Moral dilemma? Existing tenant

[Roger S.]

Hi guys.  We have the opportunity to purchase a house at a very good price.  It is currently occupied by a 50's aged widow.   She pays about $350 UNDER current market rates, the rent has not been raised in 4 years.   The house needs nothing now, and very little if she were to move out.

At my banks current terms, and purchase price of 60k, it would be a few bucks negative cash flow at her current rental rate.   But I know there is nowhere else she can go and be able to rent at the price she is paying.   I'm torn.   My wife says, if we cant buy this house at this price and deal with the tenant, then we don't need to be landlords.    This would be our 10th rental.

I think I might tell her that she is way under market rates, give her 3 months and raise it 100 bucks and then another 100 in 6 more months.  Gives her time to adjust and if need be find another place.  She is on month to month basis now. 

There is fierce competition to buy rentals in our town , and we have the inside track on this one, no one else knows it's for sale.

WWBPD?   ( What Would Bigger Pockets Do?)   LOL.

[Account Closed]

Let me tell you my story, which may be helpful.  I was a resident manager on SSI disability.  I had a free apartment in exchange for managing 25 units.  All well and good.  But, the owner was getting up there in years with spoiled kids, and it was next to a university that was coming by regularly trying to get the owner to sell it to them.  I knew that the day would come when the university would make him (or his kids if he passed on) could no longer refuse.

This was in the SF Bay Area, where I knew I could not afford to rent, if I lost my resident manager position.  So, I retired from that job and found affordable housing 4 1/2 hours away.  I got on Section 8 waiting lists, and 3 years later, got my Section 8 voucher, and am working on porting it back to subsidized senior housing in my old neighborhood.

Point being, that she knows her time is near.  She could have prepared herself sooner. And for all you know, she has a bundle of cash in the bank or under her mattress that she's been saving for the inevitable day.

She is not your mother.  You have no responsibility for her.  She is responsible for herself and her decisions.

And, let me repeat that just because she's been getting cheap rent, and may look at you with puppy eyes - that doesn't mean that she doesn't have a bundle saved up in the bank.

And even if she doesn't, and she's been blowing all that extra money - it's not your problem.

There are seniors in the subsidized buildings that I now rent in, who are always trying to get a deal or a handout from social services, etc., and the only reason they are broke is because they blow all of their money at the casinos, and on cigarettes and going out to eat or to the bars, etc.

If you go ahead and raise her rent to market rent, she will cope.  If you are going to give to charity, it should be a donation you can write off.  And, if you are in this for an investment, and it shows a loss, because you are giving away rent, then you really aren't a good business person.  

So, business or charity?  And if it's a charity, make sure she's worthy.  Get proof of her assets and investments and bank accounts.  She may not be so hard up as you think, anyway.