Help with Low Income Tenants

71 Replies

Some of the comments in this thread are absolutely appalling. These are people. Everyone isn't afforded the same opportunities to be where you are at. @Lucas Carl was asking about problems. Granted. He seems over his head, and should have done better research into the property/tenants he was investing in, but this isn't an excuse or a free for all to degrade and disrespect a group of people because of their income. The median income in America is $50k. How many Americans do you think have minimum wage jobs? A person working full-time all year at the federal minimum wage makes a mere $15k a year. They are working full-time, all year, yet still live at the poverty line. Too many people on this thread are talking about them as if they are animals. 

@Lucas Carl It should be standard practice to provide blinds to your tenants. This is your building, and if you want the appearance to have a certain look, then you are responsible for giving it that look. You said these are tenants that you acquired. That means you are also acquiring the habits/ rules/ standards of the previous landlord. They are doing what they have always done. Not because they don't know how to live other wise, or because they are "devoid of all normal standards", but likely because their previous landlord acted as many of these commentators have: as if they don't care about them (the tenant) or the property they are renting to them.

If the building is under new ownership then set your own rules and standards. Obviously, this is easier when you have the tenant sign a lease. In the mean time, show the tenants that you care about your property, and them, and I can bet they will reciprocate. Introduce yourself (if you haven't already) and let them know that though they have lived how they lived in the past, you aren't the previous landlord and your expectations are different. Inform the tenants of what your standards/ expectations are and how you intend to enforce them. I would also inform them that  how you plan to manage the property and their problems will also be different.  Let them know that when it comes time to renew their lease you expect your standards to be upheld or you will not renew their lease. Tenants in lower class neighborhoods prefer to stay in one place, as it is expensive to move. They don't want to leave or be evicted anymore than you want to evict them. 

Don't let peoples ignorance deter you from a great financial opportunity. People in A class neighborhoods also do outrageous thing, they get evicted, they destroy properties, they can also be horror stories you will tell. So take the negative expectations with a grain of salt. I think @Jill F. had great suggestions. Make the place feel like a home to the tenants, and they will likely treat it as such. 

Best of luck to you.

"Everyone isn't afforded the same opportunities to be where you are at."

No one in the working class is afforded opportunities in life, we take the intuitive to go out and find them and work for them. The majority of those we are talking about choose not to do that. Their income level is likely a result of their social standards as opposed to the reverse.

Originally posted by @Chris Connolly :

Am I the only one who is curious about how he makes 400-600 per month in cash flow in a D area? U can rent a decent apt for 600 in a nice area, what kind of rents are you getting to cash flow that?!

 Chris, show me a decent apartment for $600 in Raleigh, Cary, Durham or Chapel Hill.  That unicorn has flown the coop, buddy.  :)

Originally posted by @Caleb Heimsoth :

Anyways you’re gonna have lots of issues.  Lots of evictions and lots of damage.  Good luck! 

 Untrue.  That is one of the biggest myths foisted upon wannabe/inexperienced low-income landlords by inexperienced low-income investors.

An individual skilled in this category will not experience these sorts of problems (and others mentioned in this thread.)  At least, not much more than investors who invest in other areas, because we all know problem tenants exist across the income spectrum. Screen properly, treat your tenants with respect, and set rules.

I wouldn't listen to a homeless guy who advised me on how to invest my money.  And I wouldn't allow much credence in the advice given by someone inexperienced in managing low-income rentals when it comes to low-income rentals.  Someone can be incredibly skilled at B-class rentals, but have asinine advice built on a foundation of ignorance regarding low-income rentals.  

I've said it before and I'll say it again.  Thousands (tens of thousands?) of investors across the country are successful renting in lower-income neighborhoods.  It doesn't take some magical combination of a miracle landlord and a miracle tenant coming together to make an easy profitable process.  It takes experience and a willingness to accept that not everyone fits into the image and experiences of a professionally-employed B-class investor/tenant.

Everyone, please stop providing false information built on 1st-hand ignorance.  The OP is looking for honest, helpful advice, just like other posters who ask (and receive serious advice in return) about million-dollar syndication or $$300K renos.   Hopefully people experienced in this area will offer some.  Some people have offered jokes.  Some experienced individuals have offered helpful advice.  I hope the OP can wade through the garbage here and seize the helpful hints.

Cheers,

Randy

@Lucas Carl ,

The SFH is easy--- if them having sheets  on the windows bothers you--- buy some cheap blinds, and install them yourself.   Heaven forbid someone wants privacy and for it to block the light/heat, and doesn't have the tools or knowledge  how to install blinds!  I hate seeing sheets/towels, it's trashy and brings the moral down IMO..       Wal-Mart sells SUPER cheap blinds ($4-$7), if you're going for the lowest possible.   

Hoarding situation is a bit more complex.   Is it just a lot of stuff.. if it's in the inside, unless your lease has clearly stated limits, I don't think you have a leg to stand on.    You could request monthly check inspections, just to verify it's not infested by pests and they are taking care of the inside.   If it's outside-- again-- what does your lease state?  your lease is your only leg to stand on if it says what is/isn't allowed in the front yard.   You can't impose your personal preferences on your tenants--unless it's agreed specifically in the lease. 

Pit bulls-- just make sure your lease states no pit bulls or mixes, or whatever your insurance tells you that you can/can't allow.    I'd strongly recommend requiring tenants to have renters insurance.

 If you are self-managing, I'd suggest just a friendly conversation vs.a letter,  you're setting the tone for hopefully a long-term tenant-landlord relationship.   They aren't violating anything, sounds like they're paying on time.    Also you chose these properties, and your chose your tenants, so realize you aren't in "A" land anymore, and people live differently, because budgets are very different.         

This post has been removed.

These were two books that were recommended to me to understand low income tenants (from another BP member). I haven't read yet, but they are on my list. Might be worth checking out to understand the type of tenant you are dealing with. Or have you thought about professional property management?

https://www.amazon.com/dp/1938248015/?coliid=I3W3K...

https://www.amazon.com/dp/1934085014/?coliid=I17JI...

I used to put up curtain rods in my rentals and found that people didn't have the money to buy curtains, so they just put up sheets. So then I put up curtains, and found that usually, they would just continue to use them and leave them when they moved out. I'd wash them and rehang them -- nothing to toss in the landfill like mini-blinds that always get destroyed.

Otherwise, you'll need to provide window coverings for lower-income tenants. When they move into a place and provide security deposit + first month's rent, that saps all the money they have. That's why in lower income areas, March and April are good times to find tenants because many are getting tax refunds back and have money to spend.

This post has been removed.

@Alan Jones @Alan Jones What else is the same as green years ago? The federal minimum wage. Of course real estate in these areas haven't increased. Unless they are being gentrified there isn't any reason for it to grow. You don't invest in C and D class properties for appreciation. You invest in them for the cash flow. If you want appreciation then invest in A and B properties but expect lower cash flows. You keep stating your personal opinion of a type neighborhood that you either have no experience in or are very inexperienced in investing in. It's painfully obvious that you are trying to provoke a certain conversation. There are plenty of other platforms that welcome and encourage that type of rhetoric. This platform on the other hand, it isn't useful at all and dilutes the purpose: helping the original poster with their perceived problem. If you hate those who live in D class neighborhoods, or fear entering/ managing them, these aren't properties you should invest in. You will easily be considered a slumlord. Invest in properties that you are invested in. You will get a much better return and have a significantly easier time with them. Earlier i meant that @Kerry Grimshaw had great ideas. @Jill F. Did too but I meant to say Kerry.

This post has been removed.

Originally posted by @Account Closed :

I had to join in . Couldnt help myself.   I work in Florida parole office.   You can be rest assured D class residents are indeed animals.   Not all but way too many. 

I'm going to go out on a limb here and say that class C-/D investing would not be a good fit for you. Your post calling residents of a neighborhood "animals" says way more about you than it does about about the group of people that you are denigrating in a public forum. Shame on you. I sincerely hope that you are not working as a parole officer.

Just because you could not successfullly invest in a low-income neighborhood, doesn't mean that investments in those neighborhoods won't be a good fit and successful investments for other investors.

*Sigh* I know I shouldn't feed a troll but I can't believe this post has remained up. Mods???

@Alan Jones Your last two comments made me laugh super hard lol. Great analogy. I’m with you. I gotta change my time. D class properties are amazing. I helped a guy today not pay 90k for a duplex in the hood. I should have let him have it. These are killer deals folks. Killer. It’s gonna be yuge.
Originally posted by @Account Closed :

It is not I im worried about its all these newbies who think cheap D class is EZ money. I was riding a bus yesterday a D type tenant wanted to kick an old mans rear end because he accidently touched his shoe.  The D type dude only had his legs sticking way out into the aisle.  The old man did motion excuse me.   But the guy went on and on how he was being dis-respected.   That if he assaulted the old man he would be in the wrong.   This went on for 10 minutes.   Maybe longer as i got off the bus. 

Somehow i dont think sending this type of guy an email reminding him his rent is 6 months late is going to result in anything.

" D-type dudes' lives matter."

That's how you sound, so that's how I joke.

I am new here, can someone post a link so I can tell what a Class A, B, C, D, F neighborhood is?

Also, just for the OP to consider:  do you know for sure exactly what the lady is selling?  I once lived in a neighborhood where an elderly lady sold chips, candy and soda to the kids from her very messy garage.  Most kids in the neighborhood stopped by on the way to and from school.  Adults stopped by in the evening.  One day the police stopped by too, lots of them with their K-9 officer.  She had been selling drugs as well.  The K-9 found she was very well stocked with a wide variety of drugs stored in various places through out her messy garage.

And she was the nicest, kindest neighbor, everyone loved her!

Originally posted by @Dawn A. :

I used to put up curtain rods in my rentals and found that people didn't have the money to buy curtains, so they just put up sheets. So then I put up curtains, and found that usually, they would just continue to use them and leave them when they moved out. I'd wash them and rehang them -- nothing to toss in the landfill like mini-blinds that always get destroyed.

Otherwise, you'll need to provide window coverings for lower-income tenants. When they move into a place and provide security deposit + first month's rent, that saps all the money they have. That's why in lower income areas, March and April are good times to find tenants because many are getting tax refunds back and have money to spend.

 Dawn, I used to go with miniblinds, but last year I tried curtains with a new tenant.  I remember when she moved in the new tenant paid special attention to the curtains and liked them, but said she might buy different curtains.  A year later and a renewed lease later, the same curtains I chose are still there.  Some of the miniblinds are already damaged, but those curtains look as good as ever.

I think I may be converting to your line of thinking on this.  For one thing, at every tenant changeover, some of the miniblinds will always need to be replaced.  The curtains, as you point out, can be washed and reused for the next tenant.  Good thinking!

I have C-D rentals and will not accept Section 8.  I tried it before and it didn't work for me, but that's just my personal feeling.  Most of my tenants are hard working and live paycheck to paycheck and are grateful for a decent house.  Yes, the rent may be a week or so late, but I collect late charges.  Yes, one family left apx. 200 poop stains (not the pile, but the ring where it had been) when they moved - glad it was terrazzo floors so could be stripped and not permanently damaged.  Those tenants are the exception.  I sometimes add mini blinds, but they tend to break easily.  My tenants tend to stay well past the end of their leases on a month to month basis so I have little turnover.  I also repair anything as quickly as possible and as for rent, if they are late over a week or two, the eviction process starts and they are out in a month at most.  When you do have a vacancy, you have a huge amount of people begging for the place because there are so few places available in their price range, so you can pick and choose your tenants (and I do look at their social media posts to see how they live).

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here