Saugerties, NY · Member since 2017 · 81 posts · 33 votes
Hi BP community!
I'm just starting out in REI. I'm looking for thoughts or feedback for me on what it means to be "socially responsible" when it comes to REI and property management.
Anyone think I'm being naive? :)
I put together a list of best practices for socially responsible landlords. Here are the highlights:
1. Know the landlord-tenant laws in your city/state and follow them.
2. Inform yourself about organizations and programs in your community offering housing assistance to people who need it, even if you’re not providing “affordable housing.”
3. When posting a vacancy, be explicit about who is welcome to apply.
4. Post vacancies where people who may have a hard time finding housing will see them.
5. Keep your yard looking awesome (and landscape sustainably).
6. Meet your neighbors! And make sure they know how to get in touch with you if they need to.
7. Help your tenants get involved in their new community.
@Megan S. Not naive at all, but you should be careful as some tenants will take advantage of over the top kindness. Been there, done that. Your ideas and thoughts are good and genuine. If all landlords thought this way, there would be less slumlords. I caution not to overthink the business. The most successful landlords are ones with long term tenants, which is accomplished by some of the things you listed.
Further thoughts below.
1. Agree. Not knowing this can cost you big in the long run as some tenants could call building code. Any PM or landlord not following the laws will not be successful in the long run with tenant retention.
2. Every city/state/county differs. We do not offer section 8 in Memphis anymore for several reason, namely the way the office operates and the amount of work needed to be done each year can be high to renew the program. Some programs can get cut too or are just temporary. We rented to a person who had been a victim of domestic abuse. She moved in and had the first 4 months of her rent paid until she got on her feet. She never made another payment after the 4 months. Sh I have found the best tenants are the ones who qualify the best. That is my Memphis opinion. In LIttle Rock, we utilize section 8 and it works great.
3. Be careful here. There are fair housing laws that come into play here. To be safe, I would leave this out and assume anyone is welcome to apply. Now if you have something like a handicap ramp, I would include that in your property description. I believe you can say Section 8 welcome, but if you do that, I am thinking you should probably include that in all your listings so that you could not be accused of segregating section 8 only to certain areas.
4. Never a bad idea. The more marketing the better. Last time I checked, something like 70% of our move in's found our property through online marketing. Even our low income housing tenants have smart phones. Be socially responsible, but don't ignore what works and that is online marketing.
5. 100% agree when vacant. I never understand why landlords do not spend $150 to lay some mulch and plant some bushes. When the place is occupied, most markets for single family homes require the tenant to do. MF, the landlord does. I have a few MF and always make sure the grounds look good as I want tenant retention.
6. 100% agree here too. Give them your email or emergency phone # in case they need to contact you. They can be your eyes and ears.
7. I would create a flyer that list things they can get involved, but I wold not go beyond that. Keep the relationship professional. Always be nice, but you are not their friend, you are their landlord. You may have to evict this person one day and do not want personal feelings getting in the way. You can be socially responsible without turning your for profit business into a charity.
8. Not sure what you mean here. Can you elaborate? As a landlord, your responsibility here is to provide a nice place to live, maintain that place and be responsive to maintenance needs within the guidelines of your lease. In return, they pay the rent and get to say. That is the nature of the business and that is a Win-Win. All a tenant wants is place to live that is maintained. The response we get the most of why tenants left their last place is "bad PM/landlord." Second is dissatisfaction with the unit/found nicer place to live. That is something like 60% of why people move. You can control those 2 reason why people move.
@Megan S. Not naive at all, but you should be careful as some tenants will take advantage of over the top kindness. Been there, done that. Your ideas and thoughts are good and genuine. If all landlords thought this way, there would be less slumlords. I caution not to overthink the business. The most successful landlords are ones with long term tenants, which is accomplished by some of the things you listed.
Further thoughts below.
1. Agree. Not knowing this can cost you big in the long run as some tenants could call building code. Any PM or landlord not following the laws will not be successful in the long run with tenant retention.
2. Every city/state/county differs. We do not offer section 8 in Memphis anymore for several reason, namely the way the office operates and the amount of work needed to be done each year can be high to renew the program. Some programs can get cut too or are just temporary. We rented to a person who had been a victim of domestic abuse. She moved in and had the first 4 months of her rent paid until she got on her feet. She never made another payment after the 4 months. Sh I have found the best tenants are the ones who qualify the best. That is my Memphis opinion. In LIttle Rock, we utilize section 8 and it works great.
3. Be careful here. There are fair housing laws that come into play here. To be safe, I would leave this out and assume anyone is welcome to apply. Now if you have something like a handicap ramp, I would include that in your property description. I believe you can say Section 8 welcome, but if you do that, I am thinking you should probably include that in all your listings so that you could not be accused of segregating section 8 only to certain areas.
4. Never a bad idea. The more marketing the better. Last time I checked, something like 70% of our move in's found our property through online marketing. Even our low income housing tenants have smart phones. Be socially responsible, but don't ignore what works and that is online marketing.
5. 100% agree when vacant. I never understand why landlords do not spend $150 to lay some mulch and plant some bushes. When the place is occupied, most markets for single family homes require the tenant to do. MF, the landlord does. I have a few MF and always make sure the grounds look good as I want tenant retention.
6. 100% agree here too. Give them your email or emergency phone # in case they need to contact you. They can be your eyes and ears.
7. I would create a flyer that list things they can get involved, but I wold not go beyond that. Keep the relationship professional. Always be nice, but you are not their friend, you are their landlord. You may have to evict this person one day and do not want personal feelings getting in the way. You can be socially responsible without turning your for profit business into a charity.
8. Not sure what you mean here. Can you elaborate? As a landlord, your responsibility here is to provide a nice place to live, maintain that place and be responsive to maintenance needs within the guidelines of your lease. In return, they pay the rent and get to say. That is the nature of the business and that is a Win-Win. All a tenant wants is place to live that is maintained. The response we get the most of why tenants left their last place is "bad PM/landlord." Second is dissatisfaction with the unit/found nicer place to live. That is something like 60% of why people move. You can control those 2 reason why people move.
As for people calling you crazy, I would not worry about that. There is nothing wrong with striving to be a better landlord. I see many awful landlords and awful PM's all the time. Gives ones that do it right a bad name.
I cannot think of a more socially responsible enterprise than real estate investing in general, and the Bigger Pockets community in particular.
Look at the post topics -- for the most part they are questions from young entrepreneurs working their butts off evenings and weekends (after their W-2 jobs) to build a sustainable financial future for themselves and their families. This group is NOT into handouts -- but it is into freely sharing information so that everyone has an equal opportunity to succeed. What could be more just than that? The hard working man or woman who scrapes and sacrifices to get the seed money to start investing, and then works late into the night to finish that flip or get that house "rent ready" IS helping society. We are maintaining and improving the rental housing stock for all of society.
Yes, we are motivated by profit -- but there is nothing wrong with that! Competition will not let us set our rents too high. If we do not have a decent return on investment we will not be able to continue to upgrade our properties, or fund major capital needs like new roofs. The stereotype of the "greedy landlord" is just that. New landlords are far more likely to err on the side of failing to properly enforce lease provisions -- being too lenient rather than being too harsh. A lease is a legal contract freely entered into by two parties. What could be more just than expecting both parties to follow their agreements?
Wealth is merely deferred consumption. I am probably older and wealthier than many of the posters on Bigger Pockets. I was born into a middle class family, went to a state school and still work at W-2 job. I did not unethically appropriate my wealth. I grew my wealth by not buying designer handbags, expensive vacations, or eating out (deferred consumption). I grew my wealth by investing nights and weekends cleaning rentals, painting late into the night and screening tenants. Anyone could have chosen this path, if they were willing to put in the seed money, time and effort. That sounds socially just to me.
I'm curious - did my post come across to you as an attack on landlords or real estate investors? That was not my intention, and I don't have anything against landlords/investors in general (I am both of those things)!
I disagree that " real estate investing in general" is by default a socially responsible enterprise. I think it *can* be, just as it can be socially irresponsible (or simply ethically/morally neutral), and I'm interested in determining which RE practices fall into which category.
Similarly, wealth certainly *can* result from deferred consumption, but it can also be inherited, or earned through a high-paying job (regardless of whether one buys designer handbags or not), or accumulated via practices that negatively impact society (i.e. how about those big bankers/brokers/execs who committed fraud that basically initiated the sub prime mortgage crisis).
At any rate, it sounds like you feel you are adding value to your community through your real estate investments AND earning a nice profit - and that's the sweet spot! I'm happy you've found it!
We currently budget about 1% of property value per yr. on sustainable improvements over time this keeps vacancies at near zero. For instance we invested in a Net metering on a 4 plex using sunroof google we added 5,4 kw panels to our roof utility company buys back electricity and it adds value as increase income to property. Panels are purchased not financed so ROI is only 6 years. We also have planted fruit trees, Orange,Lemon,Tangerine and Avocado these are for the tenants to pick it cost us no more then regular landscaping and same amount of water. We money is tight a tenant can subsidize the grocery bill with fruit and pay rent on time. Tenants pay $50 more to live in our Building compared to identical floor plan on same street because its a sustainable living property. Im sure this does not work everywhere but our market it does.
On the topic of #7). Strike a reasonable balance between your tenant and their HOA or condo association. As a tenant, my last 2 HOAs were a whole separate entity. They did not acknowledge my tenancy since I was not a properly vested HOA member. This raised all kinds of problems from getting access to my postal box, to access codes to gain entry, and for the community pool. The landlord was unresponsive to repeated requests for these basic amenities, and sadly I had to rely upon neighbors who sympathized. The gate code changed every 3 months without my knowledge.
The sword cuts both ways however; the HOA tries to enforce their neighborhood codes and I claim that I have no duty. I am not a member of the HOA and there exists no contract between myself and the HOA. The lease cannot contemplate my membership or demand me make such application to the HOA.
Short-circuiting this kind of dispute requires the kind of proactive business-savvy most BP landlords do not possess (by experience or corresponding talent.) Getting a tenant to "go-along" accomplishes just that. She seems to make every reasonable attempt at being a good faith landlord. She facilitates and fosters an equal amount of respect between the parties.
@Alan DeRossett Awesome to hear what you're doing. I hadn't thought about planting fruit trees! I wonder if it means more work keeping the yard clean (from rotting fruit, etc.?) Have your tenants been engaged in maintaining the fruit trees or does someone else take care of them?
@Brooklyn A. - Thanks for those thoughts! I've never been involved with HOAs (as a renter or a landlord) so your experience and input is helpful. Good stuff to consider!
@Thomas S. - So great to read your thoughts - thanks for the input.
Re: #2: Here's an excerpt -
"What will you do if calamity strikes one of your tenants, and they’re suddenly unable to pay rent? Evict them? Subsidize their housing indefinitely? Personally, I don’t think either of these are particularly responsible options. But here’s an alternative: be ready and willing to connect your tenants with community resources that can help them through times of financial hardship...emergency financial assistance provided by the city, state or local non-profits helps keep tenants in your rental property (paying full rent), which is good for them *and* your business!"
Re: #3: You're not the first one to raise this concern. I'm pretty sure that as long as the language states that ALL genders, ALL races, ALL x, y, z are welcome to apply, you're okay from a legal standpoint as long as you include the same statement on all property listings. But I think I'll run this one by a lawyer in Oregon to get clear on the nitty gritty details.
Re: #4: Again, I think you'll have more info if you read the full blog post, but you're right - it's not necessary. My argument is that it's a way to be socially responsible, regardless of necessity. :)
Re: #5: Yep! Neat, tidy AND sustainable. :)
Re: #7: In the full post I explain that I include information in my tenants' welcome packet about neighborhood organizations, resources and businesses they may want to check out. I don't think this is interfering too much in their lives, and/but I hear you - it's not good to overstep!
Re: #8: I agree that tenants are empowered through existing law, and that's awesome. I'm curious if there are other ways tenants and property owners could both benefit from new creative policies, though, so I explore a few thoughts in #7 (in the full post).
Thanks again for adding your voice to the discussion! It's really great to get feedback from folks who have been at this a lot longer than I have.
@Account Closed - Yep! That certainly happened, too! I wasn't making a point about those folks, though. :) I was specifically addressing ways people accumulate wealth (and I don't believe many of the people who lost their mortgages accumulated great wealth as a result of the financial crisis).
Megan S. if you haven't already, you might find it interesting to listen to one of the first BP podcasts (#7) which contains some interesting discussion about being an ethical landlord:
https://www.biggerpockets.com/renewsblog/2013/03/07/profitable-ethical-landlord/
@Megan S. We have the same mow & blow guys from last 10 years so a little less grass and more fruit so price has not changed. Water bill is about the Same. I bring back a bag of fruit each week in season and Tenants all pitch in to keep it clean we use a non toxic Pest Management as prescribed by our county so it all works. with 6 trees it provides for quite a few people I get all I want of Oranges,Lemons and Avocados.
Megan S.
I pride myself in going after customers that no one else targets. Low income, bad credit, C and D class tenants. I'm even considering opening up some rentals to those with prior evictions (with certain conditions of course).
Those that others may not want to deal with. Keeping that in mind I have to be very strict and unforgiving and can't allow myself or my business to be personally involved in my tenants lives.
Being socially responsible to me means keeping my units clean and functional and at a rent that is market rate and fair.
@Anthony Gayden - I'd love to hear more about how you go after "those customers no one else targets." Do you work with any organizations, post listings in any particular places, etc?
Care to share a little bit about your motivation for doing so?
We never seem to have any tenants tell us it was either food or rent. they know if they pay rent they can still eat. Trees are very productive I harvested over 500 lbs of Avocados last year for our own eating. Stone Fruit trees would be messy compared to Citrus or avocados Apples etc. so have not planted them yet but i might. We just have a mow and blow service $50 per month is pretty standard here. they have Tree experience and can be low maintenance compared to lawns. My dad is 91 and we might spend 3 hours a week on this 4 plex. Will extend the offer to tenants for raised bed vegetable gardens in the back if they wish to work it. all our tenants seem to be long term we've had one for 20 years and another for 15 so they feel a pride in living in the building and pick up trash or any fruit that might fall on their own. Building has been 100% owned no mortgages so my Dad likes it that way. I would have refinanced and bought three more apartment buildings but the many years without a morthage on this property has been nice too,
I also Test the Water supply before buying any properties. a nice DIY Water test kit for $99 will save your whole investment if you find something wrong in water supply determine if its your properties plumbing and fix it. This Prevents the type of thing we keep hearing about in lawsuits and in Cities like Detroit. If i see heavy metals in test results maybe avoid that city as a investment even if cheap. We trust City water Statementms but we will verify annually now that we have to be our own EPA. Its our jobs as landlords to only rent a unit we would consider safe and habitable.
I've delt with people who plan on using the system to stay in a building without paying rent. as much as it hurts the quickest way I've found is to bribe them to move. if rent is $1,000 I know they could stall legally and stay 6 months and even while I'm in the right and would prevail if I sued them i know I would never collect from some. in these cases a quick bribe always has worked. i offer to pay them $!,000 to help them move out. then I'm only out$1,000 vs delay and court costs of $10k
@Megan S. some of your ideas are definitely naive. I honestly think I enjoyed being a landlord better when I was naive, because some of the realities of this business cause you to lose faith in fellow man. Much of what you are saying is very idealistic. The world needs idealistic people, but it becomes a problem when you run a business like a charity. If you have one property, maybe you can survive. The issue is if you want to scale to 10 or 100 properties, many of these suggestions will not work.
1. Agree.
2. When I was starting out, I had C and D properties that attracted low income renters. I did exactly as you suggested and when tenants had trouble paying rent, I referred them to local rent assistance programs. There is maybe 3-4 groups in my city that will pay one months rent when you get in a jam. What I found happened, without exception, is that tenants would use each of the 3-4 groups and then run out of options. People who got into a jam, kept getting into a jam because the problem isn't unexpected life expenses, the problem is poor money management. I would go to collect rent and they are sitting there eating McDonalds, watching cable TV with alcohol bottles in the garbage. Most of the people in this country with money problems have lifestyle and spending problems. You may not like to hear generalizations, but if you plan to focus on lower-income housing, you need to go in eyes wide open. They would rather have fun than pay rent. If you don't make it clear that not paying rent results in eviction, then people will walk all over you.
The other thing to remember is low income tenants are much harder on a property. I purchased a duplex that didn't have screen doors and immediately installed two new screen doors. I thought I was being nice. Over the coarse of 5 years, I replaced those doors several times. Finally I took the screen doors off. Everything I tried to improve got destroyed. I never got reimbursed for anything, because everyone always said it wasn't their fault or they disappeared in the middle of the night.
3. You can't really advocate that you want specific groups of people. As far as stating all people are welcome to apply, isn't that a given? Unless you have some discriminatory undertone, people will apply. In my experience the biggest deterrent to people applying is the rent amount and stating that I do credit and background checks. I guess you could skip those things, but that would be a bad business decision.
4. You want to advertise where the best qualified candidates are for your type of property. For example if you had a one bedroom A class property in a great downtown location renting for $1800 a month, then advertising at Homeforward would make no sense. If you had a C or D class property, then Homeforward may make perfect sense. If you had a house that was a 45 minute drive from a college campus, then advertising at that campus would make no sense. I guess the point is that you want to advertise to your target customer. I don't see the point of advertising at the Housing Assistance office unless you are specializing in sub-prime tenants. There is a market for that, but I am not sure that is a business you could handle.
5. Curb appeal is important to attracting good tenants and keeping neighbors happy. I would limit your landscaping to things that are self-maintaining as much as possible. In other words plants and grasses that require little water and little pruning. You are doing your yard maintenance yourself, but that is not scale-able nor is it the best us of an investors time. On a personal note, I have planted several trees that died because even after promising to water them, the tenants neglected them. I have gotten multiple letters from the city about long grass and piles of branches. Despite proper on-board training, it is amazing how tenants will not even do the most basic of maintenance. You need to find a balance between what looks nice and what is easy to maintain.
6. I agree you should meet the neighbors and try to have a good relationship. Just keep in mind that in general home owners are prejudice against renters. I make it clear to neighbors that my job is not dispute resolution. I leave the door open to report problems or concerns, but my job is not to substitute for neighborly resolution. In other words, if the tenant is making too much noise, they should walk over and talk to them. If that doesn't resolve then they should call police, not me. The point is treat my tenants like they own the house and with respect. I had a neighbor tell me she didn't appreciate a rental next door. She said "we own our houses in this neighborhood".
7. I am not sure this makes any difference in tenant happiness, but it probably doesn't cost you much so no harm either.
8. Tenants don't really need help being empowered. In your location, the laws are already very empowering to tenants. Those policies sound good in practice, but until you get bad tenants (and you will eventually if you stay in the business long enough or buy more properties). Contractually promising things like you suggested to your tenant is a really bad idea. Even letting someone spread move-in costs like a deposit out over three months can be dangerous. There are many stories of "professional tenants" that have used these type of tactics to get into a property without paying hardly anything. Once there, they will live for months rent free as you work to evict them. I always get rent and deposit before I hand over keys. At least I know I have two months worth of rent. Just because you got lucky with installment plans, don't fool yourself into thinking that is a good business practice.
There is probably little harm in running one property the way you suggest, because there is limited potential for loss. If you want to scale in size, you will need to have policies that protect your business. I view it as my responsibility to protect my business for the benefit of my tenants. That is the ultimate social responsibility. Think of how many businesses have made the wrong decisions, even with the best intentions. They go out of business and hurt their employees and customers. If you run your business into the ground, their is no social good you have done. I like to run my business like a business and then donate some of the profit to charity.
There are mainly two things that tenants want, which you didn't address:
1. They want to left alone. Nobody wants their landlord showing up at their door or in their business. It is their home.
2. They want a landlord to fix problems immediately. If the furnace goes out, they want someone over there that day.