All Forum Posts by: Erik Haugen

@Mindy Jensen - thank you so much for the response. I gave all tenants notice at the same time. I gave them option of moving back in after the rehab on a higher rent. 

P.S. Wow, didn't realize you're the same Mindy on the podcasts. Hi! 

I bought a 8-unit apartment building; the value add is that rents are 20% below market value. My strategy was to buy, let the tenants go, rehab, and raise the rents. We gave notice to all the tenants (who are month-to-month) to vacate. During the walkthrough I saw quite a scene where tenants were genuinely shocked that they would be moving out.

During coffee with a friend I mentioned what I am doing with this property. He was shocked and said "so this is what you do for money." I tried to rationalize that if I don't buy the building, someone else would and they would have done the same thing. I also tried to say something of the effect that this is the byproduct of a capitalistic society - should I feel bad about being a software engineer, for instance, because I know that machines one day could replace human labor? He maintained that he could have an opinion, and said that this is why rich people are hated by some. From the discussion, I can see that he thinks money corrupts the conscience, and pursuit of money is bad. From my perspective I told him that if I were just to be rich, I would not have done house hacking, live frugally, and drive an old car. I said financial freedom and not having someone direct me at work one day is important to me. 

I am new in my investing journey. I am asking for advice from experienced investors on what framework do you use to think about all the ethical dilemmas you face in your real estate journey. For instance here are some options; none is right / wrong, more important is I pick one and stick with it:  

1. I now embark on a journey that I would be hated by people simply because they are jealous and they don't understand the function of money the way I do, and I would accept that as part of my tradeoff. 

2. I would not invest in any apartment buildings where rent increase means kicking tenants out 

3. If the path to financial freedom means that some people lose their homes but it's done so in a most humane way (proper notice, empathy etc), so be it. 

Thanks for reading!