General Landlording & Rental Properties
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Nonprofit suggests lease at significant loss to owner
My husband and I purchased our 3rd sf rental in April with the intent of renting it as shared clean and sober house. It is outfitted to serve 6 women. Currently we have 1 month to month tenant. We have received an offer from a respected local nonprofit that runs a clean and sober program to lease the house long term and use it for their participants. The offer is tempting because it would meet our goals for the house, serve the community, and free up our time for the next investment. However, when running the numbers on BP calculator the requested lease amount leaves us in the negative cash flow of $644 p/mo.
I’ve checked with my realtor and the nonprofit has offered $1,000 below market rate. What are some ways we can engage them in constructive negotiations to pay a market rate lease amount? Thanks in advance for your suggestions.
*This link comes directly from our calculators, based on information input by the member who posted.
You may want to start by looking at their lease more closely. I haven't rented to an entity like this, but had one reach out a few years back. One of their selling points was they take care of all maintenance and repairs as well as repaint and some other items on their way out. If that's the case then maybe their $1,000 under market is really only $500 under with $500 being savings to your budgeted expenses. That doesn't make it a good deal, but at least gets you closer to something that may work for you both.
Matt Devincenzo thanks for the tip.
Hi Maegan,
As Entrepreneurs, we aim for profit. But, we are wired to give and share what we have to be a blessing to many. But again, $1,000 below the market rate is quite high, the $644 negative cash flow is a big number to eat up too. I see that you have the heart to help others, perhaps you can explain to them how your numbers work so they can have a better understanding. Asking also some avenues for the non-profit to raise more funds for them might help not only them but also you so they will be able to pay more than what they think they can afford. That will be a win-win situation.
Perhaps a question to you: How much interest rate are you paying on your mortgage? Is there any way you can lower your monthly overhead?
I hope that helps.
Trish W
Hi Trish, thanks for the suggestions and question about the interest rate. We put 20% down and have 6% interest. I was thinking this morning that I might be able to find a few possible grants for them to apply for. So that would be in line with one of your suggestions.
Quote from @Maegan Erb:
I don't understand. You offer a product at market rate. They have the option of accepting it or looking for something else. It's not your responsibility to try and make it work for them.
I love charity, but I give it to people that actually need it, not people that are running a business and making a profit.
Quote from @Nathan Gesner:
Quote from @Maegan Erb:
I don't understand. You offer a product at market rate. They have the option of accepting it or looking for something else. It's not your responsibility to try and make it work for them.
I love charity, but I give it to people that actually need it, not people that are running a business and making a profit.
Nathan G. excellent points. I've used that logic for other businesses and its a great reminder to me in this situation. Thank you! Our clean and sober home has been on the market for 2 months and we aren't getting any inquiries on the listing or from outreach to area agencies. We've been assured that there is a need in our area but only one tenant so far. So the offer from the nonprofit (at the right lease price) would relieve some stress related to the house not having tenants. It seems like it could be a good fit. I'm new at negotiations and the BP books that I've read have suggested looking for "win-win" scenarios. Thanks for pointing me back to the logic of giving charity to the people who need it.
Quote from @Maegan Erb:
Quote from @Nathan Gesner:
Quote from @Maegan Erb:
I don't understand. You offer a product at market rate. They have the option of accepting it or looking for something else. It's not your responsibility to try and make it work for them.
I love charity, but I give it to people that actually need it, not people that are running a business and making a profit.
Nathan G. excellent points. I've used that logic for other businesses and its a great reminder to me in this situation. Thank you! Our clean and sober home has been on the market for 2 months and we aren't getting any inquiries on the listing or from outreach to area agencies. We've been assured that there is a need in our area but only one tenant so far. So the offer from the nonprofit (at the right lease price) would relieve some stress related to the house not having tenants. It seems like it could be a good fit. I'm new at negotiations and the BP books that I've read have suggested looking for "win-win" scenarios. Thanks for pointing me back to the logic of giving charity to the people who need it.
A win-win situation would require that you actually win something. Their offer is a win for them but has no benefit to you. Just keep looking.
When someone claims non-profit status, they can still make incredible money. An example is the BLM movement where the founders became multi-millionaires in just a couple years. Two of the fastest ways to become wealthy: politics and charity.
Have you tried marketing to hospitals? Mental health facilities? Department of Family Services? Women's Crisis Center? Put the word out to these organizations every few weeks and see if they can help you find someone.
Nathan, thanks so much for the list of suggestions. I have reached out to a few of those places but hadn’t thought of all of them.
I’ll add those and reconnect with the other agencies with follow up emails.
Everyone’s suggestions have helped clear the fog. Thanks
@Maegan Erb Check with local churches. They are often involved with organizations helping people get back on their feet. Or they may have some other good leads/recommendations.
-
Broker CA (#01878782)
- Pintail Property Management
Quote from @Maegan Erb:
Hi Trish, thanks for the suggestions and question about the interest rate. We put 20% down and have 6% interest. I was thinking this morning that I might be able to find a few possible grants for them to apply for. So that would be in line with one of your suggestions.
That is actually a great idea Maegan. Let me know if you are able to do that. I am pretty sure that there are other organizations who are willing to help out. I admire you for what you are doing for these women. Not very many have that kind of passion to help them. I remember that when we had a house for rent way back then in Nevada, we would hire someone who lives in that kind of housing situation and provide them an opportunity to start their life with the jobs available to them. I pray that you will find the perfect match to do what you are called to do.