When it comes to our first real estate investment, we are relying solely on rental income as the only source of income. There are no coin-op washersand dryers on site or anything else that could bring in extra income. In away we feel that we are at the mercy of our tenets. We have not raised the rent on them We are considering a moderate increase once the repairs are all done. We realize that our tenets are below the national poverty line, and we do not want to put any extra pressure on them to pay us more money.The problem is that they do not pay their rent on time. It is not just one or two tenants that have this problem, but most of them have this problem. I think that it is not a problem of discipline, but a problem of the lack of money. So, we have been trying to think of a solution. We have discussed payment plans with our property manager, but she did not sound too hopeful.
I have made no secrets of my plans to be a philanthropist, and I genuinely want to help people like our tenants who are at the bottom of the financial barrel, so I have been trying to think outside the box for a solution. I have thought about starting a business where employees could work for me from home, so that I cannot only have these people as tenants, but as employees. The major problem I have with this is that my tenants do not have access to computers, and most if the jobs like this require internetaccess. I plan on doing more research for opportunities for people in these situations to see what sort of solutions area already out there. I had an idea, before we even closed on this property, to give everyone of our tenants, regardless of their payment history, a break at Christmas time. I was thinking of either a discount for the month of Dec, or a freemonth of rent depending on how well we were doing for the year. At this rate I do not know if we can pull it off for this year, but I still want to do something for these people. So, we are considering sending them gift cars to the nearest grocery store.
3 comments:
From another new RE investor: BE CAREFUL! I am not saying that because your tenants are at the bottom of the financial barrel, as you put it, that they will take advantage of you BUT kep in mind you are running a business. Tenants do not equate to employees, much as one of your ideas has them in that position; you don't need to compensate them for a job well done. Giving rent breaks has the potential to set you up for even more problems with regular, on-time rent payments. It has the potential to send the message: These Owners Are Doing Well Enough So They Can Afford To Cut Back On Our Rent! No Big Deal If We Don't Pay On Time, etc. You have no way of predicting how your largesse will be interpreted. You may create an impression quite different from the one you want to give. I would go with the modest gift certificates to a local grocery store, and I do mean modest, much as you might be tempted to open your wallet. I am so in line with your desire to be a philanthropist -me, too! One of the reasons I've started investing in RE- but there are other ways to give back without compromising your need to make your business successful. You NEED to make your success in business a priority otherwise you won't have the means to reach your end goal. Hope I made some sense. My best, lck
Thank for your insights. I need more people like you to keep me in check! I am also glad to hear from a person who is philanthropically minded like I am. You have made perfect sense, and I think you are right. I do need to find better ways to give back without compromising the business.
Hi RE Investor: I wanted to know if you work with HUD at all and would you ever considering buying a building and renting to primarily low income renters through HUD....I am considering on buying in the Dallas area soon and I wanted to know if you had any experince working with HUD.
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