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If the tenant is bad news and the legal rent is $2200, why not just raise the rent on the next lease renewal to $2200? Then they'd be forced to move out as they can afford the rent.
Out of all your RS units in the Bronx, what percentage would you say have a legal rent above $2000?
Yes that's a strategy you can use to get then out your building however the tenants in my building who have preferential rents are newer tenants who under went a strict screen process to qualify and therefore are well behaved and desirable tenants. I have 3 problematic tenants left who I inherited who have been living in the building at least 20 years. They pay below market rents and have no preferential rents. So using that strategy does not apply to those tenants. So basically I'm stuck with them since they're RS tenants with guaranteed lease renewals.
Inheriting tenants is always a no-no UNLESS the deal is THAT good..otherwise it just isn't worth it. For me to accept a deal with inherited tenants I have to make significant returns on my investment with them as part of the calculation otherwise it just isn't worth the potential massive headaches.
Exactly! Let's use food stamps as a prime example.
If a person is too "poor" to afford food what happens? The city gives them food stamps right?
When the person goes to the grocery store, the person is able to buy food via food stamps and the grocery owner is able to charge MARKET for that gallon of milk say $3.50 a gallon. Correct? The customer is happy because they got their gallon of milk, and the grocery store owner is happy because he made a $1.50 profit on a $2 wholesale price which allows him to stay in business and provide a living for his family. A win-win.
I ask...why not apply the same concept to RS apartments?
Currently is in the RS world, the owner pays wholesale $2 for a gallon of milk and the "poor" person (RS tenant) pays $1 for that gallon of milk that cost the grocery store owner $2. \
Does that sound like a sustainable system? The answer is NO and thats how the RS system is in a nutshell.
The problem is, that $3.50 is coming out of the tax payers pocket. The guy on food stamp isn't paying taxes, the homeowner is. In a way the landlord will end up subsidizing his own tenants if the City ends up paying. This is the problem with a "SOCIAL" welfare system, its a PYRAMID SCHEME. Look at DETROIT, NYC is going to have the same problems, if the TAX base keeps getting hammered. Why would anyone want to WORK for a living if it's easier to get a handout?
Inheriting tenants is always a no-no UNLESS the deal is THAT good..otherwise it just isn't worth it. For me to accept a deal with inherited tenants I have to make significant returns on my investment with them as part of the calculation otherwise it just isn't worth the potential massive headaches.
I agree but in the world of RS, the new landlord has to inherit the tenants for the good or bad. For a smaller property the rules are different.
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