The $30k rental club.......

316 Replies

Originally posted by @Jonathan R. :
Originally posted by @Jay Hinrichs:
Originally posted by @Jonathan R.:

@Dennis M. Another possible reason OOS landlords fail is because they aren’t standing in the yard painting graffiti off the fence when the neighborhood watch lady comes by to see what is going on. Or a leader from the church down the street that pays young parishioners to clean up trash in the neighborhood pokes their head over to see what the plans for the property are. Or they aren’t there when the neighbor is standing in the yard watching what is going on and asks if we would be willing to let him tend to the yard during our rehab for a few extra bucks. They aren’t driving their contractor to McDonalds on a regular basis to learn about their life and strategize for where things are at on a daily basis and where they’re going. They don’t realize the need to pay the contractor’s phone bill to ensure the lines of communication are always open. They don’t meet the neighborhood slumlord who is thinking about putting a property up in a local auction and offer to buy him out on the property across the street which it is being occupied by the wrong type of tenants (If nothing else this shows him someone cares). They aren’t there when a tenant is devastated that their tire blew and they don’t have a jack to change to a spare. Or, have jumper cables when the car won’t turn over. Yes, I’m hands on, but so far I haven’t lost a single tenant. If I ever do lose one it is likely they will be looking at one of my other listings online. They’ll remember the difference between a good landlord and a bad landlord. We’re building a brand. And brands are powerful.

So this is an excellent reality check.. how does an OOS investor who is 100% relying on the local PM  suppose to do what your talking about ?  and if the only way to really succeed at these is to go the extra mile like your doing ??  that in itself is a statement 

OOS landlords fail for 2 reasons.. 1 tenant does not pay or does not pay consistently thereby creating cash flow issues. 2. tenant beats up house and lots of turnover.. especially in HUD were leases are only one year.. a lot of those folks will leave for the fresh rehab down the street.. I know that for a fact. If the tenants paid all the time and took great care of the home. you would not have failure.

your failure point is those two things.

I was talking about how i was the 2nd builder to put new construction in a section of Charleston were 10 years ago you could buy houses for 10k to 20k and lots for 2 to 5k max.. 7 years later beater houses that need full gut sell for 200k not 20k and lots are 100 to 200k .. And the finished houses either full rehab or new construction like I build sell for 450 to 750k ... I found it by funding a flipper there and he kept getting robbed.   When i went into the market I brought MY OWN GC from Vegas and relocated him there.  He is great in any setting... when we started on 46 Aiken he went door to door made friends brought beer to some smokes to some whatever and they became his eyes and ears.. to this date almost 40 homes not one theft..  and some of these homes are across the street from public housing apartments..  I took a HUGE leap to break the barrier and create new construction there and we are super proud of it.. a few others followed us in and or were hitting it when we were and its just awesome to see the transformation.. of course some of the locals do complaining because their neighborhood is radically gentrifying but I can tell you the sellers i am paying 100 to 150k for their lots each.. WE TRULY change their lives.   And to me that is part of investing.. In my mind cash flow is OK but up side is very important along with neighborhood stabilization other than just having a clean rental. 

And we sold that house to Shep of Southern Charm he showed it on one episode ..  and thats who are moving in and moving out the old families its the millennial buyer that is really changing these areas. We are doing the same thing in Indy..  and of course Portlandia this has been going on for 20 years.. and When I lived in Palo Alto in the 80s we were already paying 500k for tear downs.. LOL

 The 3k purchase duplex deal is around the corner from WSU and blocks from our local major hospital. I hope the area gentrifies in my lifetime, I have a feeling it will one day. Many of the homes are very well kept on the block, we’re trying to figure out how to acquire the ones holding the neighborhood back. On the other side of WSU all the homes are $150k plus, many owned by doctors and others with collegiate involvement. 

I’ve watched every season of Southern Charm. Too funny.

https://www.youtube.com/watch?v=JHvfEN0w_YI    here is a U tube of the finished product.. and my agent team 

Originally posted by @Jay Hinrichs :
Originally posted by @Jonathan R.:
Originally posted by @Jay Hinrichs:
Originally posted by @Jonathan R.:

@Dennis M. Another possible reason OOS landlords fail is because they aren’t standing in the yard painting graffiti off the fence when the neighborhood watch lady comes by to see what is going on. Or a leader from the church down the street that pays young parishioners to clean up trash in the neighborhood pokes their head over to see what the plans for the property are. Or they aren’t there when the neighbor is standing in the yard watching what is going on and asks if we would be willing to let him tend to the yard during our rehab for a few extra bucks. They aren’t driving their contractor to McDonalds on a regular basis to learn about their life and strategize for where things are at on a daily basis and where they’re going. They don’t realize the need to pay the contractor’s phone bill to ensure the lines of communication are always open. They don’t meet the neighborhood slumlord who is thinking about putting a property up in a local auction and offer to buy him out on the property across the street which it is being occupied by the wrong type of tenants (If nothing else this shows him someone cares). They aren’t there when a tenant is devastated that their tire blew and they don’t have a jack to change to a spare. Or, have jumper cables when the car won’t turn over. Yes, I’m hands on, but so far I haven’t lost a single tenant. If I ever do lose one it is likely they will be looking at one of my other listings online. They’ll remember the difference between a good landlord and a bad landlord. We’re building a brand. And brands are powerful.

So this is an excellent reality check.. how does an OOS investor who is 100% relying on the local PM  suppose to do what your talking about ?  and if the only way to really succeed at these is to go the extra mile like your doing ??  that in itself is a statement 

OOS landlords fail for 2 reasons.. 1 tenant does not pay or does not pay consistently thereby creating cash flow issues. 2. tenant beats up house and lots of turnover.. especially in HUD were leases are only one year.. a lot of those folks will leave for the fresh rehab down the street.. I know that for a fact. If the tenants paid all the time and took great care of the home. you would not have failure.

your failure point is those two things.

I was talking about how i was the 2nd builder to put new construction in a section of Charleston were 10 years ago you could buy houses for 10k to 20k and lots for 2 to 5k max.. 7 years later beater houses that need full gut sell for 200k not 20k and lots are 100 to 200k .. And the finished houses either full rehab or new construction like I build sell for 450 to 750k ... I found it by funding a flipper there and he kept getting robbed.   When i went into the market I brought MY OWN GC from Vegas and relocated him there.  He is great in any setting... when we started on 46 Aiken he went door to door made friends brought beer to some smokes to some whatever and they became his eyes and ears.. to this date almost 40 homes not one theft..  and some of these homes are across the street from public housing apartments..  I took a HUGE leap to break the barrier and create new construction there and we are super proud of it.. a few others followed us in and or were hitting it when we were and its just awesome to see the transformation.. of course some of the locals do complaining because their neighborhood is radically gentrifying but I can tell you the sellers i am paying 100 to 150k for their lots each.. WE TRULY change their lives.   And to me that is part of investing.. In my mind cash flow is OK but up side is very important along with neighborhood stabilization other than just having a clean rental. 

And we sold that house to Shep of Southern Charm he showed it on one episode ..  and thats who are moving in and moving out the old families its the millennial buyer that is really changing these areas. We are doing the same thing in Indy..  and of course Portlandia this has been going on for 20 years.. and When I lived in Palo Alto in the 80s we were already paying 500k for tear downs.. LOL

 The 3k purchase duplex deal is around the corner from WSU and blocks from our local major hospital. I hope the area gentrifies in my lifetime, I have a feeling it will one day. Many of the homes are very well kept on the block, we’re trying to figure out how to acquire the ones holding the neighborhood back. On the other side of WSU all the homes are $150k plus, many owned by doctors and others with collegiate involvement. 

I’ve watched every season of Southern Charm. Too funny.

 well if you caught the one with Shep showing off his new homes.. that was our build and my GC got on the show as well for a few seconds.. LOL.. we LOVE that market.. I have moved on to these infill projects and virtually every city has them going on.. I was going to do some in KC as well. but did not have the right ground partner.

 I saw the episode. Hopefully he has stopped leaving beer bottles everywhere with bongs laying around. I’ll watch the YouTube video. I’m ready for another season.

Originally posted by @Randy E. :
Originally posted by @Dennis M.:

@Randy E.

It’s old nug hugger Levi’s with holes , worn out nikes and a beatup sweatshirt with bleach stains .

 I laughed out loud.  I'm still laughing.

I'll probably be laughing tomorrow when I think of it again.

I actually meant to type “ nut hugger” Levi’s lol  you know the type ... The ones you wore years ago when you were twenty five pounds lighter . You sound like your a soprano singer when you talk but your too darn cheap to throw them out lol 

Originally posted by @Elliott Elkhoury :

@Dan Heuschele it goes without saying that I also purchase everything with value add. Or just no value add, and buy it in market condition at well below market value (our business has a big deal hunting engine so it's easy to access these properties for my personal portfolio).

50% rule is not an accurate measure if you have actual numbers for expenses. Why not use actual taxes/utilities/insurance data and just use a rule of thumb vacancy and cap ex reserve? My property tax bill/water bill/and insurance bill are a much lower percent of my gross monthly rents than most properties with this rental price. 

The 600$ mortgage was a hypothetical number. I don't have a mortgage, but someone who buys this for 120k with 20% down is going to have a 500$ or so mortgage per my lenders numbers. 

Appreciation is a great play in p1/p2 of the market. It's a losing play today and I am a very active investor- I'm not buying holds in volatile markets right now, because property values are likely going a different direction in the next 5 years.  I'll buy CA property again when markets are in a different place, and make near no cash flow for an astronomical initial investment but sell them to a less astute investor during the subsequent peak market & make that type of profit then.

This thing with actual operating expenses + a 25% vacancy and maintenance reserve is still a 30% cash on cash return for an investor purchasing it with 20% down on a 120k sale price. It's a winner. I picked up 26 units in a similar neighborhood last year for 305k with debt (mkt val closer to 1M), invested 50k in rehab, and my gross rents are 18850/mo with similar operating expense ratios currently. 

Some of the more sophisticated MFR investors on BP have mentioned their best performers in 08-10 were smaller buildings in rust belt economies, while their CA assets struggled. There are short term strategies layered into the long term strategy, of course.

I have two primary take aways from reading your profile.  One is 6 years experience.  Two is that you are closer to a turnkey provider than a buy and hold investor.  The combination of these two is interesting. 

Item #1 means that you have never held a property from good condition (new or rehabbed) to where the big items failed due to end of life.  Asphalt shingle roof average lifespan is maybe 20 years.  Even a hot mop is more than 10 years.  Tile roofs at least 30 years.  Kitchens should last a lot more than 6 years.  Foundations a lot more than 6 years.  hardscape, plumbing, and electrical are a lot more than 6 years.  I do not know how you can claim an actual for cap expense without having owned for a full lifecycle of the RE.

Item #2 is that you likely find selling these RE to others to be more profitable than keeping them for yourself.  If not, why would you be selling them to others?  I suspect that there is a reason you sell them.  It is my opinion you have already pivoted away from being a buy n hold investor on these RE.  Furthermore that everyone who is OOS and passive will pivot away from the $35K RE in less than 15 years and probably less than 10 years and in your case less than 6 years.

$700/month rentals will have a 50% rule that will consume at least $400 of the rent (probably over $450) for the RE lifespan for a passive investor because the 50% rule is not enough for these lower value, low unit count rentals.  50% rule will seem fine until one of these larger cost cap expenses becomes necessary.


Originally posted by : @Jay Hinrichs
I mean why would someone sell a 30k duplex that is a breeze to own and manage that is bringing in 1500 a month.. there is a reason for that.

Hi Jay.  I can't speak for other locations, but for everywhere I've looked within 150 miles of me, most of the properties I look at come from elderly family members passing away and leaving behind a house with a good bit of deferred maintenance.

The kids or grandkids who inherit the houses either don't live in the area or they live in the area and don't want to (or can't afford) to repair the houses, and mostly they just want to sell and get enough to take the family on a cruise.

Sometimes, the sellers are the widows of the investor who actually managed the properties and the elderly women have no interest in trying to be a landlord -- it's easier for them to sell the 10, 20, or 30 houses their husbands acquired and live off those proceeds.

I almost never see a current active landlord selling his/her stock in my area.

Updated 7 months ago

There is a house in one of my target cities I looked at last year that is a perfect example. An elderly woman's health was failing, her son and his wife took her in and rented her house out. They lived over an hour away. A year later, they received a tax bill from the city saying the taxes had not been paid on two houses. Surprise! The old lady had two rent houses her children never knew about, gifted to her by an old boyfriend a couple of decades ago. They were both vacant and needed repair. The dutiful son spend a few months of weekends repairing them and found tenants. He had no experience being a landlord, much less a long-distance (75 minutes is long distance when a guy has a 40-hr/wk job and a family.) In the end, the old lady died and the son can't wait to sell. The price is perfect for me and it already has a new roof. But, the house is held up in probate because some distant possible heir won't sign off on the title.

Originally posted by @Spencer Cornelia :

@Ashley Hamilton congrats on your success, you've earned a very solid monthly income taking on properties I'm sure others would have passed on.

Regarding condos in Vegas: what entices you about the condos out here?  Any specific area?  I just lived in one in Las Vegas Country Club which is a great option in this city.

 Hello, Thanks! I love Vegas and travel there 4 or more times a year. It just feels like home to me. But I want a condo to Airbnb most of the time and live in other times and within the next 5  years I will make it my home. I saw summerlin which seems nice but would love to stay by old vegas or with in 5 mins from the strip.

Hello,

Sorry everyone who is trying to reach out to me or ask questions, I see mentions but can't find them to replay. So if you have a question you can ask me directly by inboxing me or sending a request. Thanks! 

I will gladly answer any questions and prove there's money to be made here in Detroit and anywhere for that matter.

Originally posted by @Ashley Hamilton :

First, OMG @Ryan Murdock voted on my post, I'm definitely fanning out lol. 

But I have to strongly disagree with everyone saying it's only because I'm local and that its a job. It wasn't a job and I was actually able to retire at age 23, However I turned into a job and started my own property management company after a hedge fund that I was bidding against on a property ask me to do for them what I was doing for myself. I have investors whos never been to Detroit who made $100,000 in 4 years, and everything can be proven. It's seems like no one wants to be patient and make that investment upfront and wait a couple years to recoup. Like @Stuart Smith said when a recession hits and no one can afford the expensive rents, then you all will be in trouble as for investor with cheaper properties are pretty much safe. Tenants who work at walmart and restaurants will still be safe. Also Like I heard someone on the podcast say before when you own the property free and clear or have low mortgages on them your recession proof because if the economy is bad you just lower the rents. By not having a mortgage payment you have no payment to make, So you can make the rents $300 if you have to. The key is always having a strategy.  I can debate all day, but unless you actually doing this you shouldn't call it a job. 

 You go girl, you are impressive

You just proved many people wrong

There are many ways to skin a cat

I am out of State and buying in Detroit and I am cashflowing very nicely. Of course it takes a great team in the ground

This post has been removed.

Originally posted by @Randy E. :

Originally posted by : @Jay Hinrichs
I mean why would someone sell a 30k duplex that is a breeze to own and manage that is bringing in 1500 a month.. there is a reason for that.

Hi Jay.  I can't speak for other locations, but for everywhere I've looked within 150 miles of me, most of the properties I look at come from elderly family members passing away and leaving behind a house with a good bit of deferred maintenance.

The kids or grandkids who inherit the houses either don't live in the area or they live in the area and don't want to (or can't afford) to repair the houses, and mostly they just want to sell and get enough to take the family on a cruise.

Sometimes, the sellers are the widows of the investor who actually managed the properties and the elderly women have no interest in trying to be a landlord -- it's easier for them to sell the 10, 20, or 30 houses their husbands acquired and live off those proceeds.

I almost never see a current active landlord selling his/her stock in my area.

 I get it little bergs in the country and the houses have limited market value to a owner occ..  fully understand what your talking about.. 

more houses than peeps to live in them in a lot of these areas and since it makes no sense to build new construction IE does not pencil or as existing if a fraction of replacement.. these homes have one purpose left in their life and that is for folks like you to scoop em up and re purpose them as rentals.  I totally get it..

Urban core though  burnt out failed landord is a huge swath of the inventory.. look at what that Rock Star Clayton Morris did to 400 plus investors thats a classic case of a ton of low value homes coming back on market and someone losing a lot of money. even if they did rehab them .. half of those OOS would be failing or selling within 60 months.

Originally posted by @Jay Hinrichs :

 I get it little bergs in the country and the houses have limited market value to a owner occ..  fully understand what your talking about.. 

more houses than peeps to live in them in a lot of these areas and since it makes no sense to build new construction IE does not pencil or as existing if a fraction of replacement.. these homes have one purpose left in their life and that is for folks like you to scoop em up and re purpose them as rentals.  I totally get it..

Urban core though  burnt out failed landord is a huge swath of the inventory.. look at what that Rock Star Clayton Morris did to 400 plus investors thats a classic case of a ton of low value homes coming back on market and someone losing a lot of money. even if they did rehab them .. half of those OOS would be failing or selling within 60 months.

 It's actually both.  I invest in the Triangle and Triad areas of NC.  Both are MSAs over 1M people.  Not NYC or LA, but not little burgs.  I also have interests in a small burg, but that's not my primary area.  Durham is red hot in population growth and the realty and rental markets.  The market is probably a little like where you invest in SC.

These areas are different than both the large blue collar cities that never appreciate (Cleveland, Milwaukee, Midwest areas) or the small town places with stagnant populations.  

I understand your point about companies like Morris.  While I hate that people got scammed, I have to admit that most of them bear some responsibility.  It sounds like a lot of people were looking for something for nothing.  In a sense, they remind me of all the people who took out second mortgages to inflate their lifestyles before the great recession.  Here are too many people looking to park serious money in some passive investment scheme that promises incredibly high returns, but that requires no knowledge, no effort, and nothing at all.  Just write a check and sit back and wait for all your profits to roll in. It sounds so unrealistic that it makes the Nigerian Prince scam seem like a reasonable scheme.

Cheers

Originally posted by @Randy E. :
Originally posted by @Jay Hinrichs:

 I get it little bergs in the country and the houses have limited market value to a owner occ..  fully understand what your talking about.. 

more houses than peeps to live in them in a lot of these areas and since it makes no sense to build new construction IE does not pencil or as existing if a fraction of replacement.. these homes have one purpose left in their life and that is for folks like you to scoop em up and re purpose them as rentals.  I totally get it..

Urban core though  burnt out failed landord is a huge swath of the inventory.. look at what that Rock Star Clayton Morris did to 400 plus investors thats a classic case of a ton of low value homes coming back on market and someone losing a lot of money. even if they did rehab them .. half of those OOS would be failing or selling within 60 months.

 It's actually both.  I invest in the Triangle and Triad areas of NC.  Both are MSAs over 1M people.  Not NYC or LA, but not little burgs.  I also have interests in a small burg, but that's not my primary area.  Durham is red hot in population growth and the realty and rental markets.  The market is probably a little like where you invest in SC.

These areas are different than both the large blue collar cities that never appreciate (Cleveland, Milwaukee, Midwest areas) or the small town places with stagnant populations.  

I understand your point about companies like Morris.  While I hate that people got scammed, I have to admit that most of them bear some responsibility.  It sounds like a lot of people were looking for something for nothing.  In a sense, they remind me of all the people who took out second mortgages to inflate their lifestyles before the great recession.  Here are too many people looking to park serious money in some passive investment scheme that promises incredibly high returns, but that requires no knowledge, no effort, and nothing at all.  Just write a check and sit back and wait for all your profits to roll in. It sounds so unrealistic that it makes the Nigerian Prince scam seem like a reasonable scheme.

Cheers

 I got someone contact me with a property they purchased through this company, address etc

My first thought was this investor paid through the nose for this property

I have reads some posts on BP on this company....... what can I say...... buyer beware

Originally posted by @Randy E. :
Originally posted by @Jay Hinrichs:

 I get it little bergs in the country and the houses have limited market value to a owner occ..  fully understand what your talking about.. 

more houses than peeps to live in them in a lot of these areas and since it makes no sense to build new construction IE does not pencil or as existing if a fraction of replacement.. these homes have one purpose left in their life and that is for folks like you to scoop em up and re purpose them as rentals.  I totally get it..

Urban core though  burnt out failed landord is a huge swath of the inventory.. look at what that Rock Star Clayton Morris did to 400 plus investors thats a classic case of a ton of low value homes coming back on market and someone losing a lot of money. even if they did rehab them .. half of those OOS would be failing or selling within 60 months.

 It's actually both.  I invest in the Triangle and Triad areas of NC.  Both are MSAs over 1M people.  Not NYC or LA, but not little burgs.  I also have interests in a small burg, but that's not my primary area.  Durham is red hot in population growth and the realty and rental markets.  The market is probably a little like where you invest in SC.

These areas are different than both the large blue collar cities that never appreciate (Cleveland, Milwaukee, Midwest areas) or the small town places with stagnant populations.  

I understand your point about companies like Morris.  While I hate that people got scammed, I have to admit that most of them bear some responsibility.  It sounds like a lot of people were looking for something for nothing.  In a sense, they remind me of all the people who took out second mortgages to inflate their lifestyles before the great recession.  Here are too many people looking to park serious money in some passive investment scheme that promises incredibly high returns, but that requires no knowledge, no effort, and nothing at all.  Just write a check and sit back and wait for all your profits to roll in. It sounds so unrealistic that it makes the Nigerian Prince scam seem like a reasonable scheme.

Cheers

I did not realize in Durham proper you can find 30k homes..  I know in Charleston were I am investing. there were a few little spots between N. Charleston and Charleston were you could buy some really rough stuff 5 years or so ago.. but not sure any more.. Like I said I routinely pay 100 to 200k for lots alone.  But I did sell a rental last year.. full gut on a Charleston old house with the side porchs and built a new 4 bed home behind it and I got just under 1.3 mil for those. rent to studetns at 1000 a room and there was 10 rooms.. it was a 1031 investor out of NYC  23 Amherst if anyone wants to see what a rental in that area looks like 

@Ashley Hamilton

Be careful Ashley. They are close to zero legal air bnb Las Vegas condos. They actually pay government employees to scan Airbnb and send out the violations. Because of the distance requirements between each Airbnb there is usually one legal condo per building. And they’re trying to get rid of those. 

Google Airbnb Las Vegas fine. The first one for $73k is the one that made the news. The rest are just $1,000/day type fines. 

hello, thank you I would definitely look into that. Regardless if I use it for Airbnb or just a regular rental I did just want to get over rental property there and because I do plan on moving there and then there future. Thanks for your advice.

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Originally posted by @Stuart Smith :

Im sure many of us have read all the warnings and reviews of buying low price properties, and the problems typically associated with them, but all that considered, it is what first attracts a lot of people , indeed this is the only path available to some, its a start, so lets explore whats real and possible.........

lets use Detroit, Cleveland, Michigan and Indianapolis as examples where possible ,and set a ceiling of $30k

Personally i dont see the return on higher priced properties attractive enough to invest $80 to $120k plus, and before anyone starts preaching about the pitfalls, ive done this before, over 30 properties over 20 years, just in another country, low cost houses in deprived areas, i know what can go wrong.

The first attraction here is the low cost, funding with personal loans and credit cards etc,  is possible, and with high returns , quickly repaid, whereas a large mortgage is on your credit file for years, and has to impact further borrowing, and cannot easily be cleared temporarily in the same way credit cards can, if your credit needs a boost !

How easy is it to get a portfolio of say 3 x $30k properties you own outright (wherever the funds came from !) and then refinance into one loan after 6 months or a year ?........and then repeat this process ?

This is more attainable for a lot of people surely ?

So, anyone with a similar train of thought ?, anyone already doing this ?, any input would help........

 I've dealt with 1,000's of these properties & the people who live in them over the years. I've made millions buying, selling, renting, brokering, managing, renovating, insuring, filming & anything else you can do in these suckers.

Biggest take aways from my experiences are that you can make a ton of money with them. I'm proof of that. You can also loose money, lol I've done that a few times as well. Some win, some loose. If you grind it out your wins will outweigh your losses. 

The investors who are focused on the minute details can't handle these. The tenants are regularly savage as all hell & they will break you down if you are a person who thinks about every dollar & questions why people like this do what they do. If you can remove emotion & let things roll off of you while only keeping your eye on the big prize it's a pretty sweet business.

All right, it's 11 pm at night and I got through the nine pages of the thread to review. Here's my first takeaway.

Some of the people here are known quantities to me and I've been following them for quite some time. I know @Dennis M. pretty well here on BiggerPockets.com and follow him carefully, so what he's contributed hasn't been much of a surprise.  Likewise with @Linda S. , one of the best people for renovation advice here on the site. I know @Jill F. in Akron and her multifamily business model. @Matt P. 's work in Columbus is the same kind of thing. I believe all of these people are self-managing local investors running rentals in their neck of the woods, quietly working away on their growing portfolios. Most, especially Matt and Linda, do almost all of their own work, as I do, unless I'm mistaken. Dennis and Jill are primarily in multifamily.

I've seen some of @Randy E. 's posts in the past, but his contributions here have been a real eye-opener. I've been missing out. I would also say the same about @Jonathan R.

There's a pattern that's emerging here of people who work in this space. We have individual, local investors who routinely have issues refinancing. I'm right in there now with portfolio refinancing from my bank (Dollar Bank), which has financed every step of our development from the first rental in 2013 through home equity and personal loans to now. Not many developed comments here by long-distance investors making money in the $30K space. @Stuart Smith in Vegas, you still seem to be out of luck when it comes to practical advice to work with other than, "Have a rock-solid PM" (contributed by @Dave DeMarco ) and have a "great team on the ground" (contributed by @Marisa R. ). Good luck with that.

------------------------------------------------

Here's what I think is the most important thing I can talk about regarding what's been said here by believable sources:

One of the main criticisms we've seen about making money in the $30K space is that sooner or later, higher levels of capEx will kill you. Cheaper properties simply take more money to maintain and eat up money. Randy's taken a good strong ax to this argument, and I agree with everything he's said. A local investor who's handling his own rehabs can largely mitigate this.

(Apologies to people from Pittsburgh for activating your keyword searches and drawing you here, but hey, I've got to talk our area here to illustrate this point).

The Pittsburgh MSA is Allegheny County, where the City of Pittsburgh proper is located, and the surrounding counties. There are an additional 130 independent municipalities in Allegheny County besides the City. There are a number of communities in the five counties that surround AC. Within the MSA, the cheap houses are to be had in four distinct locations: within the urban slums of the actual city, within the urban and suburban slums of the surrounding municipalities of Allegheny County, the limits of Allegheny County, and finally, in the surrounding counties, excluding $$$ pockets with strong school districts and a few purpose-built tax-haven bedroom communities just over the Allegheny County line (Cranberry Township in Butler County, where my brother lives).

My target area for those $30K properties is just outside the southeastern limits of the city, which actually used to be very prosperous when the steelmills were running. After the steelmills left...these areas went downhill. I typically buy SFR, but I also have one duplex and would not be averse to investing in other 2-4 unit multifamilies given the right circumstances.

There are two building boom periods for these areas: 1890-1929, as Pittsburgh was being built, and 1945-1960, as a lot of new housing was built for returning GIs and their new families. All of our properties except one belong to these two building periods. ALL of them are solid masonry or brick veneered, one of my basic demands for new acquisitions. There are plenty of 1920-era properties in this target area that were built really well back in the day.

For instance, my duplex was built for an heiress of the West family in the 1920s. The Wests owned most of West Homestead, one of the boroughs I invest in. West Field in Munhall, the main sports arena. is named after them, and my duplex is right by West Street. The over-under duplex itself is 2 apartments of 1760 ft2 each with an additional 1850 ft2 in the basement that my wife currently uses as her studio. This thing is built like a truck. Seamed copper roof, brick veneer, quartersawn oak, what would be modern clear-grade oak floors. The duplex was built at a time when the population density of the Borough of Homestead down the street was approximately the same as modern-day Manhattan. What do 1760ft2 2/1 apartments with another 900 ft of storage space go for in Manhattan these days?

In 1945, the duplex was sold to an old Munhall family which extensively remodeled it then sold it to a dude marrying into the family. Over the next 60 years, that dude, his children, and his children's children ran that duplex into the ground, following the time-honored formula of doing no maintenance until the place falls down. When I bought it, the Section 8 tenant on the upstairs floor had just shattered her leg on the poorly repaired front steps and had had to go into managed care. The tenant on the downstairs floor had moved out the year before when his bathroom sink drainage piping sprang a leak and the landlord's response to his asking to have it fixed was to tell the tenant to put a bucket under the leak to catch the water.

Suffice it to say, the duplex had extensive deferred maintenance that had to be brought up to date, which is why I got it for $45K. But once that maintenance was done, this place is still almost as solid as it was when it was built. Prime location across from the borough building and police station and what used to be the local hospital, very good drainage, great views down the big Homestead Hill from the top apartment's balcony, lots of light through the 20+ windows per apartment.

My point in sharing all this is to point out that not all older residential housing structures with major deferred maintenance are at the end of their lifetime. A well-done renovation will often be able to get many more years of service out of them. This is not the only place like it in Munhall. My most recent acquisition is a 1300 ft2 brick home within walking distance from the duplex, which I believe was built circa 1929. In its heyday, it was next to the local high school, and just a little way down from the prestigious Carnegie of Homestead (a combination gym, theater hall, and library). You could walk down the street and get to the main HQ of the steelmill that was the main employer of the area, the Homestead Works.

Well, the Works closed down in the 1980s, the high school has been long bulldozed, the Carnegie went way downhill before it was taken firmly in hand, and this brick single-family home is now surrounded by low-income housing nearing the end of its operational life. I got it for $25K from the former long-term owner whose family had bought it when the steelmill was around, then watched the property's value dwindle over decades. The maintenance on this place was not neglected until maybe the last decade. I'm certain that with a 6-month rehab I'll be able to keep it running as an SFR for the rest of my time here in the Burgh (once again, I project 8 years) and the guy who buys it from me will make money on it for a very long time to come.

My point is that these places still have amazing value for their age as rental properties. Because while neighborhoods decline, sometimes it's not forever. And this is the case in the target area I'm investing in. I specifically chose the target area back in 2013 because I knew that the tax-increment financing deal to build the Waterfront, a gigantic shopping and entertainment complex erected on the site of the former Homestead Works, would run out in 2018 and the municipalities I've mentioned, West Homestead, Homestead, Munhall, and the school district of the area, Steel Valley, would all receive massive bumps in their funding. Most local Pittsburgh investors didn't really pay attention to this, and now in the Homestead/Munhall area of Greater Pittsburgh, we're seeing completely predictable developments that anyone could have seen coming if they had been paying attention, and the many Johnny-come-latelies are struggling to find anything decent to buy that isn't falling apart, which really makes 

What are the chances that OOS investors would be able to see this coming if the locals couldn't manage it? Absolutely minimal.

Over in BPs Pittsburgh forum, I just posted a thread about Rankin, another municipality in the area. Rankin is a slum. Practically half the municipalities population is in the three major housing projects in the area. Ah, but it is also the site of the defunct Carrie Furnace, one of the last large open lots on the river, with excellent road and bus access to the rest of Pittsburgh and Allegheny County owns that site outright. The Carrie site was one of the three sites held open for Jeff Bezos in Pittsburgh's Amazon HQ2 bid. Once Pgh's bid failed, the property was released and proposals for development were requested. This was back in September 2018. The proposal submission process ends at the end of April.

Do you know how many local Pittsburgh residential investors here on BP knew that? Zero. Do you know how many of the local residential Pgh people I know off BP know that? Two. That's it. So what are the chances of an OOS investor becoming privy to this important knowledge? Rankin has plenty of the same high-quality old brick builds Homestead and Munhall have, places that can be remodeled into good moneymaking, highly-functional SFR . They can be had in Rankin right now for $15-$20K. Who's buying them right now for peanuts? Nobody. What's going to happen when the Carrie site is sold to a developer? They'll all be scrambling.

The generalized capex argument is kind of silly when measured against the capabilities of a local investor who can do most of the work on his own properties and knows what to buy, what will last, what can be brought back and how much it will cost to bring it back. Not all builds are of equal quality or longevity, especially in the small multifamily and single-family space. This also goes for condo developments, as I can also bear witness to.

I currently live in a 1970s-era tract-built townhouse condo in a development that's falling apart.  It's in a tony neighborhood next to a newly redeveloped pedestrian mall and across the street from the toniest pedestrian mall bar none of western Pennsylvania. Any this tony townhouse has got maybe forty more years in it before it will need to be bulldozed, and the people that built it knew exactly what kind of short-lived garbage they were building and what kind of short-sighted idiots would be mismanaging it. My 90+ year old duplex is going to outlast this 40-year-old joke of a house by almost a century, by my rough calculations.

------------------------------------------------

Something else that makes sense that I paid attention to was the importance stressed by multiple parties about tenant relations in these $30K properties. I really like a term I lifted a while ago from @Steve Vaughan , "deal belly to belly with these people." Much like Dennis, much of my childhood was spent in upstate New York (about 150 miles away from him, I'd guess?) in a $400/mo. rental on food stamps with no health insurance and the phone ringing off the hook by people looking for their money out of my dad. Yeah, we moved the car around to avoid it being repossessed. Yeah, in desperation, my father started a small business in the rental and hid it from the landlord. Yeah, when I was in college, my parents paid for some of their bills with my credit card and didn't tell me. I'm not a stranger to what poverty does to people.

But still, I have some trouble relating to my tenants. I recently got into a discussion with one of my tenants about the sewer payment. Currently, the way it's set up, I pay the sewer on her SFR, and the sewer bill is tied to her water bill. The borough, or rather the service that sends out the bills, has been on me to switch the bill to the tenant as is customary for this area. So that's what I'm going to do, and give the tenant a rent cut so she can pay for it.

I tried to explain this twice to the tenant and never seemed to get anyway. It wasn't until I realized what was wrong and stated what I needed to state firmly and clearly that I finally made headway, "We am not trying to sneak an undercover rent increase by you. This is going to be cost neutral, I can promise you."

The problem here was that I have not lived in a low-cost rental property for many years now, and I couldn't see how she was seeing it, from the perspective of having spent all her life in this kind of housing out here in western PA, where I've seen a lot more crappy landlords than I have crappy tenants. In her world and social circle, any landlord, regardless of any past behavior, can turn on you at any moment, and this is even more true of landlords who live far away and only communicate through a property management company and certified mail. Picking up the phone and calling the landlord and having him show up quickly, let alone show up WITH TOOLS, is an incredible luxury.

My tenants call me when something needs to be taken care of. They call me when they see my investments are in trouble. I am there routinely with furnace filters and batteries for the CO2 detectors and smoke alarms. They know me. They know I'm committed to the area. They know I have the construction knowledge to understand that many minor issues are not their fault, and I'm not always trying to pass the blame and expense to them. Holy smokes, I remember this guy here in the BO forums a few months ago asking about passing the expense to a tenant for replacing a mirror in the bathroom that had been damaged because "the tenant's showers are just too long."

You've got to be able to work with tenants openly and fairly and speak to them in the language they best understand, and local investors can simply do more of that better than long-distance investors, most especially if they can understand where these people are coming from through their own personal backgrounds.

Originally posted by @Jim K. :

All right, it's 11 pm at night and I got through the nine pages of the thread to review. Here's my first takeaway.

Some of the people here are known quantities to me and I've been following them for quite some time. I know @Dennis M. pretty well here on BiggerPockets.com and follow him carefully, so what he's contributed hasn't been much of a surprise.  Likewise with @Linda S. , one of the best people for renovation advice here on the site. I know @Jill F. in Akron and her multifamily business model. @Matt P. 's work in Columbus is the same kind of thing. I believe all of these people are self-managing local investors running rentals in their neck of the woods, quietly working away on their growing portfolios. Most, especially Matt and Linda, do almost all of their own work, as I do, unless I'm mistaken. Dennis and Jill are primarily in multifamily.

I've seen some of @Randy E. 's posts in the past, but his contributions here have been a real eye-opener. I've been missing out. I would also say the same about @Jonathan R.

There's a pattern that's emerging here of people who work in this space. We have individual, local investors who routinely have issues refinancing. I'm right in there now with portfolio refinancing from my bank (Dollar Bank), which has financed every step of our development from the first rental in 2013 through home equity and personal loans to now. Not many developed comments here by long-distance investors making money in the $30K space. @Stuart Smith in Vegas, you still seem to be out of luck when it comes to practical advice to work with other than, "Have a rock-solid PM" (contributed by @Dave DeMarco ) and have a "great team on the ground" (contributed by @Marisa Rowe). Good luck with that.

------------------------------------------------

Here's what I think is the most important thing I can talk about regarding what's been said here by believable sources:

One of the main criticisms we've seen about making money in the $30K space is that sooner or later, higher levels of capEx will kill you. Cheaper properties simply take more money to maintain and eat up money. Randy's taken a good strong ax to this argument, and I agree with everything he's said. A local investor who's handling his own rehabs can largely mitigate this.

(Apologies to people from Pittsburgh for activating your keyword searches and drawing you here, but hey, I've got to talk our area here to illustrate this point).

The Pittsburgh MSA is Allegheny County, where the City of Pittsburgh proper is located, and the surrounding counties. There are an additional 130 independent municipalities in Allegheny County besides the City. There are a number of communities in the five counties that surround AC. Within the MSA, the cheap houses are to be had in four distinct locations: within the urban slums of the actual city, within the urban and suburban slums of the surrounding municipalities of Allegheny County, the limits of Allegheny County, and finally, in the surrounding counties, excluding $$$ pockets with strong school districts and a few purpose-built tax-haven bedroom communities just over the Allegheny County line (Cranberry Township in Butler County, where my brother lives).

My target area for those $30K properties is just outside the southeastern limits of the city, which actually used to be very prosperous when the steelmills were running. After the steelmills left...these areas went downhill. I typically buy SFR, but I also have one duplex and would not be averse to investing in other 2-4 unit multifamilies given the right circumstances.

There are two building boom periods for these areas: 1890-1929, as Pittsburgh was being built, and 1945-1960, as a lot of new housing was built for returning GIs and their new families. All of our properties except one belong to these two building periods. ALL of them are solid masonry or brick veneered, one of my basic demands for new acquisitions. There are plenty of 1920-era properties in this target area that were built really well back in the day.

For instance, my duplex was built for an heiress of the West family in the 1920s. The Wests owned most of West Homestead, one of the boroughs I invest in. West Field in Munhall, the main sports arena. is named after them, and my duplex is right by West Street. The over-under duplex itself is 2 apartments of 1760 ft2 each with an additional 1850 ft2 in the basement that my wife currently uses as her studio. This thing is built like a truck. Seamed copper roof, brick veneer, quartersawn oak, what would be modern clear-grade oak floors. The duplex was built at a time when the population density of the Borough of Homestead down the street was approximately the same as modern-day Manhattan. What do 1760ft2 2/1 apartments with another 900 ft of storage space go for in Manhattan these days?

In 1945, the duplex was sold to an old Munhall family which extensively remodeled it then sold it to a dude marrying into the family. Over the next 60 years, that dude, his children, and his children's children ran that duplex into the ground, following the time-honored formula of doing no maintenance until the place falls down. When I bought it, the Section 8 tenant on the upstairs floor had just shattered her leg on the poorly repaired front steps and had had to go into managed care. The tenant on the downstairs floor had moved out the year before when his bathroom sink drainage piping sprang a leak and the landlord's response to his asking to have it fixed was to tell the tenant to put a bucket under the leak to catch the water.

Suffice it to say, the duplex had extensive deferred maintenance that had to be brought up to date, which is why I got it for $45K. But once that maintenance was done, this place is still almost as solid as it was when it was built. Prime location across from the borough building and police station and what used to be the local hospital, very good drainage, great views down the big Homestead Hill from the top apartment's balcony, lots of light through the 20+ windows per apartment.

My point in sharing all this is to point out that not all older residential housing structures with major deferred maintenance are at the end of their lifetime. A well-done renovation will often be able to get many more years of service out of them. This is not the only place like it in Munhall. My most recent acquisition is a 1300 ft2 brick home within walking distance from the duplex, which I believe was built circa 1929. In its heyday, it was next to the local high school, and just a little way down from the prestigious Carnegie of Homestead (a combination gym, theater hall, and library). You could walk down the street and get to the main HQ of the steelmill that was the main employer of the area, the Homestead Works.

Well, the Works closed down in the 1980s, the high school has been long bulldozed, the Carnegie went way downhill before it was taken firmly in hand, and this brick single-family home is now surrounded by low-income housing nearing the end of its operational life. I got it for $25K from the former long-term owner whose family had bought it when the steelmill was around, then watched the property's value dwindle over decades. The maintenance on this place was not neglected until maybe the last decade. I'm certain that with a 6-month rehab I'll be able to keep it running as an SFR for the rest of my time here in the Burgh (once again, I project 8 years) and the guy who buys it from me will make money on it for a very long time to come.

My point is that these places still have amazing value for their age as rental properties. Because while neighborhoods decline, sometimes it's not forever. And this is the case in the target area I'm investing in. I specifically chose the target area back in 2013 because I knew that the tax-increment financing deal to build the Waterfront, a gigantic shopping and entertainment complex erected on the site of the former Homestead Works, would run out in 2018 and the municipalities I've mentioned, West Homestead, Homestead, Munhall, and the school district of the area, Steel Valley, would all receive massive bumps in their funding. Most local Pittsburgh investors didn't really pay attention to this, and now in the Homestead/Munhall area of Greater Pittsburgh, we're seeing completely predictable developments that anyone could have seen coming if they had been paying attention, and the many Johnny-come-latelies are struggling to find anything decent to buy that isn't falling apart, which really makes 

What are the chances that OOS investors would be able to see this coming if the locals couldn't manage it? Absolutely minimal.

Over in BPs Pittsburgh forum, I just posted a thread about Rankin, another municipality in the area. Rankin is a slum. Practically half the municipalities population is in the three major housing projects in the area. Ah, but it is also the site of the defunct Carrie Furnace, one of the last large open lots on the river, with excellent road and bus access to the rest of Pittsburgh and Allegheny County owns that site outright. The Carrie site was one of the three sites held open for Jeff Bezos in Pittsburgh's Amazon HQ2 bid. Once Pgh's bid failed, the property was released and proposals for development were requested. This was back in September 2018. The proposal submission process ends at the end of April.

Do you know how many local Pittsburgh residential investors here on BP knew that? Zero. Do you know how many of the local residential Pgh people I know off BP know that? Two. That's it. So what are the chances of an OOS investor becoming privy to this important knowledge? Rankin has plenty of the same high-quality old brick builds Homestead and Munhall have, places that can be remodeled into good moneymaking, highly-functional SFR . They can be had in Rankin right now for $15-$20K. Who's buying them right now for peanuts? Nobody. What's going to happen when the Carrie site is sold to a developer? They'll all be scrambling.

The generalized capex argument is kind of silly when measured against the capabilities of a local investor who can do most of the work on his own properties and knows what to buy, what will last, what can be brought back and how much it will cost to bring it back. Not all builds are of equal quality or longevity, especially in the small multifamily and single-family space. This also goes for condo developments, as I can also bear witness to.

I currently live in a 1970s-era tract-built townhouse condo in a development that's falling apart.  It's in a tony neighborhood next to a newly redeveloped pedestrian mall and across the street from the toniest pedestrian mall bar none of western Pennsylvania. Any this tony townhouse has got maybe forty more years in it before it will need to be bulldozed, and the people that built it knew exactly what kind of short-lived garbage they were building and what kind of short-sighted idiots would be mismanaging it. My 90+ year old duplex is going to outlast this 40-year-old joke of a house by almost a century, by my rough calculations.

------------------------------------------------

Something else that makes sense that I paid attention to was the importance stressed by multiple parties about tenant relations in these $30K properties. I really like a term I lifted a while ago from @Steve Vaughan , "deal belly to belly with these people." Much like Dennis, much of my childhood was spent in upstate New York (about 150 miles away from him, I'd guess?) in a $400/mo. rental on food stamps with no health insurance and the phone ringing off the hook by people looking for their money out of my dad. Yeah, we moved the car around to avoid it being repossessed. Yeah, in desperation, my father started a small business in the rental and hid it from the landlord. Yeah, when I was in college, my parents paid for some of their bills with my credit card and didn't tell me. I'm not a stranger to what poverty does to people.

But still, I have some trouble relating to my tenants. I recently got into a discussion with one of my tenants about the sewer payment. Currently, the way it's set up, I pay the sewer on her SFR, and the sewer bill is tied to her water bill. The borough, or rather the service that sends out the bills, has been on me to switch the bill to the tenant as is customary for this area. So that's what I'm going to do, and give the tenant a rent cut so she can pay for it.

I tried to explain this twice to the tenant and never seemed to get anyway. It wasn't until I realized what was wrong and stated what I needed to state firmly and clearly that I finally made headway, "We am not trying to sneak an undercover rent increase by you. This is going to be cost neutral, I can promise you."

The problem here was that I have not lived in a low-cost rental property for many years now, and I couldn't see how she was seeing it, from the perspective of having spent all her life in this kind of housing out here in western PA, where I've seen a lot more crappy landlords than I have crappy tenants. In her world and social circle, any landlord, regardless of any past behavior, can turn on you at any moment, and this is even more true of landlords who live far away and only communicate through a property management company and certified mail. Picking up the phone and calling the landlord and having him show up quickly, let alone show up WITH TOOLS, is an incredible luxury.

My tenants call me when something needs to be taken care of. They call me when they see my investments are in trouble. I am there routinely with furnace filters and batteries for the CO2 detectors and smoke alarms. They know me. They know I'm committed to the area. They know I have the construction knowledge to understand that many minor issues are not their fault, and I'm not always trying to pass the blame and expense to them. Holy smokes, I remember this guy here in the BO forums a few months ago asking about passing the expense to a tenant for replacing a mirror in the bathroom that had been damaged because "the tenant's showers are just too long."

You've got to be able to work with tenants openly and fairly and speak to them in the language they best understand, and local investors can simply do more of that better than long-distance investors, most especially if they can understand where these people are coming from through their own personal backgrounds.

Sounds like you got yourself a day job....

This post has been removed.

@Marisa R.

Yes, I do have a real estate JOB, as I have repeatedly said. This is not passive investment for me.

While I still work in what I used to teach in, adult ESL, I have mostly traded in one dead-end poorly-paid job, teaching, for a much better-paid one, rehabbing property acquisitions into rentals (which I spend a lot of time on), and managing rentals, EXACTLY as @Jay Hinrichs said, EXACTLY as I said in my first post in this thread.

As @Randy E. pointed out, I too usually spend less than an hour per rental per month on average managing them. Significantly more  time is spent maintaining these rentals until I've got them properly dialed in, but that drops off once they're in shape and I've got my preventative maintenance schedule and inspection visits properly set up. Once in a while, there's something that has to be taken care of immediately and it takes a lot of time and effort that has to be devoted to it immediately. That sucks.

These realities are why, once again, I wouldn't have gone into $30K rentals if I had already been making six figures in a job instead of drawing down a teacher's salary. I do what I do because in my area, a $25K vacant acquisition can get turned into a $45K occupied rental with the tenant paying down the refinance for me, while I take my cash and get me another acquisition that can be turned into another little money-printing machine for me. With enough little money-printing machines in place, I can sell them all, put the money into something that produces a guaranteed return with no effort on my part, and spend my days doing what I like instead of doing what I do to build wealth.

So do you have a better way to actually make money in the $30K market? Because you've been extremely short on specifics so far in every post I've ever seen you write anywhere on BiggerPockets. In this thread, we've learned you have "a great team on the ground," nothing more. Is that all you have to contribute to this discussion?

Originally posted by @Jim K. :

@Marisa Rowe

Yes, I do have a real estate JOB, as I have repeatedly said. This is not passive investment for me.

While I still work in what I used to teach in, adult ESL, I have mostly traded in one dead-end poorly-paid job, teaching, for a much better-paid one, rehabbing property acquisitions into rentals (which I spend a lot of time on), and managing rentals, EXACTLY as @Jay Hinrichs said, EXACTLY as I said in my first post in this thread.

As @Randy E.  pointed out, I too usually spend less than an hour per rental per month on average managing them. Significantly more  time is spent maintaining these rentals until I've got them properly dialed in, but that drops off once they're in shape and I've got my preventative maintenance schedule and inspection visits properly set up. Once in a while, there's something that has to be taken care of immediately and it takes a lot of time and effort that has to be devoted to it immediately. That sucks.

These realities are why, once again, I wouldn't have gone into $30K rentals if I had already been making six figures in a job instead of drawing down a teacher's salary. I do what I do because in my area, a $25K vacant acquisition can get turned into a $45K occupied rental with the tenant paying down the refinance for me, while I take my cash and get me another acquisition that can be turned into another little money-printing machine for me. With enough little money-printing machines in place, I can sell them all, put the money into something that produces a guaranteed return with no effort on my part, and spend my days doing what I like instead of doing what I do to build wealth.

So do you have a better way to actually make money in the $30K market? Because you've been extremely short on specifics so far in every post I've ever seen you write anywhere on BiggerPockets. In this thread, we've learned you have "a great team on the ground," nothing more. Is that all you have to contribute to this discussion?

 Well done Jim congrats,  you have commitment and passion, can see why you have a successful model

All the best

Originally posted by @Jim K. :

But still, I have some trouble relating to my tenants. I recently got into a discussion with one of my tenants about the sewer payment. Currently, the way it's set up, I pay the sewer on her SFR, and the sewer bill is tied to her water bill. The borough, or rather the service that sends out the bills, has been on me to switch the bill to the tenant as is customary for this area. So that's what I'm going to do, and give the tenant a rent cut so she can pay for it.

I tried to explain this twice to the tenant and never seemed to get anyway. It wasn't until I realized what was wrong and stated what I needed to state firmly and clearly that I finally made headway, "We am not trying to sneak an undercover rent increase by you. This is going to be cost neutral, I can promise you."

The problem here was that I have not lived in a low-cost rental property for many years now, and I couldn't see how she was seeing it, from the perspective of having spent all her life in this kind of housing out here in western PA, where I've seen a lot more crappy landlords than I have crappy tenants. In her world and social circle, any landlord, regardless of any past behavior, can turn on you at any moment, and this is even more true of landlords who live far away and only communicate through a property management company and certified mail. Picking up the phone and calling the landlord and having him show up quickly, let alone show up WITH TOOLS, is an incredible luxury.

Thanks for sharing, I'm glad you triggered my keywords as my wife is inheriting some of these low cost rentals down here in Fayette County.  Lots of old coal mining company houses here.   

I did want to point out one thing with your story about lowering rent to allow to pay for sewage.  I understand why she's upset.  If she was already responsible for ANY other utility, then she was getting the standard utility deduction for her food stamps.  So by cutting her rent but giving her another utility, you've actually reduced her food stamp budget.  For example:  If she used to pay $500 + electric, her housing costs as calculated by DHS would be $1088.  If you change it to $400 + electric and sewage, her housing cost drops to $988, which reduces her food stamps by about $30/mo.  So what you see as cost neutral is probably not so much for her.  These are considerations that have to be made at this income level that aren't typically necessary at higher valued properties.

Originally posted by @Jay Hinrichs :
I did not realize in Durham proper you can find 30k homes..  

 Unfortunately, not any more.  There's nothing in the Triangle for $30K.  But there are $30K homes in the Triad and that is also a 1.5M+ MSA. Admittedly, fewer and fewer.

And there is a decent supply of $30K homes in the surrounding areas of the Triangle, which can be more like the burgs you describe.

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