Top cities for evictions and Top cities for least evictions

9 Replies

Evictions suck no matter what. Sometimes I read on BP some new folks are told to look for locations that are easy to evict vs looking for locations that just have fewer evictions per captia.  

Here are the highest and lowest cities (metros) eviction rates per capita. 

Not unrelated the top cities for less evictions ( LA,SD,SF,SJ ) also have the highest total returns ( cash flow + equity ) since 2000. 

Thoughts?

Good luck!

@Matt R. , this is very interesting data! Two thoughts immediately come to mind:

1. I always worry about aggregate data like this. Depending on how you count, Metro Atlanta could include anywhere from 9 - 21 different (and often huge) counties. Some, like mostly urban Fulton, might have dramatically higher eviction rates than a bedroom suburb like Cobb. Without seeing the sub-market data, it's hard to draw any meaningful conclusions about "Atlanta evictions." At least, I find it hard, and it's part of my job!

2. I wonder about the "causality effect." Does a higher eviction rate indicate a market with larger-then-average management costs and problems, or does a higher rate suggest that landlords in that market have an effective tool for addressing problem tenants, possibly lowering cost and risk.

For example, I understand evictions in New York can take a year, compared to about a month here in Georgia. If the NY eviction rate is lower than that in GA (because landlords can't use that legal tool effectively) is that necessarily a good thing? I'm not sure it is.

Thanks for posting and therefore encouraging the discussion!

Originally posted by @Mitch Messer :

@Matt R., this is very interesting data! Two thoughts immediately come to mind:

1. I always worry about aggregate data like this. Depending on how you count, Metro Atlanta could include anywhere from 9 - 21 different (and often huge) counties. Some, like mostly urban Fulton, might have dramatically higher eviction rates than a bedroom suburb like Cobb. Without seeing the sub-market data, it's hard to draw any meaningful conclusions about "Atlanta evictions." At least, I find it hard, and it's part of my job!

2. I wonder about the "causality effect." Does a higher eviction rate indicate a market with larger-then-average management costs and problems, or does a higher rate suggest that landlords in that market have an effective tool for addressing problem tenants, possibly lowering cost and risk.

For example, I understand evictions in New York can take a year, compared to about a month here in Georgia. If the NY eviction rate is lower than that in GA (because landlords can't use that legal tool effectively) is that necessarily a good thing? I'm not sure it is.

Thanks for posting and therefore encouraging the discussion!

 Understood and a zip code eviction rate could be more useful. One zip or two zips might account for a ton of that metros evictions and another zip could be under national average in that same metro. Rentfaxpro can get this management stuff to the street level if that helps. Since turnover could be a buy and holders biggest expense it still might be good to know what to expect. I doubt new San Jose investors buying Memphis realize the evictions there could be almost 600% more likely?

Good luck! 

@Matt R.   agreed MSA stats are misleading only meaningful stat to me would be zip code.

@Mitch Messer

I think Mitch has the right idea.

I'm a Brooklyn, NY investor, currently have 8 multi-family, 25 apts, 60 tenants.

Last time I had to do an eviction was more than 15 years ago.

I had to do 3 evictions, all of them were from inherited tenants that occupied the buildings when I purchased them.

Despite being in a Bigley tenant friendly City, Market Rate buildings and apts can perform their due diligence so that you can reduce the risk of having high risk tenants. You cannot totally eliminate Risk, but you should be able to reduce it to an acceptable level.

There are several factors for the astute Investor in the NYC Market that wants to reduce their risk of tenants that need to be evicted:

1) LARGE pool of renters. You have a large variety of tenants as a result. This is necessary because there is no point on using some tools for risk reduction if you can only rent to a certain number or type of tenant.

2) LOW vacancy rates (less than 4% normally). Combined with a Large pool of renters, you can weed out problematic tenants.

3) Availability of HIGH quality renters so you can use Credit Scores whereas if you are in areas that you expect to have only low credit scores, this is tool can become useless.

4) Eviction checks are a very useful tool. Tenants know that if you are a Market Rate Apt seeker, which the majority of tenants will be, an Eviction on your record will basically minimize the apts that are available to you. Combining this with the available number and quality of tenants, you almost have ZERO chances of finding an apt. The Strong Tenant Laws are so prohibitive to NYC Landlords, if you have an eviction record, you are at a Yuge disadvantage. Tenants know that and try to avoid being in a Tenant/Landlord case. There are a lot of tenants who are in rent regulated apts that don't share that concept because they don't have the experience of the Market Rate Apt Seekers. If they lose their rent regulated apt, the picking for those apts are incredibly slim. But that's usually when they realize the reality of the Market Rate Apt Seeker.

5) Bank statements are incredibly useful here. I always ask for 3 to 6 months of bank statements to prove you were paying your rent on time.

6) Landlord recommendation. Combined with your Bank Statements, you will hardly be able to pull the wool over my eyes by getting friends to give you a Landlord Recommendation. The Letter of Recommendation and the Bank Statements showing your rents are being paid must corroborate your story.

7) High Income - Generally, we ask for 45 times monthly rent. If I have an apt renting for $2k per month, then you need a combined income of $90k per year. My apts average $2,500 per month.  So generally, if you don't have at least $112,500 per year annual Income, sorry.... next applicant.

All of these combine to protect a Landlord in a very Tenant Friendly environment. It's because of the Tenant Friendly environment that tenants who need a break just won't have them, in my opinion. If it were easier to evict, I could give people breaks. But that's not the case and my due diligence is incredibly strict.

I want to point out that places with very tenant friendly laws seem to be very HIGH Appreciating markets. Places like SF and NYC are among them. I don't think this is a coincidence but I won't venture to tie them together in this post. It's just an observation that I have seen over the decades.

Hopefully the reader of this post will understand that just because a City is Tenant Friendly, does not mean the landlord is at the mercy of the tenant. FAR FROM THAT.

Originally posted by @Jay Hinrichs :

@Matt R.  agreed MSA stats are misleading only meaningful stat to me would be zip code.

 No doubt and some invest in sub performing zips without knowing beforehand it seems. I have never seen any seller provide that info either. It is here is the proforma and some learn the eviction risk ratios after vs " Oh, by the way, this zip also has the highest eviction rate in the state:). "

@Matt R.   pretty tough data to really get unless they are calling all the local pm's.

but there is no doubt evictions run directly to asset value.. and gross rents..

a 500 dollar renter is much more likely to miss rent than a 5k renter by a maginatude that is off any chart.

Originally posted by @Jay Hinrichs :

@Matt R.  pretty tough data to really get unless they are calling all the local pm's.

but there is no doubt evictions run directly to asset value.. and gross rents..

a 500 dollar renter is much more likely to miss rent than a 5k renter by a maginatude that is off any chart.

 That must be what rentfaxpro does as they rate the collectability of rents and the quality of PMs available. They must survey PMs somehow. 

@Llewelyn A. great post.  I never felt the NYC landlord was at MY MERCY for the 10 years I lived in the city, and I was in a rent controlled apartment for a while.  Losing that was probably the worst real estate experience I'll ever have...

Btw, are there any BK meetups that you attend?  Thx. 

@David Weintraub

Hi David.

Yeah, the real problem with Rent Control/Stabilization in NYC and elsewhere is more of a psychological one.

The regulated renters kind of lives in this isolated environment and has a connection with the value of their apt although it isn't necessarily their property. However, breaking the rent stabilized lease is very valuable to the Landlord who may offer money to vacate it.

As a personal observation which probably cannot be backed up by any real study, most of my relatives and friends who were in regulated apts, despite having access to me, refuses to invest mainly because they feel there is no need when their living is set for life. This psychology sucks the Entrepreneurship out of the person.

I sort of feel guilty in regards to one of my long term tenant. She stayed in one of my apts for 20 years but we raised her rent every year, but at a very reasonable rate. She's probably underpaying the market rent for her Apt by about 25%.

This created the illusion for that tenant that rent she pays is sort of around market rates.

Recently, I explained to her that had she actually bought an identical property 20 years ago, she would have done a LOT better than her current predicament now. If I were to sell the building, I would need to vacate her apt to renovate it. She would be faced with trying to find another apt in a very tight rental market but for about an increase of around $500 per month.

I bought the building the tenant currently lives in for $340k in 1997. Today, it can sell for $1.7 Million.

Yes, she saved in rent because I was generous to her as my longest term tenant. BUT, because I didn't keep her rent at Market Rents, she didn't know how much rents and Values moved up.

If I were to calculate how much she saved on her reduced rent, say an average of $100 per month for 20 years = $24,000 in rent savings, and compare it to how much she would have made by buying an identical property, she would have made around $1.3 Million in appreciation, not counting cash flow.

That's why I feel guilty by shielding this particular tenant from paying Market Rents.

In the same way, I feel rent Control/Stabilization has the same effects on the tenants. They are completely shielded from the Market.

It would be interesting to hear your opinion as a tenant in a rent stabilized situation.

If you weren't a rent stabilized tenant back when you got your rent stabilized apt, would you have been more inclined to buy your own place and secured your cost of living as well as captured the appreciation?

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