Gentrification in action

3 Replies

I've encountered a moral dilemma and wanted to ask BP members about their thoughts. My grandfather bought a single-family residence which has been rented by the same man for the past 30 years, he always pays on time, but is paying at least half the current rental rate for the area, furthermore, if repaired the house would be worth several hundred thousand dollars.

The tenant, possibly a veteran, lives off His retirement and could not tolerate a raise the rent, And is too old to be able to move after 30 years in the same house. Are there any creative ways to bring this property to market value while avoiding being the heartless landlord that kicks this poor man to the curb?

Does your grandfather still own it @Hyuma Leland ? If so then it would be up to him and my guess is he will let him stay.

Leaving this old guy there won't hurt the property value, it only postpones the time for when you capitalize on the area.

The bottom line is what is most important to you? 

If you don't own the house then it's not your problem.  If your grandad does not "need" extra money it's not a problem for him either.  Let the guy stay until you either buy it from your grampa or he give it to you in his will.

I'll assume this has come up because either your grandfather has passed or has sold the house to yourself/rest of family.

If it were me and it is currently a month-to-month lease, I would let the gentleman know, in person and in writing, that in 90 days the rent will be raised to $XX.  And put that number, for him, at a below market rate but still covering most of the gap.  Perhaps he has a nest egg somewhere or family members who will help.  You might be surprised.

But assuming he doesn't, I would let him know in the same conversation that considering his long years as a great tenant...if he doesn't want to or can't stay...I will be supplying him with the security deposit and first month's rent for (up to) a similar apartment as well as paying for movers to both pack and move his items.

He will probably have to move to a smaller place and/or another less expensive city to live in.  It will be traumatic for him, I get it.  And I would feel bad, hence why I would make the move out as easy as possible for him.  But I would not feel bad enough that I'm going to sit on a house that could be fixed up and sold with substantial equity or rented for a far larger amount.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

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

Start here