Property Manager · Syracuse, NY · Member since 2016 · 601 posts · 384 votes
Hey guys, I have a sad situation that I am going to be involved in soon. I am closing on an 11 unit building and two or three of the tenants have been living at their apartments for 15+ years and only paying $300/month for a 2 bedroom excellent condition apartment with utilities included. They're older and would probably find it difficult to find new housing but they don't have leases. The current owner just didn't want to raise their rents and cause them trouble nor did he take the time to renew their leases. I can't just let them stay paying this rental rate though. Any ideas? The only thing I could think is get them with a social worker who can help them get on section 8 or public assistance to be able to pay us market rent.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
6y
Strange, because nowhere in your post did I see where you'd talked to the women and explained the situation to them, and asked if they would be able to pay the rent, or even how much the rent was going to be. In all the time they've been there, has any investment been made into their units, and are they identical to the higher market rent apartments?
This old lady thinks you need to show them some respect, and deal with the women as you would others in business. If they can't afford the rent, tell them you'll be asking them to move, and then give them the notice required in your state, before you find yourself on the other end of a discrimination lawsuit.
Accountant · Ottawa, Ontario · Member since 2013 · 55 posts · 12 votes
6y
@Ronald Starusnak
Hi Ronald, rather than evicting them, try to negotiate with them. Tell them rather than raising the rent right away to market rates you will raise the rent $50 a month until you are at a market rate. Put it in writing and have them Sign off. If they don’t sign or start missing payments you can evict in the spring.
Rental Property Investor · Menifee, CA · Member since 2019 · 17 posts · 11 votes
6y
Wow, reading all the responses. I’m a bit shocked. I bought a duplex with the same problem. One of the ladies just moved out and I’m updating the unit and planning on getting market rent. The other one? I’m not touching her. I still cash flow, even though I can make more and I feel good about being a good person. One day the situation will take care of itself, just like for all of us. Don’t get me wrong, my goal is to have a nice cash flowing rental business, but it’s not all about money, sometimes stability and humanity is just as rewarding.
I am eating $400 a month in a single family home I bought "Subject to" from her days before auction. It has been a year. Unfortunately there is no other help for her. I did well on the purchase. But it has now been a year... Unsure myself...
Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
6y
I agree with @James Wise if you are saying that market rents are $800/month and they are paying $300/month then you definitely need to deal with that situation. If market is $400/ month then that is a different story.
I haven't read through all the comments so if someone else brought this up I apologize for the duplication. Don't forget that you can include the tenant in on this discussion. It may very well be that if you are trying to get their rent up to say $500 you can work out a schedule where you raise rents slowly over a 1-3 year period.
With the respect that all humans and in addition our elders, deserve.
Quoting a line from Fried Green Tomatoes "I'm old, I'm not a child."
I wouldn't hold it against anyone to raise the rent without a word to the tenant.
I also wouldn't hold it against anyone to work with an existing tenant because, after all, they are humans and this is where they live. We don't sell TV's to people, it's a bit more personal and significant than that.
The whole point of this post I guess is how can I mix the business side with the human side?
Real Estate Investor · Tulsa, OK · Member since 2013 · 33 posts · 2 votes
6y
@Ronald Starusnak
I would imagine that Section 8 isn’t a direction you want to go with your new property. Have you thought about doing section 8 just for the lady and letting her stay there? Surely you could get more than $300. And it would be a win win.
I find myself agreeing mostly with what Julie Dillon has suggested, mainly that you make no assumptions. In fact, I would have the discussion about the rents with ALL the tenants in the building, not just the three ladies of whom you speak. I would start with the requirement that all occupants be on a current lease by, say, January 1st or as soon as the notice requirement for your state allows. Then, within the lease you can incrementally raise the rent every two months or so until you get the rent for all the units to the market value by the end of the lease period. The benefit of this is that, first, by requiring everybody to be on your lease, you are not discriminating against anyone. And second, you won't have to deal with any wierd or unusual conditions that may be present in some of the current leases. Should some of your tenants elect not to sign a new lease, then you may terminate the tenancy as proscribed by the laws in your state.
Steinhatchee, FL · Member since 2017 · 77 posts · 69 votes
6y
You state that they are in 2 bedroom apartments. I think it was mentioned, but it might be worthwhile to mention to them getting a roommate. A 2 bedroom seems like more room than a single elderly lady really needs, and if you can match 2 of them up together perhaps they will think on their own about sharing expenses. Then they could probably stay in an apartment even with you raising to market rent.
I would imagine that Section 8 isn’t a direction you want to go with your new property. Have you thought about doing section 8 just for the lady and letting her stay there? Surely you could get more than $300. And it would be a win win.
Keep in mind, Section 8 has a ceiling amount per bdr/per zipcode, but also evaluates multi-unit properties by how much the landlord is getting for all the other units. So, for them to get such help AND get the 725-800 wanted, he has to raise all the rents (in all the units) to that amount first. Then they can apply. Here, they take online applications one day a month (yes, that is ridiculous, but that's how they do it). That gets you onto a waiting list, if you meet their criteria.