Invest in low income property

It is kind of hard to find investors doing low income investment(not war zone areas). I love to hear some success stories from experiened investors in this arena. And perhaps, you can share some tips and comparison(pro and con) between low income and middle income+ prop. investments.

I am interested in less desirable areas due to the facts that they are easier to get in money wise but don’t know much of how to manage them properly.


Howdy Cainvestor:

I just bought a 31 unit property that was full of crack dealers. I evicted one for non payment of rent but the second one is smarter and paid the rent. I had to give them a 30 day notice. It is not a war zone now that I fixed it up. I rented 10 units to returning GI’s. It is located in Killeen, Texas which is adjacent to Fort Hood. It has been a challenge and I still have some work to do but I collected $7000 plus in rent and only owe about $300,000. I signed a contract to sell it for $425,000 yesterday and am looking for another similar deal to trade into.

It is a hands on management intense. It would be overrun again in weeks if not controlled. Drug dealers look like you and me and do not list drug dealer on their application. I do not screen tenants enough myself but feel pretty good about the soldiers paying their rent. One thing I have always noticed is if they have trouble getting the deposit and rent together they will always have trouble paying the rent. I had one fellow apply who has been in a $150 per week motel for 2 years and still has not gotten it together to be able to pay the $275 rent and $100 deposit. I was even willing to work with him but have not heard back. He has a steady job even.

Hope this helps some LOL

Hey there,

I just got into a company that bought a number of miss-managed buildings here in Ont. We are currently re-habbing all of the buildings…and tenants. :stuck_out_tongue:

It works…working with trashy tenants has its problems but if you treat them like humans and make them feel like they are important, you can get them to do anything. We are lucky in the sense that the vacancy rate here in town is near the .5-1% mark so there is a high demand as well as alot of low income persons. With all of that and a real lack of quality landlords it has turned out to be a gold mine of a location.

Try to get your tenants to do the work for you…empower them to paint and take pride in their place…If you do get a place, take care of those little things first…they will ad up. I find lower income persons/students don’t care about things like heat loss through windows and other key things that you or I would care about so make the place easy on the eyes for the show. Then take care of the more big ticket items.

I don’t know, I haven’t been in this business too long but I find the best thing you can do is care. Care about what your tenants are doing, care that they have a job(then they can pay rent :wink: ), care that they are healthy, care about their well being. The rest seems to fall into place…

Good luck…

Howdy Ted,

Congrats on your apartment deal!

How is Killeen, more GI’s are returning?

Would it make sense( you have some PM contacts) to use property management there if someone want to buy apartments there? I am not sure PM co. typically service low income areas due to risks.

Just read your low income rental message.

My folk already have a house in a low-income area. They already owned this house, so we didn’t have to get a mortgage.

When I rented it for them, I got all the relatives of the potential tenant to sign as guarantees on the contract.

They even helped them come up with the deposit, so they wouldn’t be behind to begin with.

I just suggest you get everything in writing or don’t rent to them. I put strict payment and behaviorial, occupant requirements in the contract.
This is a good neighborhood, but still low income.


"I just suggest you get everything in writing or don’t rent to them. I put strict payment and behaviorial, occupant requirements in the contract.
This is a good neighborhood, but still low income. "

Can you elaborate what you put in the contracts to enforce the payments and well being of your property? Thx

I have a couple of duplexes in SoCal that I rent out in the $500-$600. A lot of my tenants are self-employed (i.e. working trades, etc) and have seasonal fluxes in income.

Like the previous post said, you have to stay on top of it. In a polite but firm way, you have to keep current on the rent and do not them turn your place into a garbage dump (Every few months, I usually have to inform my tenants with notice clean up the yard or I will do it and bill them). In keeping them current, you must immediate be on them if they are late or behind and give them no slack (unless they build up an excellent payment history; one year 100% on time payment; almost never happens). If you start cutting deals, you will forever doing it. You need to make sure you are the first guy getting apid out of their paycheck.

With all this said, be friendly and polite and respectful toward you tenants. This goes a long way if (or when) you need to have the “hard” discussons about late rent, etc.

Also, if you have a tenant that get behinds and does not look like they are going to get current, Offer to them to get out by the weekend or even offer them $100 or something. While you may lose a few hundred dollars in back rent, it is better than having to evict. Evicting people is a real pain and costly both interms of lost rent and actually dollars.

so what about using property management companies for these properties?

absolutely!!! I use property mgmt companies for all my properties.

We bought a similar deal - 11 units for $85,000 on a short payoff (original amount was $185,000); it appraised for $210,00 without the rehabbing and $265,000 after rehabbing. The tenants were not exactly crack dealers, but they are in the building on the left and right of ours. However, the tenants took us seriously enough about wanting to change things, that they even came out with us and helped paint and landscape the building, clean up the inside and painted. We supplied everything and even had pizza and pop. This was a very positive event for the area. The dealers are still there in those other buildings, but they are not intrusive to our tenants and our building is fully occupied, a lot of Section 8 in there too.

Oh this is a great thread!

My husband and I just found a bankowned 20-unit complex. The developer ran out of money, the units have never been rented and I’m not sure how close they were to complete, as the place has been professionally boarded up. The two windows I could see into told me that the trim work and paint are done. The property was very hard to find, it is still a construction entrance. This is definitely a low-income area. The scum that has found the place are dumping everything from used condoms and crack pipes to mattresses and motor oil. The disgusting pool has an empty container of pesticides floating in it.

So far we’ve only done houses in low-income and moderate-income areas. I’m with everyone else here. Treat your tenants with respect and empower them to respect themselves. The way I list my rents: $800/month, however, I offer an incentive – pay me by 5pm the first of every month, your rent is $750. Everyone loves to get a perceived deal. In return I ask them to pay for the first $50/month for any repairs. This works like a charm. When they are one-day late, it’s very expensive for them, the rent is automatically moved to the $800/month, and after the fifth late day, I add daily late fees until the rent is paid. If anyone would like me to e-mail them how this is structured in my lease – just drop me a note.

I also love the cash to get them out idea. I haven’t had to use this yet, but I sure would if the need came up.

Thank you everyone,

Your concept is truly wonderful, but Cleveland won’t hear of you increasing the rent by one day and then adding on a late fee. The largest late fee you can charge is $25 or 5% of the monthly rent. And if the tenant is “government subsidized” (Sec. 8, etc.), the late fee cannot exceed 25% of the tenant portion (i.e., tenant portion $50 times 25% equals $12.50 the tenant would pay for a late fee). What city/state are you conducting business in?

Georgia here and this is a solid lease for this state. It’s called the Killer Lease by John Adams. The rent is technically the higher amount, so it’s not a double whammy “technically.” I don’t rent to Section 8. I may ended up doing so with some future properties and, I know this lease won’t cut it with them. So far my only reseach into Section 8 is the printed stack of papers sitting here that I haven’t read yet :slight_smile:

I’ve been burned badly in California with deadbeat tenants due to the laws – no way would this lease hold up in California either :cry: We actually had a deadbeat ask the judge (with a straight face!) if she could “just stay in the property until June so her second grader could finish school.” This was February and it had taken us four months to get that far in the courts. I’m not a fan of California rent laws.

Take care,