Quote from @Kristina Anderson:
Am I the only one who continues to be upset that purchase price of the business doesn’t reflect that the business isn’t viable at that price? Value add to me is adding a 3rd bedroom, updating the kitchen, not doubling the rent x2. If you bought a restaurant and were told “it works! Just cut salaries in half” you’d say “uh, then it doesn’t work”. Our strategy is to buy based on current rents. Yes, raising 50 a month or so, fine. But when we see properties that sit at the .25% “rule” we don’t even put an offer in. We investors are part of the reason we are seeing so much inflation. And let’s get honest. Most of us don’t own in fancy communities where a family might have resources to pay more. No. We are doing this in C and D areas. We think “well we have to to make it work!” But what if we simply didn’t buy an underperforming property in the first place? I’ll say keep the grandma if you buy. Increase her 50 or so. Be a kind landlord. If that means you can’t afford to eat, then maybe this property isn’t for you.
Amen and Amen. We are in class A area. We are raising rents to cover increased property taxes, and that's IT. $25 a month, $50 for one because the city it is in decided landlords have to pay the trash bill and the tenants realize we are going to transfer that $17 a month BACK to them. One tenant actually called me up crying, when she saw the notice for $25 increase she thought it was a typo and I meant $250 (From $1350 current rent.) Because people ARE doing that, and they ARE part of the problem. With fifteen properties we COULD be making at least another $1500 a month, probably closer to twice that. But I'm a firm believer in Mark 8:6--"What does it profit a man to gain the whole world if he loses his soul?" My mom was a widow with seven kids. People came together and helped us. Groceries on our porch. An uncle who farmed got an extra cow to keep us in milk. Clothing hand me downs. Doctor never billed my mom again once my dad died for normal visits, vaccinations. "We'll mail you the bill". But never did. Shoe salesman sold to us at cost. Grocer gave us food that was imperfect but still edible--what now you find in the "bargain bin" at Meijer. We all grew up and went to college (on full scholarships) and became taxpayers. Isn't that the IDEAL outcome? But we could very well have ended up in the welfare cycle. The DIFFERENCE was people willing to help. And we all seven of us feel obligated to pay it forward. (well, six, one sister has died.) We have tenants who were 80 when they moved in, we have not raised their rent in six years, although we told them last year we have to this year. We've gone from just above breakeven to just below. But they live in a special building, completely handicapped accessible, and others are paying $1895 now for what they get for $1400. We're bumping them to $1450. They used to be our neighbors so there is a relationship there. And they have six kids, if necessary I would expect them to help--they are all middle class people. One of them said two years ago "It's basically like you give them $300 a month (as market rate was $1700 then.) I was like "And I'm OK with that." We find it more rewarding than giving to most charities. So OP, I would say research SENIOR ONLY Section 8 properties, the wait list for them is not so long, as well as other charities/kids pitching in/roommate. And thank you for willing to do the kind thing.
