Hello BP Family,
I have a tenant who is a single woman that ever tired receiving a fixed income. She is currently paying well below market value for her unit , however her payments are on time every month. He's over the age of 60 years old , and I'm trying to figure out a way to increase her rent but keep the tenant. Does anyone know of any programs that I can have the tenant enroll in order to subsidize or pay a portion of the rent ?
Not sure what city this home is in, might want to list that to get more targeted answers. Churches are a great place to start. Many offer programs for one time payments that may assist in one you are trying to do here.
Tough situation. I'm kind of in your situation. Are you still turning a profit? How much below market rent are you with this tenant?
She could apply for Section 8. Bigger question: why do you feel obligated to help her afford something she currently can't?
You have a product worth $X. Find someone willing to pay it. Do you think Elon Musk gets a call from retired women asking how they can get subsidies to afford a Tesla? Of course not! He puts his product on the market for what he thinks it's worth and people can either pay that or they can buy a 2003 Ford Escape. I can assure you he doesn't lose sleep at night thinking about the poor people that can't afford his product.
Your job is Landlord, not social justice warrior. Let her know what the rental is worth, that you are a businessman that invests in real estate to build a future for yourself and your family, and that she needs to pay market rent or she'll have to move out. If you want to be nice, give her up to 90 days to find another place to live. Then clean it up and rent it for market rates.
I was in a similar boat, inherited 4 tenants that were all under market rent. A ninety year old lady had been there for 10 years and never had a rent increase. She was on a fixed income as well. Turned out she really wanted to stay and when confronted with the increase she disclosed that she had plenty of money and it was a non issue. Have you had a Frank conversation with her?
I agree with @Nathan G. . Everywhere your tenant goes is a business that says, "The price is..." and it has nothing to do with her situation in life. Tell her the rent is... A tenant that is always on time with rent payments doesn't look like a tenant who is struggling. She might be telling her friends what an awesome deal she has living in your place.
Now is a perfect time for tenants to be seeking rental assistance with all the COVID aid out there. If you feel guilty, you can google for local rent aid programs.
Many cities have programs for financially distressed elderly people. Call your local city hall.
I agree 100% with the post that states that her financial condition is not your problem. You are running a business. Treat it like a business and don't get into your tenant's personal issues. I've had tenants dying from cancer, liver disease and one tenant was in a coma for 6 months. I have a huge heart and feel for those tenants, but business is business and I try to make sure a tenant or someone pays the rent even after the pass away and I can't rent the apartment until their furniture is removed. Fortunately, someone I don't even know always steps-up-to-the-plate and pays the deceased person's rent. Usually is is a relative, but I have had a few churches step in, pay the rent and remove the deceased's furniture. It sound like I am cold, but if you don't treat your rentals like a business and you lose a few thousand dollars 5 or 10 times over a 5 or 10 year period you the numbers start to add up.
If you are losing $100 per month for rent because you have a soft heart and don't want to clean and paint the unit then you are losing $1200 per year, or $12,000 in 10 years, or $18,000 in 15 years. I don't know about you, but there are a lot of nice things I can do with $18,000 like writing a check for $18,000 to give to one of my children gives me a great feeling and just imagine what someone you know can do with $18,000.
And then do the math for raising the rents for more than $100 and it is a ton of money.
I agree w/ @Nathan G. @Brett Hennessy @James Mc Ree You seem concerned about her finances & ability to pay market rates I understand that, moral code. You say she’s paying well below market so why not already have begun doing subtle increases right away? Just the thought alone of knowing something will be breaking in the future will dictate that. Like mentioned above you may find out that she’s saved up wealth & don’t even know it yet. You could also be giving her an application/questionnaire for her to answer your n her annual income. That way you can have her info on record. She should be able to disclose her annual income to you. I wouldn’t get into subsidized programs unless you were prepared to work w/section 8 housing w/a whole new tenant. Start w/the subtle increases to if you really think she’s a good tenant. That way she at least gets understanding that nothing stays the same anymore.
I am taking over property management for a 6 unit apartment building I identified for my buyer. Upon reading the leases I have discovered half the leases have rent increase clauses that have never been executed once the tenant reached their 12 month anniversary. I will be writing up new leases reflecting the current terms including the rent increase. I will bet your under market rent tenant has a similar clause that she accepted and the previous landlord failed to execute.
If you want to give your money away, we can help...
To some extent, I agree with @Nathan G. about this -- you're a landlord here, not a social worker. On the other hand, 60+-year-old tenant, in Pawtucket, RI on a fixed income with a proven history of paying rent on time, easy on the property...my low C-class landlord antennae prick up at that.
Free economics and Adam Smith aside, that sounds like that special kind of poor yet STABLE someone you can put into a C-class living situation who will stay where she's put for a long, long, long time, and that's one of the main ways you make money in C-class, minimizing turnover and taking advantage of stability in an ocean of instability.
Investigate Section 8.