"Evictions ok" type ads?

Question

This occupied my mind all day yesterday:
Probably every major city has some kind of free weekly magazines, full of ads, masked as a TV program, and targeted at the African American community, often lower income range. Here, they are called "The Blue Book" and "The Red Book".
Besides about 50% of the ads promoting some kind of hair-related service, there are some rental ads in there, too, and quite a handful show in big bold letters "EVICTIONS OK".

I was wondering why landlords would target this group of people specifically. Anybody knows (or maybe does it)?

Do they take a higher deposit, evict at the first opportunity and still come out on top?
Do they charge exorbitant rents and gamble that it will offset and future losses?
Are they total junk properties? But evicted tenants are the first to call the city inspector, so can't see how that strategy works.
Hard to rent places where no normal person would go to?

Mark H. · Answer

The broker I hang my license with specializes in this kind of tenant - they advertise for the tenants the big-guys won't take - often getting leads from the leasing offices of the stricter complexes.

The properties that do this all have very narrow criteria - one might take evictions as long as there's a payment agreement, one eviction might be ok, but two is the kiss-of death, etc.  I think the biggest draw for the landlords is that even in a city of ~five million people, there are only a few that will actually (knowingly) take these tenants.  If you add in the other classes of rejected tenants, (those with big dogs, bad credit, felony records, sex-offenders), etc, you can have a waiting list at even a tired complex in the worst area of town.  And my state is extremely landlord-friendly.

I suspect a part of it may be pragmatism - evicting a tenant in a large complex often means they end up couch surfing at another tenant's place in the same property - banning felons just means you end up renting to single women who magically find "Mr Right" (a felon) as a boyfriend the day after she moves in, etc.

If your PM is already tough-as-nails & takes no prisoners, evicting someone with a history isn't really much different than evicting a first-timer and in a large complex, knowing *who* is in your units is a never-ending battle anyway.   The tenants I've met were really jaded - they didn't expect to see a deposit returned, they expected to get nailed for junk fees, and they didn't shop by floor plan or decor.  They know they're on a *very* short leash, and seem grateful for any chance at housing.  Whether that means they've learned to stiff the cell-phone company *instead* of their landlord, I don't know.

Karen Margrave · Answer

Steve Babiak Obviously each case is unique. I'm not saying to be careless and not screen tenants. My beef is more about peoples credit scores that have been thrashed, along with the negatives on their credit, due to the economic policies they had no control over. As for the deadbeats that just don't like to pay rent.... I have no pity for them.

Steve Babiak · Answer

Karen M. - - don't know if you do or don't have any residential rentals, but my experiences in this area indicate that most of the renters are following a pattern of behavior for a while, not just encountering a bump in the road.  I certainly do give consideration to those whose credit reports indicate that their derogatory accounts aren't a pattern, but those applicants have been the minority of applicants I tend to see.  I'm happy to see that they can make 6 months of steady payments on time, but that is even a challenge for many.

Karen Margrave · Answer

Steve Babiak The point is, people are more than a credit score, or history. This economy has hit a lot of really good people, very hard, and unfortunately, sometimes due to circumstances beyond their control they have lost their income, business, etc.

Though our business isn't a charity, we do look at the bigger picture when dealing with people, and make a judgment on whether or not we think their circumstances are a bump in the road, or an overall pattern. It's worked for us, for years.  I'm not saying you should do it.

Steve Babiak · Answer

Karen M. - Do you run your business as a charity?  That last line of your post sure makes it sound like you do ...

Karen Margrave · Answer

With what has happened with the economy over the past years, record job losses (through no fault of the employees), former small business owners that had businesses close, and many others have been struggling and unable to pay rents, falling behind, etc. Many of these people were formerly homeowners, or reliable tenants, that have found new jobs, relocated, etc., and need a break.

Dave M. · Answer

In some areas you can get around standard eviction procedure, for example by offering daily or weekly rentals that are not treated as apartments. Instead these are treated more like hotels so if someone fails to pay they can be arrested for trespassing.

Of course, the people you reference may just charge such a high rate that builds in the cost of lost rent, eviction, etc. to keep them profitable.

John Stevenson · Answer

That is true. In Wisconsin, there's no statutory limit on security deposits at the state level, but check your city and county laws to see if your municipality has set a cap on security deposits for residential rentals. It may be mandated on a more local level.

If not then that makes it a little easier for the landlord to assure a tenant will not trash your property. 4 Months of rent is a pretty good incentive.

Uwe K. · Answer

Thanks guys. I keep that strategy in mind once I come across a hard to rent place :)

John: In WI, for example, there is no limit on the deposit you are allowed to charge. I know a guy holding some exclusive SFH he's is renting to (visiting) execs from large local companies, and he is charging 4 months with no issues.

John Stevenson · Answer

States mandate how much can be asked for a security deposit. This is usually one to one and a half month's rent.  If they are charging exorbitant rent then they just increase the likelihood of further evictions.

I agree with Shanequa J. and Rob K that these are going to be dumpy properties in not so good areas. But, if you factor in keeping the security deposit for trashing the property (common with careless don't pay rent tenants) and you can fill the unit in under 30 days.,then your cash flow is still consistent and the numbers work.

"Evictions ok" type ads?

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