How do you be a successful C-Class and WAR zone landlord?

66 Replies

Originally posted by @Jim K. :

As you said, different markets surely require different practices. Just like we are all equal, but some are more equal than others.

Are you throwing Orwell at us?  

Originally posted by @David Abbate :

By being a professional, dedicated slum lord. Apparently it works, if you're willing to have that be your life. 

Wrong. And good landlords resent that mentality.

 

I have several D and a couple C properties. It’s all about being a leader in the community. I love the Section 8 housing program in these areas. I personally would rather have a government deposit each month than an A class renter even, but that is me. Treat people well, and they might stay out the duration of their lives. Provide a gorgeous product and be a responsive landlord, easy. Also, I try to pretty much stay out of their hair once they are placed. If you move to evict for being dirty or something trivial, you’ll make less than I do. :)

Originally posted by @Jonathan R. :
Originally posted by @Jim K.:

As you said, different markets surely require different practices. Just like we are all equal, but some are more equal than others.

Are you throwing Orwell at us?  

No, I threw Orwell at Charlie, in the certainty that it would sail right by his Napoleonic head.

Originally posted by @Jim K. :
Originally posted by @Jonathan R.:
Originally posted by @Jim K.:

As you said, different markets surely require different practices. Just like we are all equal, but some are more equal than others.


Are you throwing Orwell at us?  

No, I threw Orwell at Charlie, in the certainty that it would sail right by his Napoleonic head.

 Lol! I love it. 

Originally posted by @Jim K. :

As you said, different markets surely require different practices. Just like we are all equal, but some are more equal than others.

Mr Moore ask this question about once a month.. 

 

@Erik Whiting Wow, I’m a newbie ( within my 1st 60days of investing ) & I took in & felt every word. Thank you sir for your detailed input, I hope to figure out just how to operate this thing & follow along as you share your wisdom & experiences.

Originally posted by @Erik Whiting :

For starters, we need to fix the title of the post.  "Class C" doesn't mean war zone.  Those who think it does have a very limited understanding of what buying cheap, older properties is all about.  

Came here to say this. @Erik Whiting beat me to it. I don't have to do anything differently with my C tenants than I do with my B tenants. C neighborhoods are not even close to war zones. 

 

Originally posted by @Erik Whiting :

@Charlie Moore , I have a standard policy....

1) I never discuss application approvals/disapproval in person or on the phone.  Then it becomes "he said/she said" and that's how you end up in court.  Plus then all they do is argue with you.  They will never accept your reasoning is good enough and will whine, wheedle, and in some cases threaten you.  Remember, we're talking Class C here....

2) When we deny, we send an email to the address they provided on the application: "Sorry but you were not approved.  If you'd like more info, please send a self addressed, stamped envelope to PO Box 123, etc.  Allow 4 weeks for response."

I've been a land lord since 2005 and run over 500 applications.  Never ONCE had anyone send me a self-addressed, stamped envelope  They KNOW the reason!

When was the last time you applied for a W-2 job and the HR department called you to tell you why you didn't get a call back?  The Pro's have it figured out.  Leverage their knowledge/best practices.

What would you say if someone DID send a self-addressed, stamped envelope? 

@Mindy Jensen , the truth, the whole truth, and nothing but the truth.  So for the last person I rejected it would look like this:

1) Applicant has two prior evictions from 2013 and 2015.  Neither judgment shows a satisfied payment.  Neither judgment holder indicates that applicant has contacted them or made any efforts to settle judgment.

2) Past land lord (2015) stated eviction was due to property damage, unpaid rent, and disturbance of neighbors.

3) Less than 90 days on current job.

@Erik Whiting   over the course of the decades working with clients another very easy way to determine the status of your renter is to look at their car.. if its a pig sti  so is the house 90% of the time I work out of my car a lot so its probably a little more messy than some.. but you know what I mean.. you can just tell.. and I really like  the ODOR  thought process you can smell folks that are un tidy they have a certain odor to their cloths.. as one who has worked in the distressed space for so many years .. you just know it.. I can tell if I am standing in line at a check out at the store and get a whiff. 

of course newer landlords just don't know what they don't know..  and most will not have the ability to go to their potential tenants home to interview them  either they don't live close by or they are simply too busy.. but I like that.. for the DIY landlord that wants to make this their basically sole source of income that is a very wise move on your part.. !!!

@Jay Hinrichs , thanks for your comments!  Yes, I have smelled the odors you're talking about!

It's easier to get into someone's home than most folks think, especially if the person wants something from you (i.e. to rent your house) and they have nothing to hide.  In town or out of town: it's not complicated or expensive.  Considering the average Class C eviction + turn over + vacancy represents a bare minimum loss of $2,000 in unpaid rent, court costs, and clean up, it's nothing to spend $50 hiring a real estate floor agent to drive by the current home, snap a picture of the outside, pictures of their pets, and peek inside while the applicants sign a copy of the listing data then forward all of that.  For local applicants if the investor doesn't have time or isn't comfy doing it, hire a helper and give him a $20 bill and 6-pack of his favorite beer.

To be clear: I only do this final step once everything else on paper checks out.  75% of the time I DQ the application before it gets there.

To me, it's basic due diligence for Class C.  B or A tenants probably don't require it because in general they will have good credit/good jobs/assets/reputations to protect.  But when you dip your toes in the Class C pool, I can't understand who wouldn't at least TRY this a few times and see if it helps with getting quality tenants.  

A wise real estate investor I know said whenever someone asks him what the first step is to becoming a real estate investor, he asks them to go into the bathroom, take out a $100 bill, and flush it down the toilet.  Basically, be ready to lose some money on stupid stuff/for no reason whatsoever.  My thought is, rather than flush that $100, how about send someone over to the homes of your next 2-3 Class C applicants to look, listen, smell.

These are two completely different questions. The way I understand it, at least in my town, C-class includes most working class and a lot of lower middle class housing. That's probably at least a third of the city. The neighborhood I live in would probably be called "C+ class or just breaking into B class." There's a mix of blue and white collar, unemployed and sec 8, all types of people. There's some crime but not much, some rundown housing but a lot of rehabs and new builds. 

What I'd call "war zone" is much more uniformly bad. High crime, poverty, hopeless.

The strategy for C-class rental success is to try to stay toward the upper end of that class, provide attractive properties to get attractive tenants, maintain stuff well to keep those tenants and, in particular, be very careful with your screening in the first place. Keep maintenance and management in-house for quality at lower cost. Being local and hands-on gives you a big advantage.

I have no suggestions for how to invest in a D-class war zone. I know people who are succeeding in these areas, but I don't envy them. 


  

Originally posted by @Erik Whiting :

@Jay Hinrichs, thanks for your comments!  Yes, I have smelled the odors you're talking about!

It's easier to get into someone's home than most folks think, especially if the person wants something from you (i.e. to rent your house) and they have nothing to hide.  In town or out of town: it's not complicated or expensive.  Considering the average Class C eviction + turn over + vacancy represents a bare minimum loss of $2,000 in unpaid rent, court costs, and clean up, it's nothing to spend $50 hiring a real estate floor agent to drive by the current home, snap a picture of the outside, pictures of their pets, and peek inside while the applicants sign a copy of the listing data then forward all of that.  For local applicants if the investor doesn't have time or isn't comfy doing it, hire a helper and give him a $20 bill and 6-pack of his favorite beer.

To be clear: I only do this final step once everything else on paper checks out.  75% of the time I DQ the application before it gets there.

To me, it's basic due diligence for Class C.  B or A tenants probably don't require it because in general they will have good credit/good jobs/assets/reputations to protect.  But when you dip your toes in the Class C pool, I can't understand who wouldn't at least TRY this a few times and see if it helps with getting quality tenants.  

A wise real estate investor I know said whenever someone asks him what the first step is to becoming a real estate investor, he asks them to go into the bathroom, take out a $100 bill, and flush it down the toilet.  Basically, be ready to lose some money on stupid stuff/for no reason whatsoever.  My thought is, rather than flush that $100, how about send someone over to the homes of your next 2-3 Class C applicants to look, listen, smell.

I agree with you.. since I spent a good 20 years selling real estate at the street level .. I have been in if not hundreds probably over 1000 homes on appointments etc.. Like my Daddy always told me.. REal estate is Belly to Belly.. now with the internet and folks texting this art is being lost.

 

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