Low Income / High Cashflow?

5 Replies

Or do you mean... you have most of your properties paid off or have high equity in them AND you rent at the low end of the rental market value (providing a good product for low cost) AND your market niche is providing housing to low income/fixed income folks AND renting to them cash flows well because they tend to settle in and stay a long time, with less turnover headache and expense? If that is the case.... then we do!

Originally posted by @Marcia Maynard :

Or do you mean... you have most of your properties paid off or have high equity in them AND you rent at the low end of the rental market value (providing a good product for low cost) AND your market niche is providing housing to low income/fixed income folks AND renting to them cash flows well because they tend to settle in and stay a long time, with less turnover headache and expense? If that is the case.... then we do!

 This is more or less my model with the exception of income range, as our niche is lower middle-class rather than low-income individuals; they take better care of the property as a rule, have less problems with credit, criminal background and evictions, and are just as likely to be long-term renters. Otherwise, yeah, that is our model as well. Higher-end rental candidates are too limited in market size where I live for me to consider it viable, though I know a few people that serve that market and seem to like it. 

I do!  I'm a bit lower income than Marcia, so don't see the same low turnover, and there are a lot of headaches for sure, but I like making strong cash flow, getting plenty of party stories, and knowing I am helping the community.

My wife and I decided 20 years ago that everybody in New Jersey seemed to be building for the high end, and ignoring the low end of the rental market.  Of course there's ALWAYS demand for decent housing at an affordable rate.

We found a niche in boarding houses, but we were VERY selective about our locations:  choosing solid, working-class to middle-class neighborhoods.  Each property had been severely neglected and catered to residents who blighted the neighborhood. 

We were able to buy these places very inexpensively, because other prospective buyers only saw it as it was.  We'd take possession, give proper notice to all residents of new "house rules" designed to bring order out of chaos, and start fixing the place up.  This included furnishings, appliances, improved common areas/baths, and (here was the trick) cable and internet available throughout the house. 

With better living conditions and amenities, we raised the rents, enforced the house rules to get rid of the trouble-makers, and quieted the places down.  The neighbors were happy, police respected our new style of operation, and we proved something in the process:

A property will attract the tenants that it deserves.

Our residents are decent people who are down by circumstance (lots of divorces and down-sized white collar workers), not because of bad lifestyle choices.  They appreciate what we've done and look out for our property because they really consider this THEIR home.