inherited 85 year old tenant but rent is way below market
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Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
6yI'm on the other side of this. I would raise the rent of the other places and leave hers how it is for the time being. I fully believe in karma. This might not be a charity, but this is also an opportunity to help someone out. If she moves out you will eat the cost of rent for a month and have to do repairs before re-renting it.
What's chances of the others moving out? Can you handle 2-3 of them going vacant at the same time?
Maybe tell her you plan to raise it next spring, giving her more time to figure something out? Obviously you can't eat that cost for forever, but I'd def work with her as much as possible.
94 Replies
If you don't want to be that guy then maybe you should invest in the stock market where you never have to deal with real people. You could have her move out and then just pay her $550 a month and be a charity and reach the same outcome if you really want to. I'm not saying end the lease in the middle of the pandemic but you can work with her to help her find more affordable housing.
- It's nice that you feel concerned. You have a heart and that's good, but this is not a charity. This tenant wants to live there but cannot afford it. You can give them a break on rent, but that money would be coming out of your pocket. If this tenant wanted a nicer car than they could afford, you would not help them with that, so why should you help them afford an apartment that they cannot afford? The best situation is to help transition her into an apartment that is more fitting to her individual needs, financial needs included. Also keep in mind, NJ is a very litigious state. What do you think will happen if the other 5 units find out this tenant gets a break on rent because "she is 85 years old and you felt bad?" That's ageism, and age is a federally protected class. Do I think it's likely you can get sued? No. Is it a real possibility, based on facts? Yes. Keep in mind, I'm not suggesting your only option is to go to full market tomorrow. There is a pandemic going on and a light touch with empathy can still be used while following strict, financially intelligent business practices.
- Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes6y
I'm on the other side of this. I would raise the rent of the other places and leave hers how it is for the time being. I fully believe in karma. This might not be a charity, but this is also an opportunity to help someone out. If she moves out you will eat the cost of rent for a month and have to do repairs before re-renting it.
What's chances of the others moving out? Can you handle 2-3 of them going vacant at the same time?
Maybe tell her you plan to raise it next spring, giving her more time to figure something out? Obviously you can't eat that cost for forever, but I'd def work with her as much as possible.
- Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 3k+ votes6y
@Ray Reed, see, landlords really do have a heart (sometimes).
Here's a possible win-win: investigate any/all local charitable help services including Sec 8 to see who would help this poor elderly tenant. (The previous owner did her no favors by not increasing the rent, IMHO. They just kicked the can down the road.)
We have been asked by tenants seeking help to actually serve them with eviction papers so they can go to a service to get aid.
You really won't be able to do any actual increases or evictions at this time until your Governor grants you back your civil liberties, er, I mean you are released from lockdown. (Sorry, I've been in quarantine too long.)
- Investor · Wakefield, MA · Member since 2019 · 31 posts · 73 votes6y
She's paying $800 for a unit and her SS + pension are only a little more than $1k/month. Frankly it was unethical for the previous owner to have her in the unit to start with. She needs to find a place much cheaper or get aid/assistance, regardless of whether or not you increase the rent.
- 6yJoseph CacciapagliaBusiness MemberLender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
I think @Marc Winter is right, in that you should help her find any social programs that she may qualify for. If you come up dry there, you may consider just helping her find a more affordable place. One thing to keep in mind is that with a 5+ unit property, the income has a direct impact on any future financing or sale price.
- Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes6y
Everyone saying that the past landlord did her no favors and comparing this to upgrading a car - please take a step back. This is housing, and an 85 year old has limited options but this is still a necessary resource.
@Ray Reed I do think it's great that you're being considerate of this particular tenant's situation. My approach would be to be flexible with her, and yes, see if there are any rental subsidies/vouchers she may be eligible for. It's up to her to apply, and I think the reasonable thing to do here is give plenty of advance notice of a much more modest rent increase. Let her know that you are only doing the bare minimum to cover your own deficit and give her lots of notice so she has a chance at finding alternative housing.
The current below market rents should have been part of your pro forma before closing, and these kinds of scenarios come up all the time. Plenty of landlords can afford to take the loss on one unit to do the humane thing, and then raise rents at the next turnover.
@Aaron K. it crossed my mind to help her find something more affordable but thanks for that push because since she does not use a computer i am sure i can help her find something faster and maybe assist with the move
@Andrew B. good point. i didnt think about the ageism aspect. I am conditioned to think its the seniors that have a case when you discriminate against them but you are correct. I would not be surprised if the others sued when they found out. they have had it good with the low rent for a long time.
@Derrick E. i believe 2-3 of them will either move or get evicted. one guy has been paying $450 including heat and he drives a mercedes. his lease is for $850 but the prior owner just asked him to clean up property and take garbage out. he doesnt do that and the owner didnt want the hassle of taking him to court. i can sustain the vacancies because of my other properties so if some of them moved, i would welcome it.
@Marc Winter i will look into charitable organizations. thank you for that idea
@Jennifer S. the prior owners were relaxed. i do not think they adequately screened the applicants. they went by word of mouth. They owned the house since the 70s so it was more like a hobby than anything..
@Joseph Cacciapaglia i am trying to position myself to refinance in August. rates were good last i checked but i have to the rents up and separating the utilities
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
@Ray Reed the best option is for her to move to an over 55 income based housing complex. I would see if she has family that can help her. I would call around and look for places in the area that have openings. Type up the information (phone numbers, contacts and available units) and give it to her. It would take only a couple hours of time and it would help give your tenant better options. I know some people just say, "not my problem", but I think that is short cited in business. First of all, she may not even leave if she doesn't get help. Good luck evicting an 85 year old lady. You better hope social media doesn't grab hold of that! More importantly business is about solving problems. If you find a good home for her, she can move out and you can get market rents for your empty unit. Helping her, helps you.
In the end this is better for her. Over 55 communities have been designed for accessibility and they provide an environment where seniors can meet other seniors. Social isolation is the most difficult thing for older people. Very often people who move to these communities wish they would have done it sooner.Of course, make sure whatever you do complies with CDC, state and federal guidance based on COVID-19. At risk people have been told to shelter in place, even as restrictions are lifted. By raising her rent to the point she is forced to move, you are forcing her out of a shelter in place. It could be safe by August 1, but just monitor the situation and make sure you are not putting her in an unsafe situation or breaking the law.
- Rental Property Investor · Cleveland, OH · Member since 2020 · 19 posts · 15 votes6y
@Aaron K.
You’re right. Business is business. We should be more lenient in the current situation but 800-1350 is quite a bit of money. Investor or Charity? They must decide. 
- Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes6y
@Joe Splitrock I think your suggestions are thoughtful, but I would be careful about assuming that she would be better off in a senior living facility or housing community. It is never the landlord's place to tell a tenant she can benefit from additional socialization and added accessibility features.
I think it would be smart for @Ray Reed to have a conversation that's open ended and let the tenant herself let him know what her needs are. From there, he can assist with helping her access those options, as he said himself even just with the technology piece.
Also as to the ageism piece - I would not be so concerned with that. It is your choice to raise rents or not based on a variety of factors, which in your case could be anticipated vacancy that you'd like to avoid, especially in light of having to evict other units. Her age puts her in a more difficult position and is more likely to cause you unwanted vacancy or as Joe said a really ugly eviction.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes6y
@Ray Reed Two sides to this coin, legal aspects of business and being a decent human being and not earning the karma of getting bum-cancer or something.
Here is what I would do, I would raise her rents in lock step to everyone's BUT I would talk with her and reassure that I will allow her to pay what she has been, and let that balance accrue. Advise how she can find something more fitting for her situation or locate some kind of off-set program to assist in paying the difference, etc etc. It is a landlords choice to evict or not, but discrimination in rents is a loaded gun, and yeah a special discount for an elderly SS income person is discrimination and another say 24yr old tenant who finds out could make complaints.
I am not a charity organizer so I wouldn't find or get those things for her, but giving her the encouragement and room to do so. Ideally, with the accrual there will be some action at some point to pay that balance off.
- Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes6y
@Ray Reed I've seen go both ways, but I would have to agree with @Robert Burnell Investment or charity? I think you know what you have to do.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes6y
There is nothing immoral about charging someone a fair price. She still pays the same price for milk and gas and a haircut as a 20-year-old so why would any other commodity be different.
Give her 90 days notice and a list of affordable housing options. If you want to give $6,000 a year in charitable giving, I can probably find people in far greater need around the world.
The DIY Landlord Book4.7247 Reviews - Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Anna Sagatelova:
@Joe Splitrock I think your suggestions are thoughtful, but I would be careful about assuming that she would be better off in a senior living facility or housing community. It is never the landlord's place to tell a tenant she can benefit from additional socialization and added accessibility features.
I think it would be smart for @Ray Reed to have a conversation that's open ended and let the tenant herself let him know what her needs are. From there, he can assist with helping her access those options, as he said himself even just with the technology piece.
Also as to the ageism piece - I would not be so concerned with that. It is your choice to raise rents or not based on a variety of factors, which in your case could be anticipated vacancy that you'd like to avoid, especially in light of having to evict other units. Her age puts her in a more difficult position and is more likely to cause you unwanted vacancy or as Joe said a really ugly eviction.
I never said to tell her she would benefit from socialization or accessibility. I just said she ultimately would. The reason to refer her to an income based community is because it is the only affordable housing option that fits a $1000 a month income. Having a conversation is part of it, but presenting her options is ultimately what she needs. We already know she lacks the income to stay in the property, so it is now about helping her find a new place.
- 6yChris De CellePro MemberRental Property Investor · Los Angeles, CA · Member since 2016 · 41 posts · 28 votes
@Ray Reed I have to ask, did you not see the T12'd before the close during your due diligence period? This should not have been a surprise.
If you’re asking, to me, that means you are looking for validation, to the people that are saying, ‘it’s no a charity....you should move the tenant.....etc.’ be super careful in any of those approach’s. Maybe help with Section 8.
Your tenant can make life very, very difficult and cost you a fortune in legal fees.
Even in August, do you really want to be the person who kicks out an 85 year old? Again I think you don’t and we’re looking for validation to make the move.
Personally I’d chalk it up as a ‘learning experience’ and move on. Id also pay more attention to the numbers when you are doing your due diligence.
Hang in there as there will be more deals coming down in the next few months. You’ll be able to make it back.
- Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes6y
@Ray Reed I can totally understand why you seem to be struggling with this conundrum, but I also think you already know the answer. You may need to hear it from others before you're ready to move forward, but, again, I think you know what to do.
Not a single person in this thread will actually reference facts, but only opinions and how you "feel"? Guess not many of you have been in front of a judge.
For about the third or so time in a couple months, I'm referencing links to two PDFs on readable New Jersey landlord/tenant laws. These include rent raises. Read them. Page 58 starts rent increases. Its quite good. Understand something. If she decided to take you to court over the rent raise, or anyone like her family members, non profit etc, the burden of proof is on YOU to prove $550 is not unreasonable and unconscionable. I've been in front of judges. You've seen movies. An 85 year old lady telling her story about fixed income vs you who needs to push his cap rate up to 8% from a 7.5%, c'mon judge I run a business! Just putting things into perspective. No one in this thread will be there to defend you. Look at it from a reasonable person point of view. That's what the courts do.
Edit: I just realised $550 is your proposed rent raise on her. Uh, not happening. Is your attorney a flipping idiot? Does he read NJ law? In 2020, with COVID19 going on. You walk into a courtroom in a couple months saying $550 a month raise is within the law, you will be laughed out of there. I'll post screenshots of the damn PDF to prove my point. This is not rocket science.
I'm not saying I disagree with you. Just making you understand worst case scenario. And getting you to understand most people here giving you advice have zero clue on NJ laws. Happy reading.
@Mark F. the proposed increase is not 800 to $1350. The increase would be from 800 to 1050. the market rent currently to comparable units is $1350. Sorry for the confusion. I threw an arbitrary date of 8/1 hoping we will be past the first wave of this virus but my timeline of the increases to all the units are after the virus.
@Chris De Celle i did not do a T12. I am very familiar with the area and the expenses. I have houses in the area. The house was operated inefficiently and being that it is not rent controlled, i knew i could turn a profit once the pandemic is over. the house is on a double lot. I also purchased with plans of future expansion. The income and expenses were not a surprise. The 85 year old lady on a fixed income was.
Thank you for all the feedback and suggestions. I will be contacting agencies, utility companies and possibly lower priced units so i can present her with options.
Sorry for the confusion but i am not proposing to increase from 800 to 1350. My increase would be to 1050 for other comparable units in the house. The other change is that residents will be paying their own heat. The units will not be worth 1350 once i separate the heat.
I did have a conversation with her Monday. Based off what the prior owner told her, she expressed moving because of affordability. I told her lets talk everything over in a couple of weeks. right now the residents are trying to get a feel of what i will be increasing the rents to but i just tell them 'i don't know yet but a similar unit around the corner rents for X'.
If I was in this situation, I would try to work with her as much as possible. Does she have family that can help with a rent increase that you can contact? Are there social programs she can get in to? Put her on a month to month lease until you can figure it out. Someone at 85 probably shouldn't be living alone anyway. Very sad to see that what she is receiving isn't enough to afford a place to stay, plus the other necessities of life. I don't see how she is getting by now with rent at $800. Contacting the family might be your best option. $1050 in NJ is very cheap for a 1 bedroom apartment, $800 with heat included is just totally outrageous. How was the previous landlord even affording the old mortgage?
- Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes6y
@Ray Reed
@Anna Sagatelova brought up a good point. Dangerous for her to move now to a new environment . Particularly one where the occupants are in a high risk group for Covid-19.
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