Help with Low Income Tenants

71 Replies

Hello! I just moved into a new market and bought 3 low income doors. 

1 Single Family flip in a D neighborhood that is just on the other side of an A neighborhood

1 Duplex that is 15 years old in a C area that is coming up. 

It took me a month to put a tenant in the single family as everyone wanted section 8 and I knew nothing about that. I drove by yesterday and the tenant has sheets on the windows and a bunch of junk on the lawn. I left a voicemail asking her to remove the sheets and get cheap blinds and please get a storage unit for the junk. How much can I do and how much should I really care when her neighbors have pitbulls? 

The duplex is already occupied. The right side has been there since it was built and is a bit of a horder. She's also selling candies and snacks to neighbors like it's a conveience store. Should I care? 

What should I put in the letter to these new tenants (which I will also post on their doors) and should I think about getting rid of them or just leave them in there if they pay on time?  Should I fix things in the duplex like cracked windows and bent mailboxes or just leave as is? 

Lots of questions here. My first time dealing with anything less than an A property so I'm looking for advice! Thanks 

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LOL well I’m a guy. And thank you @Account Closed but once you've been in the STR business for a while you'll feel my pain.

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@Account Closed has questions about.  None of these issues are un-solvable and there are likely some simple answers for navigating this new venture for us, and there are MANY investors on this forum who have dozens or hundreds of doors who deal with lower income tenants all the time.  Those are the folks whose answers we are interested in hearing. What is "sad" about that?

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Well this thread quickly went to crap thanks to a rapid fire troll. Please delete 

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@Lucas Carl @Avery Carl , when dealing with these types of rentals, automating your processes will become everything. Low income tenants & properties can be very high maintenance, so you should aim to outsource as much as possible. In my market, I find it best to either rent to section 8 tenants for guaranteed rent payments (though, this comes with drawbacks as well), or rent to own SFR's, since many people looking in these areas can't qualify for a mortgage and you evade the expense and hassle of maintenance, while gaining security from the initial down payment of $1,000-$1,500.

Maybe I didn’t explain this well. Each property is renting for 400-600 positive cash flow per month. I think it’s time to abandon this thread lol 

@Lucas Carl is there anything in your lease about the things you are describing? If so, you have two options.... let it slide and give them the idea that rules dont Mayer and they can do whatever they want with your property without consequence, or enforce the lease and tell tell them what rules have been broken and of the terms of the lease are not adhered to, they will likely face eviction. If there is nothing I the lease about maintaining the property and running a convenience store out of their home, sorry but that's on you, or whoever wrote up your lease.

If your SFR is on the border with an A neighborhood, you need to strive to make it more of a B neighborhood unit. That means telling the tenant to clean up the mess. If it were me, I'd go purchase and install cheap blinds, (you have cashflow for that) and tell the tenant that damage to these WILL be deducted from the deposit. The junk in the front yard, most likely violates SOME code enforcement rule of the city somewhere, so tell them to clean it up. Make the exterior of the property more like it belongs in the A neighborhood. Then buy the property next door and do the same. You might get your street to more of a C or B, then you can raise rents. But if it looks like a D house, and smells like a D house....

As far as the duplex convenience store, if it bothers you, call the city and tell the tax people that there is someone selling stuff without a sales tax license, and operating a business without a permit.  They are going after kids with lemonade stands, they will go after her. But if that helps her pay the rent?  If it's not hurting anyone, I'd ignore it.   I'd be more concerned about the hoarding, but again, tenants who are willing to live in C and D neighborhoods tend to overvalue possessions, since replacements or upgrades of said possessions are not in their future.  And yes, I'd fix things in the duplex.  Didn't you say that it's a C area that is coming up?  Do you want to be the reason it doesn't?    Yours shouldn't be the worst place on the block or you're going to get a ton of investors calling you, thinking you are tired of being a landlord.

@Lucas Carl I feel your pain. I think a letter notice is a good next step. It’s a formal notice that you are on top of it. If it continues you might have to think about getting rid of them. I know that would be tough but you want to keep to a standard. I am starting to take Section 8 and it actually has been good to me so far. If tenants act up, you at least have a case worker to go through.
@Lucas Carl I invest in the ghetto and I can tell you that you must learn to take these things in stride . It ain’t Beverly Hills bro ! people are going to be doing stupid things and they usually have no class or style in these areas . They are going to live the opposite of how you live and you need to learn to pick your battles in low income areas or your going to be mailing /postIng out notices every other day and you will give yourself a heart attack . When you pull up to your property and see something that boils your blood ( WhIch happens to me frequently BTW) you need to first ask yourself A - is the tenant hurting my property??? B- is the tenant paying their rent on time each month ???

Hey...unless your lease says something about window coverings, A bed sheet is good enough. I always put semi cheap Home Depot vertical blinds on my windows. I did it because it was like that when I bought it, but now I see I have prevented the "Dallas Cowboys" bedsheet window covering issue. I charge the tenants if they are busted when they leave, but I can usually buy new slats, and just keep the whole thing.

I have a number of low income properties-- with some excellent tenants; Some of these tenants were fine from day one and others we have worked with.

We always provide blinds in low-income properties. Your tenants will not likely be able to afford it and may have difficulty getting to a store to purchase  blinds and get them home on the bus and then they probably won't have to tools and/or skills to install them. I usually put up 2" faux wood pvc blinds because they look better, last longer, and are more repairable than cheap mini blinds. 

Some people really don't care/understand that 'tacky' is not always ok. Make sure that your lease doesn't permit toys, lawn equipment, etc. to be left out in the front yard over night and that only outdoor furniture is permitted in outdoor spaces. NO (indoor) upholstered furniture on the porches. Usually I politely and verbally notify that there is a problem. This so far has been sufficient.

Hoarding, on the other hand, is a mental disorder (in the OCD family of illnesses). I would not keep a hoarder if I accidentally rented to one and I would not purchase a property with a hoarder in place. If you have a for real hoarder, you need to get them out asap. It's not going to get better and even if you happen to be qualified, you are not in a position to treat them since you are the landlord not the therapist. If they are just messy and unorganized, you can insist that the property be kept to a certain standard and if they don't want to move they must comply or you evict them. I'd make sure to keep everyone on a month-to-month rather than a term lease.

You get real good, real quick at having direct, frank discussions about all kinds of 'awkward' topics as a landlord.

@Lucas Carl

Hello Lucas, honestly, keep the tenants there because I believe your unit was hard to rent. In case she is violating her/his lease, you should send a letter of your intention in case legal action is needed in the future. 

Now as for the property, YES, you need to rehab it. Rehab will add significant value to your property. As the property appreciates, you can look to evict your current tenant and have good ones in place.

Main reason I am suggesting to rehab the property is because it allows you to do 2 things:

1. Sell the property and buy more doors. 

2. Refinance

In your case, you should be looking to exit and invest into more doors. 

Read the book "Evicted". The people making money on D rentals are those who grew up in those neighborhoods and often still live there. Its hands on. Its about paying the junkies $20 and beer to repaint the whole house. Its about physical rent collections with threats and cajoling as needed. Your $400/month cash flow is as transient as the homeless guys sleeping on the sidewalk. It will fly away before you know it. And seriously, even if the 400/month is real, is it worth the hassle and stress?!

@Anish Tolia Yep it is worth it ...Atleast for me .stress is relative to the person being stressed because Life is what you make it .you have to alter your mindset and expectatIons to invest in these areas .if you can get in at a low price point and make a great profit each month then why not . if I have to scold a tenant once per month for leaving out junk bicycles in the yard or hanging beach towels up for curtains/ blinds then yeah I’m okay with that ! I’ll take those 4 Ben Franklins every 30 days for that ..but then again I’ve worked back breaking jobs running a jackhammer and digging ditches by hand when i was young for 240$ a week ,so this seems like a pretty good gig for relatively little physical effort
Originally posted by @Account Closed :

Not a troll.   Be patient other s will chime in.   If you think Hood investing is the thing to do.   Thats great.

Answer this question, and this question only for me: is it still a "hood" due to people like YOU, or due to people like OP, and me?

I have 17 properties and been a landlord for 25 years. I'm not sure how distressed of an area your properties are located in but I think I have a comparable property. I own a duplex in a not so desirable but safe area (small mill neighborhood), the rest are C class older homes in decent areas. I  have had some dealing with lower income tenants/ lower middle income tenants. I have never dealt with section 8. For this particular duplex, both apartments are in  good/ modern shape, fresh paint, nice flooring,stainless appliances, and some little extras (lighting or tile). To make this short, what you put in you get out! If you want to pull this off your going to need to do small things to make up for location. If something is in needing repair, fix it. If something is old, worn or ugly replace it, I would definitely replace the cracked windows (if not today soon or at least have a time frame to accomplish this) and fix the mail box. I install cheap mini blinds in all the apartments ( $50.00 well spent) and I charge the tenant when they move if they are broken. Just because these tenants don't make a lot doesn't mean they want to live in a sad depressing property. I find little things go along way to spruce up the units- maybe a really nice light fixture that I got on clearance at home depot/ lowes. You can't turn every tenant around but if your more selective with screening you can get a feel for people and find ones who will take care of things and appreciate your efforts.  I do not EVER allow stuff/junk outside the apartment. It decreases your home value as well as the surrounding properties. My lease says junk (basically everything (bikes, tires, toys, unregistered vehicles) will be removed and I charge it to the tenant. I do allow some outdoor furniture it it is nice only and they must get written permission. Communication is the best defense, text or call them and give them a time frame for removal/clean up. In the past, I have had tenants put old couches on the front porch. UGH! I now make a point of explaining to every new tenant how upsetting this is (any and all junk) and wont be tolerated. It usually does the trick

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The single family tenant obviously has zero social standards. If you care about the appearance of your property attempting to train them to your personal standards will be a futile attempt. Bare minimum you demand they maintain the exterior appearance to the community standards (probably already do) and buy/install cheep blinds yourself. Remember it is not that they can not afford cheep blinds it is that they see no value in having anything nice. Keep in mind that being in a D neighbourhood every penny you spend is a penny wasted....you are not living there. Protect your property and let them wallow if that is their style.

The duplex in a C neighbourhood sounds like you have typical tenants. Again as long as they pay rent and do not cause damage every penny you spend is a penny wasted.

You need to lower your own standards to understand C/D class tenants. You take their money and provide as little as possible in return when managing C/D class properties for profit. Major micro management required if you allow your personal standards to interfer with your business.

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