Would you discount rent for the less fortunate?
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Bill ThompsonPro Member
Rental Property Investor · Jamaica Plain, MA · Member since 2015 · 60 posts · 88 votesHi Joel,
This is a quick story about one of my experiences. I had just began to market a beautiful, newly renovated 3 bedroom, 2 bathroom apartment and my first applicant was a women living in a homeless shelter. She noted on her application that she had been evicted from her last apartment. I explained to her that the I have a standard process for qualifying tenants and that her eviction would automatically disqualify her. She then asked for 5 minutes to explain. She proceeded to tell me she recently got divorced and her former husband skipped town and provides no support for their three young children and that she got stuck with all of their joint financial obligations. And that she works and makes decent money but could not stay afloat even after cutting spending to bare necessities. Because of her income she could not qualify for any public assistance unless she became homeless. In order to become homeless she had to get evicted. After being evicted she was moved to a homeless shelter and was then able to qualify for temporary housing assistance payments. The homeless shelter was a bad environment for her kids. They immediately started doing bad in school. The lady basically begged me to GIVE HER A SHOT.
After hearing hear story, I wanted to help. I gave her former landlord a call. What I heard shocked me... he corroborated her story about the circumstances of her eviction. More importantly, he said she paid him back every cent he was owed while living in the homeless shelter. Long story, short... I took a chance on her and she turned out to be one of my best tenants ever - she paid rent on time, kept the apartment in immaculate condition, decorated tastefully on holidays, and went above and beyond to maintain common areas. I did end up reducing the rent I usually charge to make the numbers work for her, but that was ok with me because I was still making a reasonable profit on the unit and was doing a good deed. It warmed my heart to watch her put her life back together and get to a point where she no longer needed public assistance. She was on the waiting list for a very nice mixed-income housing development so when her number came up (after 2 years of waiting) she moved. I would like to think I played a small role in stabilizing the lady's family situation by providing clean, safe housing at a price that was affordable to her when her options were limited. The moral of the story is listen to your head, but also listen to your heart, and then do what feels right. If the numbers work for you, taking a chance on the right person, particularly a Veteran, may provide something more rewarding than money... the opportunity to make a difference in someone's life.
Bill
38 Replies
- 11yMichele FischerPro MemberRental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
I think there is a big difference between taking a chance on someone and charging below market rent. We have taken a chance on many people, and been burned by a lot of them. When we face a $3K move out, we certainly would not want to be under water with rent. If there were less $3K move outs, I think all low income landlords would be willing to charge less.
A lot of non-investors lament that we need more low income housing. There is not enough, that is clear. But there will never be enough until the reward is worth the risk. Housing Authorities take risks and get lower returns, but it is not realistic for private owners to do both.
That said, we will take a chance on a borderline applicant if they have a co-signer or agency int heir court. We will reward long term tenants by being slow to make rent increases, and in smaller increments. And even with the higher maintenance costs and move out costs, we are more than covering expenses.
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes11y
This isn't a business decision. It's a moral decision. If you do this, you will lose as it relates to business. But, you may win relative to being a human being. You must choose :(
And having to make that choice is a sad testament to our society. But, there it is...
@Ben Leybovich Well said Mr. Leybovich! We often talk about wealth and why we want to be wealthy, I want to be wealthy so i can give my tiem away and then give the money away. We will all give our wealth away, whether it is to your children, homeless Vets, or Uncle Sam.
- Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes11y
Give some one an inch , they take a mile . I have had my share of sob stories . I do feel for the people , but the answer is still NO
- 11yAdam BartomeoBusiness MemberReal Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
I have worked with several charitable organizations in the past and have made accommodations to my normal business practices. I have found that if and when things go sideways all of the organizations had followed through with their commitments.
Having that said I always ensure that we are not in harms way and that we are covered.
I am a US Amry veteran and have recently began the process to researching a similar program in FL. Good luck and let us know how it turns out.
Bartomeo Property Management4.7143 Reviews - Investor · Columbia, TN · Member since 2015 · 21 posts · 7 votes11y
Originally posted by @Ben Leybovich:
This isn't a business decision. It's a moral decision. If you do this, you will lose as it relates to business. But, you may win relative to being a human being. You must choose :(
And having to make that choice is a sad testament to our society. But, there it is...
like @Ben Leybovich said, it is a choice. I often follow the advice of my grandmother who said charity begins at home. Take care of yourself and family first, anything left over you can now help others wirh the surplus.
I cannot speak for all of the HUD VASH programs (just the one connected to the VAMC I work at) but veterans in this program are closely monitored by the social workers assigned to this program. Home visits by the counselors are routinely done both to ensure the vets are paying their share of the rent and utilities and to check out the condition of the property. Perhaps the biggest headache for landlords is smoking inside the rental units (include a "no inside smoking" clause in your lease).
Keep in mind that this remains a business relationship, not a charity. Remember that the majority of veterans never saw a day of combat throughout their military careers and some homeless veterans are folks who do well in a controlled environment such as the military (or, sad to say, a prison situation) but lousy when living on their own. Thus, close monitoring helps to keep them on the "straight and narrow" so to speak. As with Section 8 participants, request a contact number for the social worker assigned to the veteran you rent to should problems begin to pop up.
Gail
For what it's worth....the coordinator of our homeless program came by to discuss this program with our medical team this morning since we do get our fair share of homeless veterans admitted with medical issues and no where to go at discharge.
Our current program has 150 filled vouchers, 11 new vouchers and a waiting list of 50 potential applicants.
The coordinator handed out a pamphlet describing the VA HomeFront program. As a landlord (and a federal employee) I probably viewed this a bit different than the others in the room. I was particularly drawn to the statistics on the back which stated that more than half of homeless Veterans contacted by the VA have either a drug or alcohol dependence and a majority have been diagnosed with a serious mental illness.
It's important that any landlord interested in this program understand this.
Gail- Emeryville, CA · Member since 2016 · 1 post · 0 votes10y
Originally posted by @Joel W.:
@Alexander Felice agreed. It didn't help her cause to follow on her presentation at one point saying to a room full of Military Officers "you all are officers you make tons of money, right?." I admired her cause to help homeless Vets, but not the lack of business sense. As others on here have mentioned, they used good judgemnt to help others at singular moments, and it worked out. Although, I couldn't do that at this time.
@Gail K. This lady was discussing exactly that, as her discussion was talking about the Seattle Market which has a vacancy rate below 3% right now. Even for 1 bdr apartments it is difficult to find anything affordable.
Hi @JoelW
This is my first time on the site. I'm a reporter researching a possible story on the VASH program and some of the challenges in hot housing markets, where the vouchers bring in less than what landlords can make on the open market. Are you willing to talk to me about your experience? Seattle is one of those markets...I can see that as a vet you want to help but it's hard to imagine many landlords passing up market rate rents to do so. Let me know if you are up for a chat...
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes10y
Originally posted by @Ben Leybovich:
This isn't a business decision. It's a moral decision. If you do this, you will lose as it relates to business. But, you may win relative to being a human being. You must choose :(
And having to make that choice is a sad testament to our society. But, there it is...
Wrong. This is a business decision. You buy and rent property as a business. So run it as a business. Not wanting to rent to someone because of risk is not immoral.
A moral decision is when an existing low income tenant says they are $15 short of the rent and could they pay a bit short (and not incur some bs late fee), and I've done this many times.
- 10yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
There are occasions where doing good and doing well can align from a business perspective. We are presently engaged with a mid-sized multi-unit complex which was running at 50%+ vacancy as a consequence of mismanagement and inadequate re-investment. Last week we leased 10-units, at a 20% discount from scheduled rent, to house refugees which are arriving in our community at 3-5 families per day. There's a 60-70% chance we will be able to fill an additional 5 -10 units.
Yes it means giving up a sizeable chunk of theoretical revenue, but in the business' current situation, 75% is much better than the 0% earned last month. I would welcome an additional 10-units to stabilize cash flow while we start with the heavy lifting to upgrade the property unit-by-unit.
- Professional · Manchester, NH · Member since 2015 · 13 posts · 4 votes10y
We have in special circumstances lowered rent for people. Just did it last night for a girl who lost her roommate. She desperately wants to make it on her own, works hard, never been late with rent. We also point them in the direction of services that they can qualify for such as fuel assistance, electricity assistance. It comes with the stipulation that they pay on the day rent is due or eviction will immediately commence. We are especially open to this in winter months when people aren't moving as much. Rather than lose a tenant in January and go weeks to month without any income, I'll lower the rent $50 a month for the duration of their lease and not renew.
- Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes10y
I agree with @Valerie Reed if you want to do much of this it is probably better structuring it that way up front. There are several possible funding sources.
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