Author Topic: Compassionate landlording  (Read 1636 times)

LaineyAZ

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Compassionate landlording
« on: May 10, 2019, 08:12:02 AM »
A question for the future:
I have a tiny 1/1 single family home in downtown Phx AZ.  No mortgage.  Property has nice front and back yards with irrigation, mature landscaping, and lots of space for parking.  Have an elderly relative in there now paying the "family discount" rent.

My question is that after this relative passes away, I'd like to rent it to an individual or small family who could use a break financially but would otherwise be good renters.  I know that may be asking for the impossible, but I don't need or want to squeeze every dollar out of this property.  I have a lot of interest in affordable housing and since I'll be in a position someday to provide that, I'd like to help someone out. 
How would I go about finding some renters who are truly in need and avoid scammers who just want cheap rent?  or is this just a pipe dream?

Another Reader

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Re: Compassionate landlording
« Reply #1 on: May 10, 2019, 09:20:56 AM »
Pipe dream.

The process of selecting renters is so difficult now because of discrimination issues that you would not be able to say no to people that you don't want that do meet your income criteria.  Section 8 will NOT get you what you want, especially in the City of Phoenix.  Not renting to higher income people might be interpreted as another form of discrimination in an open market listing.

Your best bet is either to find someone via word of mouth or to rent it out at market and donate a portion of your proceeds to a group that is effective in finding housing for these people.

When I do get a good tenant that is struggling financially, I will back off on rent increases.  I have one situation now with a long term tenant whose spouse has cancer and can't work.  Not raising their rent.

rothwem

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Re: Compassionate landlording
« Reply #2 on: May 10, 2019, 09:29:50 AM »
Pipe dream.

Yep.  Trying to be compassionate in the landlording business is a good way to get really screwed.  Sell the place and donate the profits, at least you'll be giving the money away on your terms instead of spending it cleaning up some lowlife's mess. 

iris lily

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Re: Compassionate landlording
« Reply #3 on: May 10, 2019, 09:36:13 AM »
Pipe dream.

Yep.  Trying to be compassionate in the landlording business is a good way to get really screwed.  Sell the place and donate the profits, at least you'll be giving the money away on your terms instead of spending it cleaning up some lowlife's mess.

It is probably a casita on her property. 

Love those places! We rented one thri Air bnb on a vacation where we took our dog who barks. Couldnt leave him in a motel room, too hot to keep him the car.

iris lily

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Re: Compassionate landlording
« Reply #4 on: May 10, 2019, 09:37:07 AM »
OP, I bet you can find it kind of tenant you want by working with local churches or nonprofits who work with transitioning people to their own place. Placing notices on the open rental market is not the way to go.

couponvan

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Re: Compassionate landlording
« Reply #5 on: May 10, 2019, 09:37:33 AM »
Word of mouth is probably the best way.  My parents had lots of single mothers with welfare as their tenants....but they always got their names from church.  Every one of them was a good long-term tenant.  Sadly all of their kids (daughters) have turned out like their mothers - sweet, but young single mothers on welfare.  It has been a huge mental disappointment to me that these girls haven't broken out of the mold.

iris lily

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Re: Compassionate landlording
« Reply #6 on: May 10, 2019, 09:44:32 AM »
Word of mouth is probably the best way.  My parents had lots of single mothers with welfare as their tenants....but they always got their names from church.  Every one of them was a good long-term tenant.  Sadly all of their kids (daughters) have turned out like their mothers - sweet, but young single mothers on welfare.  It has been a huge mental disappointment to me that these girls haven't broken out of the mold.

I found the book Promises I Can Keep, an academic study of single mothers, to be a fascinating glimpse into the  life of purposely choosing unmarried motherhood and government subsistence.They have their own reasons, logical within the framework of the culture of poverty.

waltworks

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Re: Compassionate landlording
« Reply #7 on: May 10, 2019, 09:52:54 AM »
Go to any local elementary school, get buzzed into the front office, and talk to the front office person/secretary about your place. The school will almost certainly have teachers (some single parents) who are barely scraping by and doing a very important job.

When our current tenants get married and move out of our basement apartment, this is what we'll do.

-W

PMG

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Re: Compassionate landlording
« Reply #8 on: May 10, 2019, 10:31:46 AM »
I hope you're able to find someone!  I might not have the right words, and I really know little about landlording, but I wouldn't really talk about it as a charity, or even that your looking for someone at risk.  Framing it that way seems like it would create more risk for you!  I could see someone abusing your generosity.  But targeting where you advertise the opening (at a school, like someone suggested) might lead the right person your looking for to you.  You still want to be doing background checks, credit checks, getting thorough info. What you really want is someone who will be a good renter.  Responsible with your property.  Someone who will communicate. Ask for income info on your application.  When you interview you can likely spot who fits what you're looking for and give them priority.  You can give them a boost in life without explicitly telling them that's what you are doing.  Word of mouth, a friend of a friend, might be the best way to find someone, but I would still approach it in a business like manner.

I was really low income while in school, and long time friends rented to me for a "friends and family" rate.  If they had told me it was charity I would have avoided the whole situation.  I would have been concerned about there being strings attached to the deal and never really been comfortable with it.
« Last Edit: May 10, 2019, 10:36:46 AM by PMG »

Another Reader

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Re: Compassionate landlording
« Reply #9 on: May 10, 2019, 11:14:49 AM »
OP, I bet you can find it kind of tenant you want by working with local churches or nonprofits who work with transitioning people to their own place. Placing notices on the open rental market is not the way to go.

And those same people might file a fair housing complaint if you don't rent to who they send you.  If you do rent to one of their applicants and have to evict, they may testify for the tenant and pay the tenant's lawyer.  If you insist on doing this, word of mouth and applying the same screening criteria you would use on any other applicant would be the path I would take.

Cassie

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Re: Compassionate landlording
« Reply #10 on: May 10, 2019, 11:23:13 AM »
I have known single moms that have gone from welfare to college to work. They have successful careers and there kids have turned out well. 

iris lily

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Re: Compassionate landlording
« Reply #11 on: May 10, 2019, 12:05:31 PM »
OP, I bet you can find it kind of tenant you want by working with local churches or nonprofits who work with transitioning people to their own place. Placing notices on the open rental market is not the way to go.

And those same people might file a fair housing complaint if you don't rent to who they send you.  If you do rent to one of their applicants and have to evict, they may testify for the tenant and pay the tenant's lawyer.  If you insist on doing this, word of mouth and applying the same screening criteria you would use on any other applicant would be the path I would take.

Ah! No good deed goes unpunished.

Jon Bon

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Re: Compassionate landlording
« Reply #12 on: May 10, 2019, 12:35:16 PM »
Just charge market rent and donate the difference. Probably will do more good, but might not feel as good.


FINate

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Re: Compassionate landlording
« Reply #13 on: May 10, 2019, 02:03:15 PM »
Good for you!

We've done something sorta similar over the years with spare bedrooms and vacant rental units, letting people stay for a time rent-free as guests. A few things I've learned over the years:

1) A fixed time period is better than open-ended. Find folks by word of mouth who are experiencing a temporary rough patch, maybe a recent job loss or urgent need to find new housing. There's a gap in the social safety net because it takes time to get plugged into programs, and you can fill that gap. If they cannot sustain themselves long-term then they need to get on Section 8 and/or make some other big changes. Otherwise, over a long period of time they'll become dependant on your generosity which inevitably creates resentment on both sides, and it also creates housing insecurity because they depend on you instead of being self-sufficient. IMO, 6 months max, which should be enough time to find employment and save up enough for a first/last along with a bit of a buffer.

2) No drugs or alcohol. Again, you can mostly find this out by word of mouth. Unless you are trained and equipped to deal with addiction just accept that it's a monster that you cannot deal with on your own. So limit it to those who are clean and sober. I don't have anything against alcohol, per se, but if someone's at the point where they need charity then they shouldn't be wasting money on alcohol. Especially since it can become an issue if then end up using it as a mental escape.

3) Other house rules: Hours of coming/going (esp. if you share an entrance/driveway), expectations for cleanliness and upkeep, visitors, and so on.

4) Long-term plan for sustainability.

I cannot stress this enough: Communicate expectations up front and as clearly as possible, and be diligent about holding the line throughout.

Finally, understand and accept the risk that comes along with the territory. We had one person who was a problem -- hard on the property and difficult to get rid of, and then we had to spend some money to clean and fix the place. But in other instances people got back on their feet and are now thriving.


LaineyAZ

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Re: Compassionate landlording
« Reply #14 on: May 10, 2019, 08:07:42 PM »
Thank you all. 
This is a tiny home on its own property; I live 12 miles away in my own home.   

I was under the impression that as a "one door" landlord (i.e. I do not have multiple apartments or houses) that I was not subject to the discrimination laws - perhaps that was naÔve, I'll have to check on that.  Of course, I was not planning to discriminate in the first place but I realize now it's best to know up front. 

In any case, it does seem like making some discreet inquiries and not openly advertising is the best way to go.
« Last Edit: May 10, 2019, 08:29:38 PM by LaineyAZ »

elaine amj

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Re: Compassionate landlording
« Reply #15 on: May 10, 2019, 08:53:22 PM »
Wevbasically had a charity case in one of our rental properties for a few years (we did decide to treat it as such). We had a nice tenant who hit some hard times when she got cancer. So for the next few years, we allowed her to pay whatever she could, when she could. She typically paid $200-300/mo. I think it was good that she still paid some sort of rent most of the time. This went on for a few years until she sadly passed away.

I have to say, I was very impressed with how well she kept up the house throughout that time. She was kept it clean and tidy and as nicely set up as possible. I had been a little worried.

We originally agreed to take on her boyfriend as a tenant after her passing but he left rather abruptly just a couple pf months later.

We now have a new tenant. When she fell on some hard times, we let her split up her rent into two smaller payments. At one point she ended up about a month behind. After some months, she did catch up again and now all is good. Currently we are not planning to offer the house as a charity project.

I guess I would suggest screening your tenants carefully. Personal interviews and asking for recommendations from people you trust could help a lot.

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AMandM

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Re: Compassionate landlording
« Reply #16 on: May 12, 2019, 07:34:40 AM »
I would go by word of mouth--let your circle of friends and family know that you have this place available, do they know anyone suitable? And by suitable I mean suitable as a tenant, not just in need of cheap housing. I personally know lots of people who could really benefit from below-market rent: grad students with families on small stipends, a refugee being helped by our church, a single mother who needs to finish school, new college or high school grads just starting their working life, a college student kicked out by her parents, etc. Not all of them would be reliable as rent-payers.

At the same time, you have to watch yourself, to be sure you don't, AT ALL, feel that cutting them a break on rent gives you any say in how they spend their money. It's your choice to set the rent at a generous level, it's their choice how to use the financial advantage that gives them.  (To be clear--I'm not accusing you of this!)

rothwem

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Re: Compassionate landlording
« Reply #17 on: May 12, 2019, 08:02:59 AM »


I was under the impression that as a "one door" landlord (i.e. I do not have multiple apartments or houses) that I was not subject to the discrimination laws - perhaps that was naÔve, I'll have to check on that.

In a lot of states that only applies if youíre living on the property with the tenant. Iím not sure if it even applies to duplexes, since itís technically a different address.

tralfamadorian

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Re: Compassionate landlording
« Reply #18 on: May 12, 2019, 01:44:56 PM »


I was under the impression that as a "one door" landlord (i.e. I do not have multiple apartments or houses) that I was not subject to the discrimination laws - perhaps that was naÔve, I'll have to check on that.

In a lot of states that only applies if youíre living on the property with the tenant. Iím not sure if it even applies to duplexes, since itís technically a different address.

Instead of guesses- here is the HUD handbook with the federal laws.

https://www.hud.gov/sites/documents/FHEO_BOOKLET_ENG.PDF

Owner occupied and managed residential (1-4 unit) properties are exempt from most federal housing laws. Discriminatory advertising is always disallowed. State overlays can be more strict.

OP, since you said it's a separate property, you are responsible for following all federal housing laws along with any additional state housing laws. I would be very careful about how you describe what you are trying to do. Example from above- saying that you are looking to provide "family and friends" discount housing for single mothers is discriminating both on the basis of sex and familial status despite good intentions.

Personally, I wouldn't touch it with a 10 foot pole. Housing laws are taken very seriously and any applicants (or interested parties not allowed to apply) with better traditional qualifications could have a strong fair housing case against you. Another example- an older single person with FT employment calls you and says they heard from someone at church that you had a property for rent. You demur then later rent to a college student who will greatly benefit from the lower rent expense. The first person could file a housing case on the basis of age discrimination.

SwordGuy

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Re: Compassionate landlording
« Reply #19 on: May 12, 2019, 02:54:25 PM »
Section 8 will NOT get you what you want,

Not my experience with it.  We have multiple houses with section 8 tenants in them.   They take good care of the properties.
They are occasionally a few days late with their rent, otherwise they are model tenants. 

Don't assume "poor" is the same as "bad".   




LaineyAZ

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Re: Compassionate landlording
« Reply #20 on: May 12, 2019, 03:07:40 PM »
Thanks for the info and the website.  I will take it seriously and study everything. 

At this point it's premature because my elderly relative could live for another 5 or 10 years, or could pass away this year (they're a long-time smoker) - no way of knowing.  But I already feel more educated and I appreciate the feedback. 

Another Reader

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Re: Compassionate landlording
« Reply #21 on: May 12, 2019, 05:47:27 PM »
Section 8 will NOT get you what you want,

Not my experience with it.  We have multiple houses with section 8 tenants in them.   They take good care of the properties.
They are occasionally a few days late with their rent, otherwise they are model tenants. 

Don't assume "poor" is the same as "bad".

This may vary among markets and the agencies that run Section 8 programs.  In Phoenix, I would not consider Section 8.  My houses are priced above the limits anyway, as rents have increased dramatically.

Goldielocks

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Re: Compassionate landlording
« Reply #22 on: May 12, 2019, 06:53:00 PM »
DON'T DO IT!

My story -- I recently took over the volunteer "Building" portfolio for our church.  Part of it is the ex-parsonage SFR rental that we own  and rent out.   The original thought was to rent it out at a discount to market rent, to a family that could really use the break, and needed help.

Now, 10 years later, because of rent controls, the rent is lower and lower compared to the market rate around us.  The renters are great quality renters.... but obviously no longer needs any sort of rental support.  Both are working, driving nice cars, participate in lots of sports with their kids, etc.

We would want to provide that discount to another family that could really use it, but can't.

Next time, I highly recommend starting at market or just under, and then providing a housing subsidy / donation through a local charity... it could even go to your own renters... but the key is that they need to reapply each year, and based on incomes, (we use tax returns) would or would not qualify to continue to receive the subsidy.


Dicey

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Re: Compassionate landlording
« Reply #23 on: May 13, 2019, 10:54:42 PM »
Nobody has mentioned the IRS. I hear they don't like it when folks rent out their units at below market rates, especially if those tenants are relatives. Dang it, I always miss @Cheddar Stacker, especially when topics such as these pop up. Not sure this batsignal will reach him. Any other tax accountants or CPAs in the house?

LaineyAZ

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Re: Compassionate landlording
« Reply #24 on: May 14, 2019, 07:42:45 AM »
Actually my tax accountant has mentioned the market rate issue.  I told her the truth:  the place is a dump, original 1950s kitchen (and not in a cute way), holes in some walls, and lived in by a smoker and semi-hoarder.  The rent my relative is paying is not far from what I could get from anyone else willing to live in those conditions.
 
My understanding is that if the rent was greatly different than market rate then my relative would have to declare that difference as income on their taxes.  To me, that's a bizarre rule:  you as the landlord are trying to give them a break financially and then the IRS comes and nullifies that.  What a mess.

 

Peachtea

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Re: Compassionate landlording
« Reply #25 on: May 15, 2019, 08:52:13 PM »
Why not talk to some of your local housing authorities about what you can and cannot do in trying to provide affordable housing to those in need? Iíd think they could at least point you in the right direction for further resources.

https://www.phoenix.gov/nsd/programs/landlord-tenant-counseling

https://housing.az.gov/notices-deadlines/new-lihtc-income-rent-limits-have-been-released

Certain discrimination laws only go one way, like age and familial status. I.e. Itís only age discrimination if your discriminating against those 40 and older or for familial status against those with kids, pregnant, or planning on kids, etc. They donít protect discrimination against 20 year olds or single people. And itís not so strict in encouraging groups as others made it sound like. For example, this doc from SD housing authority clearly states that advertising a place as Ďfamilies welcomeí isnít considered discrimination against other protected classes. http://www.sdhda.org/property-management-docs/867-familial-status-discrimination/file.html You just want to be cautious and take time to get advice on your local rules before posting an ad.

If you set a standard criteria and apply it to all applicants Iíd think itíd going be awfully hard for someone to successfully pursue a discrimination claim. If you said only available to tenants that make at or below the 150% poverty line for family size, what protected category does that discriminate against?

Thereís an entire federal program administered in partnership by states/cities to encourage private development of income based housing. (Not talking about section 8, but LIHTC.) While that program probably isnít a good fit for your situation since itís focused on tax credits for private development or rehabilitation of housing in exchange for reserving portions of rental units for low income households for x years, itís not immediately apparent why you couldnít of your own initiative implement its standards on your own. Again talk with your local gov agencies and then maybe an attorney...but definitely seems like something to explore more. Hereís the income chart and allowable rents under that program. The percentage is percentage of area median income (AMI) and so lower percentage equals lower income. https://housing.az.gov/sites/default/files/documents/files/IB-14-19-2019-LIHTC-Rent-Income-Limits.pdf


chasesfish

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Re: Compassionate landlording
« Reply #26 on: May 16, 2019, 05:41:44 AM »
OP, I bet you can find it kind of tenant you want by working with local churches or nonprofits who work with transitioning people to their own place. Placing notices on the open rental market is not the way to go.

I'm going to chime in here too as a board member of a human services not for profit.  Find a human services not for profit or a women's shelter and see if they want to rent the place at a below market value from you.  That lets the professionals who are in the business of humanity vet out the place and move people through that need it.

Lmoot

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Re: Compassionate landlording
« Reply #27 on: May 17, 2019, 02:18:00 PM »
Iíve my property for the last several years to coworkers. We work at a nonprofit, and itís just a part-time job for me, but a full-time job to the renters Iíve had. They work in an industry that is high in education, low on pay. So far Iíve only had amazing tenants who take better care of the property than I do and have actually increased renting value through upkeep and minor upgrades such as building a sand leveled patio and painting the front door, And other wall done paint repair jobs.

But I agree, word-of-mouth is the best way to go. That is the only way to ensure youíre not getting someone undeserving to your cause, or who may abuse your goodwill.

calimom

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Re: Compassionate landlording
« Reply #28 on: May 17, 2019, 06:06:47 PM »
OP, I bet you can find it kind of tenant you want by working with local churches or nonprofits who work with transitioning people to their own place. Placing notices on the open rental market is not the way to go.

I'm going to chime in here too as a board member of a human services not for profit.  Find a human services not for profit or a women's shelter and see if they want to rent the place at a below market value from you.  That lets the professionals who are in the business of humanity vet out the place and move people through that need it.

This is a great idea. And since it sounds like the property needs some rehab, there might be a local service group, like the Scouts or a church organization who could pitch in on the labor.

SunnyDays

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Re: Compassionate landlording
« Reply #29 on: May 20, 2019, 10:10:10 AM »
You could try approaching Habitat for Humanity, as I'm sure they get applications that they cannot fulfill simply due to supply and demand.  That way you will have people who have decent jobs and were prepared to put in sweat equity in order to own their own home.