Low income housing strategy

6 Replies

I live and invest in Monroe, Louisiana, which has a very high percentage of the population being considered to be low income. I currently own a handful of SFR in low value areas, but not areas you would consider to be warzones. My questions is - what is the long term strategy ideal for these types of properties? I see the major investors that own hundreds of these in my areas being way more hands on than I want to be, so is there a way to build a portfolio of low income housing without it becoming a job because of it's high maintenance nature?

@Austin Works spending the money upfront to take care of things like roof, ac, plumbing, etc goes a long way. I try to make my houses as tenant proof as possible and knock out all of the things that could end up being major expenditures down the line. You should be able to get about 10 years out of a well done renovation before major capital expenditures start coming up so you can decide if selling in the 5-7 year range is best or holding.

Obviously the second part is finding good quality tenants. A nice renovation usually attracts better tenants. I rent to traveling workers that make $150k a year and just need a place to stay for work.

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Austin

if you don't want to be hands on, sell the properties and invest in an annuity.  I had a friend that said basically the same thing you are saying so I told him to hire a PM.  Then he complained that they are too expensive and don't care about things like they should.  I told him real estate is not for him and maybe that applies to you also.

@Josh Bakhshi I think you may have misunderstood my post. I am currently managing my own properties, and I'm very hands off in doing so by implementing systems. My question is - what long term strategy works for buying these types of properties? Should I keep accumulating these properties for a trade up to a higher asset class later? Should I aim to sell these off as turnkey rentals individually to investors? Or am I building a house of cards by buying these? I am just looking for guidance from people who have invested in this asset class and had a successful outcome. If you have not done this, then this post does not apply to you. 

Originally posted by @Austin Works :

@Josh Bakhshi I think you may have misunderstood my post. I am currently managing my own properties, and I'm very hands off in doing so by implementing systems. My question is - what long term strategy works for buying these types of properties? Should I keep accumulating these properties for a trade up to a higher asset class later? Should I aim to sell these off as turnkey rentals individually to investors? Or am I building a house of cards by buying these? I am just looking for guidance from people who have invested in this asset class and had a successful outcome. If you have not done this, then this post does not apply to you. 

We have properties in low income and mid-income areas (and a handful in high income like Marin County).  To answer your question, it depends what your goal is.  Typically, low income properties generate the higher rates of return for your cost.  Now if your systems that you implemented are working and your are self-managing with a hands-off approach, then why not keep growing and get more income?  If you wanted to do a play for appreciation, then you should (typically) go for higher class assets.  I am already diversified so I go for more lower income properties and add about 3 properties every two months.  Something I can pass on to my kids.  But you have to decide what your goals are.

Originally posted by @Austin Works :

I live and invest in Monroe, Louisiana, which has a very high percentage of the population being considered to be low income. I currently own a handful of SFR in low value areas, but not areas you would consider to be warzones. My questions is - what is the long term strategy ideal for these types of properties? I see the major investors that own hundreds of these in my areas being way more hands on than I want to be, so is there a way to build a portfolio of low income housing without it becoming a job because of it's high maintenance nature?

 You can't change the amount of interaction needed to manage those types of tenants. Only thing you can change is who does this interacting by hiring a property manager.

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