Sick of filthy, trashy rental applicants - Posted by Edwin

import · February 28, 2009, 10:41pm

Posted by Wayne-NC on March 04, 2009 at 14:59:38:

Sure, I can see how you can spin it in either direction. Now on to deny. Yes, but the key word here is “tactfully” which could equate to lawfully and purely for an economic standpoint based on logic and common sense derived from MY personal experiences. Other results may vary. Nothing is 100% correct but I like to play the odds. Even thought we plan for perfection we only come out average. As far as being discriminatory, any case can be made for that. Even for spilling hot coffee if one wanted to pursue it hard enough. I don’t want to open a can of worms here and the discussion could get both lengthy and heated. I know where you are trying to go with this and you know it too. I like your last line though:
“I’ll rent to anyone who will pay their rent and take care of the property. Just behave responsibly is all I ask. But sometimes I have to make choices that might appear discriminatory to some.” That is what’s supposed to happen and I will too, but how do you know that ahead of time and before the damage is already done? Your statement needs to be the result when the lease is terminated. “I RENTED to anyone who DID pay etc, etc.” I start off believing otherwise with a new tenant until I am proven wrong. One of us will always get the chance to say. “See, I told you so”! I like it to be the tenant who gets to say it and mean it.

import · February 28, 2009, 10:41pm

Posted by Edwin on February 28, 2009 at 23:41:48:

Okay, that’s it. I’ve been doing this business 20 years and have decided I have no more patience with a certain class of tenants. When I first started, I bought some cheaper houses in bad parts of town, because that’s all I could afford. I absolutely HATE the process of advertising and screening new applicants, because this is mostly what I experience:

Applicants who clearly have limited intelligence, poor educations, poor finances, crappy jobs–if they have any, are on welfare, have too many kids, are smokers, hidden drug users, can’t speak with good grammar, and have dings on the credit reports, including evictions.

I do NOT enjoy wading through this human filth time after time just to find someone half-way decent to rent a property! Obviously, the best solution would be to sell the properties, and believe me, that is the plan once the economy gets better.

Has anyone else experienced this, and if so, how do you handle it? Not to sound uppity, but I didn’t go to college and do a lot of things right in my life to put up with this B.S. from idiots interested in being my tenants. One easy solution would be to turn it all over to a property manager, but so far I’ve been too cheap to want to do that. Early on, I simply could not afford it. Now, I could, if I wanted to.

How do you investors who have properties in bad areas deal with this? Do you just have stronger stomachs than I do? Or are you also ready to pull your hair out? I’d love to hear all feedback!

By the way, I also own a couple properties in better neighborhoods, and the caliber of tenants they attract is 300% better. Smart people, with jobs, and excellent credit reports. No stupid excuses for why they’ve screwed up their life. Managing those properties is 10 times easier.

import · March 2, 2009, 9:19am

Re: Sick of filthy, trashy rental applicants - Posted by James-Ct

Posted by James-Ct on March 02, 2009 at 10:19:39:

I believe the economy will continue its decline and rental real estate is a good hedge against it. My suggestion is to put up with the headaches of the low end rental market for now. You are doing a lot better than corporate ladder climbers recently or soon-to-be laid off. You can always sell when/if the economy turns around. Section 8 is recession-proof (I hope).
Good luck

import · March 2, 2009, 6:51am

Slumlord Millionaire - Posted by DJ-nyc

Posted by DJ-nyc on March 02, 2009 at 07:51:14:

I feel your pain. I rent to 90% Section 8 and I have alot of low income tenants. It is very challenging; but I have learned to Screen them thoroughly and have a “Real talk” session with them to let them know that I will “Throw them out quickly” if I have problems. Does it always work? No, but as much as this about Real Estate investing; it is really about PEOPLE. The more I am doing business; the more I am learning about human behavior, especially my own. My patience level, how I talk to people when things go wrong, etc. I agree with ken about the “System” and having it in place and being Fair with the low income tenants. Some days are better than others. You may just need a vacation trip and someone to “lay hands on you”. hahaha
DJ-nyc

import · March 2, 2009, 5:45am

Re: Sick of filthy, trashy rental applicants - Posted by Chad (MD)

Posted by Chad (MD) on March 02, 2009 at 06:45:55:

Not to sound like a bleeding heart liberal, but calling any group of people “human filth” is going too far.

I don’t deny higher rates of crime and drug use in lower income areas. But it’s not accurate to make generalizations about lower intelligence.

Landlords who hold such beliefs and openly display contempt for their tenants should get out of the business. They do a dis-service to everyone – including other landlords.

As a side note, complaining that their grammar bad is not accurate either strictly from a linguistic perpective. Grammar is standard and non-standard. It’s also relative; You may think someone’s grammar is bad, but yours may be bad to someone else.

import · March 2, 2009, 1:58am

Re: Sick of filthy, trashy rental applicants - Posted by Celeste-fl

Posted by Celeste-fl on March 02, 2009 at 02:58:20:

It can be very hard at times to handle tenants in a low income area, but I would rather have the headache and make on average $500 a month cashflow net per unit. When I started I went for the real nice area with $100 a month cashflow with a big mortgage payment and almost went broke. It would take me 30 years to when the mortgage is paid off to make $500 a month cashflow.

Now I don,t invest in war zones ( we don’t have any in my area) just average low income working class. You can buy these houses for cash and not have to deal with a mortgage.

import · March 1, 2009, 10:37pm

Re: Sick of filthy, trashy rental applicants - Posted by Ben T

Posted by Ben T on March 01, 2009 at 23:37:23:

What I’ve found is that properties in the type of area that you describe
are cash cows if managed correctly. You may not enjoy the
experience, but they are considerably more profitable than the best
part of town.

I rent to people with problems in these areas, because that’s all this is
there. If they have an eviction, I require two months deposit plus first
month rent, all up front. This chases some away, but they get why you
require that, and some will do it because they want your property.
Paricularly if it’s well kept.

The thing about the 2 month deposit is that it could take that long to
get someone out in my area. So I break even with it. In other words, I
simply price my rentals based on the risk.

I don’t rent to someone unless they have a salaried or hourly pay type
of position that I can verify via paystubs. No one who gets paid cash
under the table. No welfare types. Pay stubs. And I want to see the
stubs. This way I have a chance to collect if they default.

If they pay late I charge the late fees, and collect them. Otherwise, I
evict. If I start the eviction and they want to stay, I let them if they pay
the legal costs and late fees.

Low end tenants have to be actively managed. But if you do this, they’ll
be profitable for you. You don’t have to socialize with them.

Ben

import · March 1, 2009, 10:20am

Re: Sick of filthy, trashy rental applicants - Posted by BTI

Posted by BTI on March 01, 2009 at 11:20:15:

Edwin

The advice to get out is the best advice you have been given. Don’t wait for better times, get rid of them whenever you have the opportunity or maybe go section 8 for awhile.

You will experience a nice feeling when you get these turkeys off your back. My Brother and I were age 16 and 19 when we started and we were doing deals in a part of town that was a great place to live only a decade before, but we discovered our attempt to reinvigorate the area was like trying to hold back the ocean with a bucket.

We were lucky in the sense that my brother had married a girl with connections to 3 different groups that people didn’t want to meet and we just turned our problems over to some “collection specialists” for a small fee and our turkeys would either leave the cash on our doorstep, or leave town never to return. After a couple of years we went with the “bread and butter properties or better” philosophy and life was much easier.

import · March 1, 2009, 7:43am

Trashy Tenants - Posted by Rich-CA

Posted by Rich-CA on March 01, 2009 at 08:43:03:

I have noticed that tenant quality travels in “price bands”. That is, a $1000 per month rent attracts one kind of prospect (assuming its in a $1000 per month area) while a $900 per month rent attracts another. The bottom line is that the further you get down the food chain, the worse the tenant quality. After all, there is a reason why some people can only afford $300 per month and others can afford $800 per month and it has nothing to do with their being victimized somehow. People who lack drive, education and so on are going to be who you see at the low end. A responsible person, educated, well mannered and so on simply will not want to and will not have to live in those areas.

Really, your only solution to get rid of the kinds of tenants you describe is to get rid of your units in those areas.

import · March 1, 2009, 3:26am

Re: Sick of filthy, trashy rental applicants - Posted by ken

Posted by ken on March 01, 2009 at 04:26:20:

I am also trying to upgrade my quality of neighborhoods.I think it is a natural progression.I bought what I could when I was in my twenties and hussled to deal with it.Now I expect people to take care of themselves to a much larger degree.I am finding single family properties rented on a rent to own are bringing much better tenants who I do not mind dealing with.

import · March 2, 2009, 7:20pm

Just a bit of disagreement with - Posted by Kenneth Hocking

Posted by Kenneth Hocking on March 02, 2009 at 20:20:57:

Michaela on this one–

Given the current administration and congress the likely hood of Section 8 shrinking anytime in the next 8-10 years is very very low…

Keep your property up and you will rent just fine… become a non fixing landlord and they will not fund your house it is that simple… Each and every Section 8 office can set its own rules within the GUIDLINES of hud…

In Houston we have a HARRIS COUNTY and a CITY OF HOUSTON sec 8 office each are different in inspections requirements payments etc etc

Real interesting when you own a duplex and one side is the city and one side is the county and both are judged differently…

But in a demo controlled government entitlement programs WILL grow

import · March 2, 2009, 11:14am

Section 8 - Posted by michaela-CA

Posted by michaela-CA on March 02, 2009 at 12:14:01:

James,

don’t be so sure about section 8. This is what happened in Atlanta several years ago, after the real estate market there crashed (2000).

Typically, section 8 rentals were lower end. But after the crash there were so many empty new and newly renovated houses that the owners were unable to sell, that they started applying to section 8.

So, now they had the choice of some really nice homes and they dropped their contracts with the so-so properties. Those landlords were scrambling now, of course, because it was hard to fill those sub-par houses with market rents and make the same kind of profits or even get enough to pay the mortgage. A lot of landlords lost their shirt due to that.

Then section 8 started a point system, by which they gave points for certain amenities (mini-blinds, dishwasher etc), but they wouldn’t tell you what they were rating and how many points for each. Then depending on how many points your property got they would rate it A-F. ‘F’ of course meaning ‘failed’ and not acceptable for section 8. They then had a payscale depending on your grade.

Certain things, like a boarded up house on the same street would automatically result in an F. So, this way they could deny almost whole neighborhoods, that very typically section 8 before.

They only chose the cream of the crop of properties, since they could only take on a limited number of homes.

So, my point is: Don’t count on section 8, make sure that your property cash flows as a normal rental and if you can actually get section 8, then look at it as ‘icing’.

Michaela

import · March 1, 2009, 12:09pm

Re: Sick of filthy, trashy rental applicants - Posted by Edwin

Posted by Edwin on March 01, 2009 at 13:09:21:

Thanks for the comments, BTI. You are so right that trying to reinvigorate a decling or bad area is often next to impossible. About 15 years ago I was thinking of buying a 43 unit apartment complex in a bad part of town. I was idealistic and thought if I fixed the place I could attract better tenants, etc. That is true to some extent, but I had no control over the general area. I backed out of the purchase, and today that area is about the same. Whomever bought the building has improved it and gotten better tenants, but it’s still in an undesirable area and will never appreciate that much.

import · March 2, 2009, 3:38am

Trashy Landlords - Posted by Wayne-NC

Posted by Wayne-NC on March 02, 2009 at 04:38:54:

Maybe the two go hand in hand. I am not saying that Edwin is one but what you have just described could fit the profile of landlords that he could sell to. To get rid of those properties the price will have to go down to either his willingness to sell (to an able and willing buyer) or the mortgage balances whichever is higher. Anyway, I have noticed that landlord quality travels in “price bands” too.

import · March 1, 2009, 6:05am

Re: Sick of filthy, trashy rental applicants - Posted by Edwin

Posted by Edwin on March 01, 2009 at 07:05:30:

Ken, that is correct. Single family homes tenants who intend to buy should be better tenants. However, you cannot simply advertise any house on a Rent to Own basis and expect that to solve your problem. Some houses simply will not attract the type of tenants who want to buy. They only attract renters. I have found this out the hard way. I have also owned apartment units that only attracted low income people, and they were just as aggravating. Admittedly, I had some tenants who were hard working and behaved themselves, but I had others who were complete losers. I bought into that situation because the building was cheap and affordable, but never again. I really think it’s better to pay more for a property in a better neighborhood, even if it means you own fewer properties. Go for quality, not quantity. As someone said once, "you can take the person out of the ghetto, but you can’t take the ghetto out of the person.

import · March 3, 2009, 5:43am

Re: Just a bit of disagreement with - Posted by michaela-CA

Posted by michaela-CA on March 03, 2009 at 06:43:10:

Kenneth,

I don’t think we necessarily disagree on this. I just pointed out that section 8 may change their requirements in some areas (you point out yourself that every office sets their own rules within the general guidelines) that could eliminate your property, even if it had been accepted before.

Michaela

import · March 2, 2009, 1:21pm

Re: Section 8 - Posted by James-Ct

Posted by James-Ct on March 02, 2009 at 14:21:51:

Thanks for the feedback Michaela. I wasn’t aware of that. Edwin has properties near Sacramento or Elk Grove, if I recall correctly. I wonder if the same scenario that you describe can happen in CA?!

import · March 2, 2009, 1:21pm

Re: Section 8 - Posted by James-Ct

Posted by James-Ct on March 02, 2009 at 14:21:35:

Thanks for the feedback Michaela. I wasn’t aware of that. Edwin has properties near Sacramento or Elk Grove, if I recall correctly. I wonder if the same scenario that you describe can happen in CA?!

import · March 4, 2009, 2:51am

Can I quote myself? - Posted by Wayne-NC

Posted by Wayne-NC on March 04, 2009 at 03:51:03:

“I am not saying that Edwin is one…” With that said, I have the same standards as you. I’ve had the good, the bad, and the ugly in tenants. You can do all the checking that you want but it really comes down to the luck of the draw. You just try to put the odds in your favor. Almost certain problems come with select minority groups, boyfriend/girlfriend relationships and those with a lot of kids and/or so called “pets”. If done tactfully and correctly, those problems can be avoided. I have a 100% disaster rate with those groups and have over 10 years of experience used to compile my statistics. Your results may vary.

import · March 3, 2009, 7:28pm

Re: Trashy Landlords - Posted by Edwin

Posted by Edwin on March 03, 2009 at 20:28:11:

Wayne, FYI, I am not a trashy landlord.It is precisely because I do go to great lengths to provide safe, clean, and decent housing that I am sometimes annoyed that I have to waste my time with unqualified applicants. It gets really old after awhile fixing things that were damaged by careless tenants. Lots of tenants have no problem moving into a freshly painted, carpeted, repaired house and then quickly destroying it. They seem to have no concept or appreciation for the money and effort it took to put it into good condition. If I was a slumlord I would probably care much less about the quality of tenants I attract. But when I put out a good product, I think I deserve a decent tenant.