'm assuming every investor would want :)

    I'm guessing that Cleveland is like any other city where there are neighborhoods that are expensive and there are some that are not.  We are in the neighborhoods that are not trendy, but affordable.   I am using the brrrr strategy and making a high rate of return on my investments though.

    I do work with the refugee agencies, but as stated above, I also speak French, so I receive a LOT of referrals.  The agencies pay me direct for the 3-6 months that the refugees are supported.  Then, the refugees themselves begin to pay.

    Let me know if you have any more questions.


  7. Tiny 1461549781 avatar cherylc7

    Thank you for this thoughtful article. Really gives pause for thought.


  8. Tiny 1452872985 avatar julier14

    Great article and concepts, and I really like #9. Are you homes under market value? Do you feel like to have to be on the less expensive side to attract refugees?

    Do you work directly with an agency to connect with refugees? Do the agencies ever pay you direct?

    Thanks for this information!