Helping tenants improve their financial literacy/stability

11 Replies

Tl/dr: we are looking for advice/resources to help "train" our newly inherited tenants to be more financially literate/stable (more context below). 

Here is what we're looking for:

  • Any programs/courses (either in Georgia or nationally) that help people become more financially literate.
  • Recommendations for banks or other companies with low fees that might be beneficial.
  • Any general advice/ideas on how to help/encourage our tenants to be more financially literate.

Some more context about the situation:

  • My partners and I just acquired a rental property with tenants already in place. The tenants have been there for several years and want to continue to stay. As far as we know, there has not been an issue with collecting rent. 
  • Our tenants are all minorities somewhere between ages 30 - 50. To every extend possible (without putting ourselves at risk), we would like to try and keep the tenants in place as part of the community. Many parts of Atlanta are experiencing gentrification and displacement of lower income individuals in the city. If possible, we do not want to exacerbate this (of course if issues arise, we aren't afraid to evict/do cash for keys, but we want to at least try to make it work first). 
  • We do have some concerns about the financial literacy and stability of the tenants though. 
    • The previous owner collected rent each week, not monthly. 
    • We think the tenants have close to minimum wage jobs (or at least likely below median income). 
    • We are also unsure whether the tenants have bank accounts. Rents have previously been done via money order. 
  • We aren't planning on changing too much on Day 1. However, we would like to move from collecting rent biweekly instead of weekly ASAP. And then long-term collecting monthly like normal. Even if it takes time to get to monthly rent payments, we also at least want to have a contract so that they're on a longer term lease (i.e. 6 months or 1 year), even if we still have to collect weekly for a little while.

Any thoughts are appreciated. Thanks!

Wow, that's great that you would like to help your tenants be more financially secure. Smart obviously because it'll help you, but besides being smart on your part, that's very kind of you as well.

@Michael Ehmann   I commend you!  I have long held the belief that we as landlords have the opportunity to do good for humanity and good for our community.  Open and honest communication and mutual respect goes a long way. We have bought tenanted properties and always strive to save a tenancy, rather than force a move.

You've identified a key factor about low-income tenants. Often their position is a result of a lack of education and/or the desire to do what it takes to improve their situation. Many tenants lack an understanding about financial matters. Some lack the ability to read and write too. Most need someone to believe in them and provide guidance.  

Maintaining their sense of security and dignity is paramount. Transitioning from the previous landlord's rental agreement to yours may be a challenge for them, or may not be.  We start with introducing ourselves and our management style. We also let tenants know we will not be raising rents at this time and that tends to put them at ease. We open a dialogue whereby we can understand their current position and they can understand ours. Then we find common ground. If our values and their values align, then it works out. We share our mission statement with our new tenants..... "We strive to provide safe, clean, affordable, comfortable, and quiet housing for responsible renters." Everything we do centers around that.

Engagement is key. If the tenants understand WHY you are doing what you are doing, it will be easier for them to engage and grasp WHAT the goal is and HOW to get there.

If a tenant has a bank account, it can be beneficial for receiving, saving and managing money, as well as for paying rent and utilities. Wells Fargo offers "Opportunity Checking", a unique checking account designed to help people get a fresh start, even if they have made banking mistakes in the past. Other banks and credit unions may offer a similar product. I would check out those that are close in proximity to the rental unit and/or easily reached by public transportation.

I used to teach a class at the local Housing Authority called "Money Management Matters". In the class I introduced participants to a simple way to handle their income and expenses. The starting point was their current situation, building value for improving their situation, defining the direction they want to go, and asking "What would it take to get there?". Then providing the encouragement and resources to help them help themselves to do just that.

@Michael Ehmann That’s a noble effort and I hate to be cynical but I think it’s ultimately going to be a vane effort . People are poor because of poor thinking habits not poor work habits . Getting people to 180 their norms and thinking by explaining the benefits is not something they are going to reverse without major mental hurdles to jump . They have been trained their entire life that money is something that is scarce and not for their “ type” . You are attempting to reverse a lifetime of bad education and thinking habits . ThId Is goIng to sound bad..but I’m not even sure you’d actually want to do this because if they become too financially literate they will ultimately become homeowners instead of renters and therefore you will lose your clientele

@Michael Ehmann   I like your thinking.  Depending on how big of a complex, you may be able to get companies come to you to give free financial training/planning?  See if any of the local colleges or social service agencies have any programs that you can promote or even pay someone $100 to come teach a few classes.  Some churches offer financial education as part of their holistic ministry.  Partner with one of them?

I think you just have to find the right people to donate (or reasonably paid) their time to helping better fellow humans.

@Dennis M.   I would not be worried about educating and losing the tenants because they have improved their life.  If anything Michael will develop a good reputation in the community and people will want to rent from him, a fair and just landlord.

This is absolute nonsense.  Are you going to pay to enroll them in finance classes?  Maintain your building, provide safe housing, collect the rents, and leave it at that. Volunteer at the local boys and girls club if you want to be a hero in your community.

@Dick Stevens Yep, That’s exactly what I was thinking . If the person is inclined to help then great , that Is a worthwhIle cause but don’t mix business with it . It’s just asking for trouble . So many good programs out there to get involved in to volunteer your spare time . Thousands of churches to help people that are sufferIng .The sobering fact is if your a 40 year old healthy man making minimum wage In the rIchest country In the world In the best economy sInce the 50‘s then there is obviously some major problems going in their mind and some money management coarse isn’t going to change that . Poverty is a mental condition that has been taught to these people since birth

Thanks, all for the input. Really appreciate getting some perspectives on both sides. 

For the cynics: I do agree (partially). This is an investment property first and foremost, not a charity. That being said, the tenants are already in place, so our thought is to at least try and keep them in there since the information we have so far suggests they are decent, stable tenants who are interested in staying long term. 

We aren't going to be paying to enroll them in finance classes or let them get away with stuff we wouldn't expect of any other tenant. We aren't looking to create a ton more work for ourselves, just wondering if there are some low effort things we can do to make them more financially stable (which reduces our risk as landlords). 

To be honest, we would be 100% stoked if they became financially stable to the point of owning homes themselves. Our property is in a good part of town near a university, so we will have no shortage of tenants. 

@Michael Ehmann This is good in theory but will likely be futile in practice. I own rentals but rent where I live. I live in a community of over 300 apartments. A couple months ago they held a financial literacy type thing where they brought in a local banker to talk about personal finance. I was the only person who showed up. Good luck

@Michael Ehmann

It is with great hesitation that I post this, and I'm going to say some hard things, but I don't for a minute believe that you don't mean well, Michael.

If I'm reading this correctly, you see this as a kindhearted, rather generous opportunity to help your fellow man out his plight and put him on a better road in life. And it will lead to you being paid on time. It's a win-win situation for both you and the tenants.

This will include some tough love...again, if I'm reading this correctly, you're planning on explaining to your new black tenants that their being broke is a choice they've made. It's their fault, and the power lies with them to reverse their poor past choices and pick themselves up a bit by their own bootstraps.

You're going to tell these new tenants that what's primarily wrong with them is not a legacy of a crime against humanity in the form of three hundred years of black slavery, followed by an unfunded emancipation that turned a huge number of Americans into desperate economic refugees based on the color of their skin, followed by a legacy of organized race hatred, bigotry, pseudoscientific and religious condemnation, and of course overwhelming and widespread intimidation and coercion, followed by a series of failed half-hearted half-measures coupled with an absolute refusal to consider slave reparations and the most lopsided minority levels of poverty and incarceration in the developed world.

You're going to explain to these black folks that all that is of secondary importance, and what's REALLY important now is that they get better managing their money so they can hand it over to you more efficiently and you won't have to work so hard to get it. And you're going to very clearly imply that they should be grateful about it, because after all, increasing these people's "financial literacy" and their "economic stability" is a good thing.

This is going to happen in Georgia, a state where your great-grandfather would have had the legal right to buy their great-grandmother and do whatever he wanted to her, your grandfather might very probably have been able to get away with murdering their grandfather with a knife or a rope as long as he had some good friends with him and a sheet over his head, and your father would have had a chance to live in a neighborhood which allowed him to borrow money to buy a house while their father lived in a neighborhood where a mortgage could be refused due to an arbitrary red line on a map.

I do not believe this is going to go over well. Michael. There's a polarizing difference of social viewpoints here that I believe you're sharply underestimating. I think you need to work through this before you consider implementing a private financial improvement program like the one you're describing.

@Dick Stevens @Dennis M. Guys he’s stopping evil gentrification and those pesky white folks raising home values. In addition I’m sure there are plans in the works for composting, recycling, community gardens, and the displaying of various flags and sindry bumper stickers declaring a safe and hate free environment. No one wants to hear about “reality” and actual “solutions”. Please knock it off with that cold shower talk

I buy all kinds of financial books at yard sales.  FPU, RDPD, Total Money makeover, etc.  

I've given out at least 8 books to tenants over the years. I write a note in it.  Helped me, hope it can be of use to you, too!  

It hasn't helped yet that I've seen, but also didn't hurt.  I was hoping they may ask a question (which is the only time you should offer personal advice) but none did.

Admirable intention, just don't stake too much into it or get your hopes up.