Apartment Complex full of Govt. Assistance Tenants

[Chris Ayers]

Checking out this one 29 unit apartment building now and spoke with the current PM who mentioned that:

• Most tenants are on government assistance
• Building is old but condition is fair
• Great cash flow. 
• Converted hospital to apartment building years ago 
• Owner pays utilities and you can't separate

It's in a class B-C area but not sure how I feel about most of the building being on government assistance. Has anyone every dealt with situations like this and how did it turn out for you? 

[Margie Fuller]

I haven't personally owned a property where tenants were on public assistance, but I have managed one or two units out of a large inventory that did. Of those, they always paid because the money came directly to the office. The negative is in the maintenance agreement. You'll want to be sure that you know what their damage is before buying because when they come to do the inspection, the owner frequently has to make the repairs. Hopefully, the PM did a walk through and has a signed walk through agreement. The government assistance part is good on the payment, but bad in that they have no skin in the game. Fortunately, the 2 that I encountered still had respect for their home and didn't create a lot of damage. They also stayed longer because the rent was guaranteed for this location, whereas, they may not get approved again if they move. Just something to consider. I wouldn't let it be a drawback. Just do regular inspections and have your contractors report anything that may attention as they go in and change fire alarm batteries. It's the best way to keep your eyes on damage regularly.