Seeking Advice on Handling Rent Increase Dilemma with Elderly Tenants

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2y

Quote from @Brandon Thurman:

Hello!

I hope this message finds you all well. My wife and I recently acquired a 4-unit apartment building with inherited tenants, and I'm facing a bit of a dilemma that I'd appreciate some advice on.

Two of our tenants, both elderly ladies living alone, have been residing in the building for over 10 years. They've been paying a significantly below-market rent of $280/month. After assessing the condition of the apartments and the market rates in our town, we realized that we could potentially get $600-650/month or even more with some renovations.

In an effort to bring the rents closer to market value, we spoke with these two tenants individually and proposed a slight increase. One tenant's rent was increased to $400, and the other to $350. However, both tenants expressed that they could not afford any higher rent.

Now, we're stuck at a crossroads. On one hand, these two tenants have proven to be excellent renters who take great care of the property. On the other hand, there's a considerable potential income loss by not bringing in new tenants at higher rents.

I would greatly appreciate any advice or insights from the community on how best to handle this situation. Have any of you faced similar dilemmas, and if so, how did you navigate through them? Is it worth the potential income loss to retain these long-term, responsible tenants, or should we consider bringing in new tenants at the higher market rates?

Thank you in advance for your input!

- Brandon

If you want to make money, charge them what the apartments are worth, or close to it.

If you want to provide charity, let them live there for $280/mo.

Investor · MD · Member since 2023 · 71 posts · 45 votes

2y

@Brandon Thurman thanks for posting this is a great question! Unpopular opinion- I would have passed up on this property because I wouldn't want to raise the rent on the these tenants. Yes you're running a business and not a charity, but you also want to be able to sleep at night with the business decisions you're making. Assuming they're both on a fixed income, it makes sense that they wouldn't be able to afford a rent increase. I think the best win-win option is helping them identify a program to subsidize their rent. Maybe there's a program through HUD. I'm in MD and I know we have a program like that here.

9 Reply

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

2y

@Brandon Thurman at the point of the rent raise I would have said to them that you will raise rent on an ongoing basis and that you would understand if that put them in a position where they had to move. I had a set of tenants where I knew they wouldn't be able to keep up with an increase. I told them that there are several affordable income based places they could get on a list for and they didn't. I even had a tenant get affordable housing and turn it down because the unit wasn't big enough. They however kept paying until they left. You really aren't doing them a favor by prolonging the inevitable.

Scott Mac

Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes

2y

You probably will not get Market Rent without a turn.

If they cannot pay the price, they have options:

(1) Go move in with a family member and be a useful member of the household.

(2) Get set up with a section 8 program. Use their vouchers. If the vouchers make Market Rent for the unit they're all set. If not they have to move into some place the government sees fit price wise for them

(3) Moving to a nice facility for the elderly. Be around friends and receive nice medical care.

(4) Become homeless and live under an overpass, Cooking roadkill over an open fire. If they are completely helpless and you think this is going to happen perhaps you can set them up with some type of social worker who could help them through this situation with just a phone call. Because that's kind of sad to have happened if it doesn't have to happen.

Maybe some volunteers from a local church will help pack up their stuff so they can move. You know make it easy on them.

Good Luck!

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Joel OwensBusiness Member

Moderator

Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

2y

You should have answered this question before closing on the property. You should have had a plan in place pre-closing.

What age elderly 60's, 90's?

Care tends to increase as they age. Some section 8 areas have waiting list of YEARS to get approved. Same thing with lower income places they can have years of waiting list. It's not like ( hey I want to double your rent and you have 30 days to get them out ).

Care facilities most of them suck. Post corona they have limited staff and charge like 4,000 to 7,000 a month depending on what they ask for and is needed. Someone could literally hire a full time nurse to live in for cheaper with much better care on a day to day basis. How do I know this? I explored all options with my mom who is 80 years old. She lives with her brother who is 72 in and older apartment building complex that is not technically a senior community but has 84 ranch like units and 90 plus percent or older people living there.

One time the seller tried to sell the dirt to ALDI which would have displaced lots of seniors. The property was in the city limits so the city crushed the application to not approve and ALDI went away.

Make sure this 600 plus market rent you are talking about is comparable to your property. Are you comparing your property to a large complex that has elevators and amenities or other 4 units in same area and not better area? Does your comparable units have granite counters, stainless appliances etc. or old units worn out?

You have to calculate lost rent for downtime of 1 to 2 months and make ready cost.

So if unit takes 5,000 to completely reno with down rent costs would take about 2 years with a good tenant paying on time with no capex issues to break even. After that sure the rent NOI likely jumps a lot. How old is the roof on the building, sidewalks, interior guts, landscaping large trees to close to building, etc.?

You knew going in there were older people living there if proper due diligence pre-closing was done. Elderly are on fixed incomes and barely survive. Not all of them but a huge majority are. They can't afford a 75 or 100% increase in rent.

They could have family move in with them to help cover the extra cost possibly but you would have to qualify the additional people.

It's probably why the rent is so low the landlord had a great heart and could not sleep at night displacing the elderly like that.

If they absolutely have to move then it seems like a better thing to do would give them some reasonable time to figure it out like 4 to 6 months. If you are holding the investment for a long time giving them time to see how much more they can pay is not the end of the world.

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5 Reply

Daniel Zamora

Charlotte, NC · Member since 2017 · 18 posts · 4 votes

2y

Quote from @Eric Gerakos:

I don't see a dilemma. Run your rental property as a business and charge market rent. If you can't be emotionally detached from every tenant with a sob story, hire a PM. This is why being a landlord is not for everyone.

Erik Gerakos

you are one sob

those are elderly women with limited means how would you like it if those were your grandparents your mom would you have the same mindset there are other ways to handle this if these women are grandfathered in then their rents will remain

You obviously are an inconsiderate uncaring individual I won't give you the consideration of being human we are to take care of the elderly

If you knew what the laws of reciprocity are and how they function you would change your greedy attitude

words

ended

D

3 Reply

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2y

Quote from @LeeAnn Owens:

@Brandon Thurman thanks for posting this is a great question! Unpopular opinion- I would have passed up on this property because I wouldn't want to raise the rent on the these tenants. Yes you're running a business and not a charity, but you also want to be able to sleep at night with the business decisions you're making. Assuming they're both on a fixed income, it makes sense that they wouldn't be able to afford a rent increase. I think the best win-win option is helping them identify a program to subsidize their rent. Maybe there's a program through HUD. I'm in MD and I know we have a program like that here.

If you wouldn't buy it because you would lose sleep raising these tenants rent, why wont you buy it to prevent someone else from raising their rent? Does their self imposed situation only bother you if you have to hear them whine directly to you?

Investor · MD · Member since 2023 · 71 posts · 45 votes

2y

Quote from @James Wise:

Quote from @LeeAnn Owens:

@Brandon Thurman thanks for posting this is a great question! Unpopular opinion- I would have passed up on this property because I wouldn't want to raise the rent on the these tenants. Yes you're running a business and not a charity, but you also want to be able to sleep at night with the business decisions you're making. Assuming they're both on a fixed income, it makes sense that they wouldn't be able to afford a rent increase. I think the best win-win option is helping them identify a program to subsidize their rent. Maybe there's a program through HUD. I'm in MD and I know we have a program like that here.

If you wouldn't buy it because you would lose sleep raising these tenants rent, why wont you buy it to prevent someone else from raising their rent? Does their self imposed situation only bother you if you have to hear them whine directly to you?

Personal preference, I’d expect most to disagree with me and that’s fine!

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2y

Quote from @LeeAnn Owens:

Quote from @James Wise:

Quote from @LeeAnn Owens:

@Brandon Thurman thanks for posting this is a great question! Unpopular opinion- I would have passed up on this property because I wouldn't want to raise the rent on the these tenants. Yes you're running a business and not a charity, but you also want to be able to sleep at night with the business decisions you're making. Assuming they're both on a fixed income, it makes sense that they wouldn't be able to afford a rent increase. I think the best win-win option is helping them identify a program to subsidize their rent. Maybe there's a program through HUD. I'm in MD and I know we have a program like that here.

If you wouldn't buy it because you would lose sleep raising these tenants rent, why wont you buy it to prevent someone else from raising their rent? Does their self imposed situation only bother you if you have to hear them whine directly to you?

Personal preference, I’d expect most to disagree with me and that’s fine!

You do see how hypocritical that stance is though?

Investor · MD · Member since 2023 · 71 posts · 45 votes

2y

Quote from @James Wise:

Quote from @LeeAnn Owens:

Quote from @James Wise:

Quote from @LeeAnn Owens:

@Brandon Thurman thanks for posting this is a great question! Unpopular opinion- I would have passed up on this property because I wouldn't want to raise the rent on the these tenants. Yes you're running a business and not a charity, but you also want to be able to sleep at night with the business decisions you're making. Assuming they're both on a fixed income, it makes sense that they wouldn't be able to afford a rent increase. I think the best win-win option is helping them identify a program to subsidize their rent. Maybe there's a program through HUD. I'm in MD and I know we have a program like that here.

If you wouldn't buy it because you would lose sleep raising these tenants rent, why wont you buy it to prevent someone else from raising their rent? Does their self imposed situation only bother you if you have to hear them whine directly to you?

Personal preference, I’d expect most to disagree with me and that’s fine!

You do see how hslypocritical it is though?

What makes these forums so helpful is that everyone is coming with a different perspective and therefore different opinions. I may not share your opinion, but I appreciate you taking the time to comment and adding to the conversation. Have a great Saturday!

4 Reply

Henry T.

Member since 2022 · 1k+ posts · 1k+ votes

2y

This post can't be for real. You managed to buy a 4 unit building. This is your dilemma?

1 Reply

Eric Gerakos

Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes

2y

Quote from @Daniel Zamora:

Quote from @Eric Gerakos:

I don't see a dilemma. Run your rental property as a business and charge market rent. If you can't be emotionally detached from every tenant with a sob story, hire a PM. This is why being a landlord is not for everyone.

Erik Gerakos

you are one sob

those are elderly women with limited means how would you like it if those were your grandparents your mom would you have the same mindset there are other ways to handle this if these women are grandfathered in then their rents will remain

You obviously are an inconsiderate uncaring individual I won't give you the consideration of being human we are to take care of the elderly

If you knew what the laws of reciprocity are and how they function you would change your greedy attitude

words

ended

D

I normally don't respond to garbage like this but since you attacked me personally with childish name calling I will. The irony is that I work in health care with hospice patients so while you talk a big game, I actually care for the elderly every day. We're talking about investing money with the goal of making money. Buying property and then not raising rents until your rising expenses have you losing money is not how to invest in real estate. Being a landlord requires being able to raise rents and evict people. If you can't do that then other investments like the stock market may be better for you. Best of luck to you.

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2y

Quote from @Daniel Zamora:

Quote from @Eric Gerakos:

I don't see a dilemma. Run your rental property as a business and charge market rent. If you can't be emotionally detached from every tenant with a sob story, hire a PM. This is why being a landlord is not for everyone.

Erik Gerakos

you are one sob

those are elderly women with limited means how would you like it if those were your grandparents your mom would you have the same mindset there are other ways to handle this if these women are grandfathered in then their rents will remain

You obviously are an inconsiderate uncaring individual I won't give you the consideration of being human we are to take care of the elderly

If you knew what the laws of reciprocity are and how they function you would change your greedy attitude

words

ended

D

Dan - Stop with the pretend outrage. If you cared about these two elderly women you could just buy their house and prevent another landlord from buying it and raising their rent. But you don't and you won't, so hop off your soapbox.

8 Reply

Scott Mac

Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes

2y

Trying to hold property owners responsible- morally - for society's failure to be able to properly house and care for all of the elderly people in the USA seems misplaced.

Our business is not charity, nor is it being elderly care.

Our business is renting living space to those who want it and can't afford it.

Rather than condemn property owners as black-hearted profit pirates, a better focus would be to advocate for changes to the existing system with the local, state and federal governments.

Because these are the entities responsible for caring for the helpless and semi helpless elderly in the USA.

It's also important to note, I think, that tons of people stream across the border on a daily basis and are immediately provided with free homes, free food, free medical care, free clothing, etc... but the elderly (In this regard) seem to fall through the cracks for some reason (according to one of the posts above).

Saying it takes a long time to get elderly people on to section 8 in some areas. Maybe you could advocate for that To be modified in some way.

But as for holding property owners responsible for housing the indigent and semi-indigent at reduced rates simply due to their lack of income, seems misplaced.

Just my 2 cents.

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2y

Quote from @Scott Mac:

Trying to hold property owners responsible- morally - for society's failure to be able to properly house and care for all of the elderly people in the USA seems misplaced.

Our business is not charity, nor is it being elderly care.

Our business is renting living space to those who want it and can't afford it.

Rather than condemn property owners as black-hearted profit pirates, a better focus would be to advocate for changes to the existing system with the local, state and federal governments.

Because these are the entities responsible for caring for the helpless and semi helpless elderly in the USA.

It's also important to note, I think, that tons of people stream across the border on a daily basis and are immediately provided with free homes, free food, free medical care, free clothing, etc... but the elderly (In this regard) seem to fall through the cracks for some reason (according to one of the posts above).

Saying it takes a long time to get elderly people on to section 8 in some areas. Maybe you could advocate for that To be modified in some way.

But as for holding property owners responsible for housing the indigent and semi-indigent at reduced rates simply due to their lack of income, seems misplaced.

Just my 2 cents.

They won't do any of that because they don't care. They just like to stroke their ego by crying about it on the internet.

4 Reply

Dwayne Poster

Investor · Van Isle · Member since 2021 · 455 posts · 226 votes

2y

Now there's a concept, discover a vulnerability and leverage it for gain. When you think about it, there is a large portion of the population that are tinkering on the brink, and with just a little shove, they're no longer a pediment to your dreams.

Personally, I like to help people get ahead.

Could be though that they are just taking advantage of a good thing, and thier free ride has run it's course, and it's time to face reality.

Every business person runs on thier ethics. You may have inherited some base lines, but only through experience can you cement in your mind what makes you who you are.

0 Reply

Daniel Zamora

Charlotte, NC · Member since 2017 · 18 posts · 4 votes

2y

Greg M

that is exactly what I would recommend

seek assistance for section 8 housing to apply to these properties to assist the elderly

Good head on your shoulders

words ended

D

1 Reply

David Adams

Rental Property Investor · Lafayette, LA · Member since 2019 · 40 posts · 42 votes

2y

I understand the problem. I've got a lot of rentals and a few years ago a couple of small SFH that I purchased had long term tenants that have been there 10-15 yrs . At that time they were paying $400 month and market was $650. I told them I couldn't continue renting to them at that rate . I told them I would raise the rent $50 per month each year till we got to market rate . Now this is years out . Told them at any point the want to move I would let them out of

their lease . This gave them plenty of time to decide if they wanted to stay or move.

0 Reply

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2y

Quote from @Daniel Zamora:

Greg M

that is exactly what I would recommend

seek assistance for section 8 housing to apply to these properties to assist the elderly

Good head on your shoulders

words ended

D

If you feel so strongly about it, why is it something you are recommending in a theoretical sense? These woman are real. Their landlord is in this thread. Why don't you do this since you feel so strongly about it? There is no reason you can't do this right now.

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

2y

One other thing to consider when people say private landlords and the government should be responsible for the elderly is how often you see families not stepping in to take care of their own elderly family members. I am watching this now. Kid got grandmas old car when it should have been sold to meet grandma's needs and now a couple years later he doesn't even stop by to help her. Also had a non-paying tenant say, I can't go to the kids for help (but is was ok if I effectively paid the rent) since she wasn't.

Also section 8 isn't the only affordable option, there are affordable senior units they can sign up for and sometimes there is a waiting list they can get on ahead of time since they know the rent is going up.

3 Reply

Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

2y

Quote from @LeeAnn Owens:

Assuming they’re both on a fixed income, it makes sense that they wouldn’t be able to afford a rent increase.

We need to stop this "seniors are on a fixed income" lie. I don't know how it got attached to seniors exclusively, but it isn't accurate. It's just something that everybody says without actually thinking about it.

Seniors get an inflation adjustment every year with Social Security. However, many active workers are actually on fixed incomes as their wages don't increase with inflation.

6 Reply