Selling Low income houses

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2 years ago I purchased a package of low income houses from a friend in the business. All together the houses were around 85k. There not in terrible shape but are low income. 

When I bought the houses, I inherited a property manager who took care of all issues. 

after several times of being screwed over by tenants and eventually having to fire my property manager, i'm pretty burnt out. I can usually keep two houses filled at any given time but now i'm getting close to running out of money in my business account due to several repairs. 

I put the houses to sell on craigslist and am only getting responses from investors who want the houses for 50% what I paid for them. 

I've considered Rent-to-Own but would like to simply get out of the business if possible.

So i have a few questions:

* is this just a phase for new investors? I feel overwhelmed and that I made a terrible mistake.

* Is lease  to own a better option if I can't sell them for what I paid for them?

* where can I find some specific resources to help with this issue?

@Thomas Stanley   it happens to the best of us... the low end low income home in the US is about as tough a asset class as exist.. yet many who venture into them have little or no experience.  And your results are common unfortunately.

And of course the nice guys who sell them to you will buy them back at 50 cents on the dollar that's common or worse.

If you cannot personally manage them and get them running then you need to cut and run is my advice..

Also for anyone reading this.. its why I absolutely do not like the advice some give .. that its better to buy some low end rental than to pay a guru money to learn how to do real estate.. many make that comment on BP.. and I think its horrible advice.. low end rentals are only appropriate for very experienced folks that do this for a living they are NOT investment.

Thomas,

We also invest in low income properties.

Jay offers great advice, but he is very down on low income properties.  It can be a profitable niche market with the right mindset.

We went through a phase, last year, when we had 13 move outs, so more than one a month.  We got pretty frustrated.  But this year has been much better.

We've given half of our units, the biggest headache ones, to a property manager.  This lets us compare what we are doing to how she does things, but still keeps us involved.  Each time one we are managing goes empty, we can decide whether to fill it ourselves or hand it over to the PM.

A few things to try:

- Look on Facebook for a FOR RENT group in your area.  Mine is full of low income applicants.  Read the posts and get a feel for which property managers they like and recommend to others.  Interview those PM's to potentially hire.  If the tenants like them there will be a bigger applicant pool.

- Whenever you have a vacancy, getting the unit re-rented has to be the priority.  Pay non-paying tenants cash for keys or whatever you can do to get them out, make sure it is priced right, and get any repairs done as quickly as possible.  Empty units will drain you fast.  Every time you have a bad tenant move out, go back to the application and screening decisions and figure out what you could have done to screen them out.  Keep refining your process to accept fewer problem tenants.

- Study up on offering owner financing to investors.  Rent or lease to own to a resident will be more headaches in a low income area, so you probably want to sell to an investor.  If you offer financing they may be willing to pay more.

Low income properties are going to be more time intensive.  They are going to have more repairs and move out costs.  But the purchase price/mortgage is lower and the rent per investment dollar is higher, so they should still cash flow just fine.

@Michelle Fisher This is such great advice! thank you for passing this along. Do you have any advice around how to most effectively collect rent on late tenants? this seems to be the thing that causes the most stress to me. 

Originally posted by @Thomas Stanley :

@Michelle Fisher This is such great advice! thank you for passing this along. Do you have any advice around how to most effectively collect rent on late tenants? this seems to be the thing that causes the most stress to me. 

you have to really check references, and credit scores, and late fees for paying late. Collect first and last months rent up front and one month security deposit