I have specialised in low price rentals for years. This is in small town Canada and I don’t have the real jungly areas like you do in the states.
It used to be 30 years ago my clientele was mainly hard working people trying to make ends meet on unskilled labour type jobs in factories, warehouses etc. There were a few weekend drunks in the mix but not too many problems.
Now it seems as if all those factories have moved to the US or the Orient and the jobs have disappeared. The children of those tenants are working in stores and restaurants (a few of them) but mostly on welfare. These people are a lot more childish and irresponsible and harder to deal with. I believe they take drugs, some of them.
You practically have to ride herd on them like children if you expect to keep the place decent and get your rent.
It’s almost like running a nursery or a dog pound instead of providing decent homes for responsible adults.
You can do it and you can make money but you have to keep right on top of the management or the rounders will take the place over.
The reason you can make money is because you can buy real cheap from don’t wanter owners. There are very few buyers for these type properties. The downside is if you go to sell you have the same problem.
Posted by Kyle McPeck on January 22, 2002 at 04:27:07:
I have a possible 3 unit to purchase that when full generates $1150 a month. The price is $34900. I haven’t looked at it yet but it is in a rough area. My mom operates a grocery in the area and she tells me how bad it is and to stay away. My conventional wisdom tells me the same. But, money is money.
How many of you are owners in rough areas. Areas that if they called you past dusk you wouldn’t go? Did you buy a headache or a cash flow?
Posted by Kristine-CA on January 23, 2002 at 24:02:28:
Kyle: I’ve been a renter in these types of areas, the ones Ron Starr accurately describes as below-average and below-below average. There are always good people looking to live cheap: artists, social activists, home schooling parents, families trying to live on one income, people trying to save money for a downpayment. If your mother’s business is successful (profitable), and I assume it is, I would use that as guide about the numbers of the deal (which look pretty good to me). Just be very selective about your tenants. And be VERY good to them. It will pay you back in ways you can’t predict.
I speak here as one of those good tenants, not as an investor. Sincerely, Kristine
I own in the below-average and below-below-average neighborhoods here in CA.
You have to be very selective in picking renters. On average, I look at about 15 applicants before I will offer my property to somebody. You also have to be aggressive about collecting rents and starting eviction actions.
It is definately profitable. Much more so than in the middle and better areas. But, not for the softies.