Moral issue with evicting LT elderly renters to sell property

[Pookie]

If anyone has thoughts or experience with this, I would love to know! Or suggestions to make it better.

I have long term renters ( @ 10 years)  who are elderly. I want to sell my property. They are renting well below market value and I know they are barely getting by financially, but they are making it. I really want to sell this property but have an issue with making them move because I know that local rent for a different place will be more than double what I charge, if not more. (I'm still making money on the property BTW)

A couple of things factor in with these particular renters, too. Healthwise, they NEED to be looking into long term care before something happens to either of them. I know I am only the landlord and it is truly not any of my business, but I just don't like treating people badly. I don't have a relationship with them and honestly, they haven't been the nicest folks to rent to over the years. Plus, they don't have any family.

I contacted local housing for income-based rentals. There's a 6 month to 1 year waitlist. Financially, income based would be their only option.

I could give cash for moving expenses, however if they know they have to move, they probably won't pay rent. And I live off of rental income. The money from the sale will go into index funds.

I don't think I could sell it rented and I am sure the new owners would kick them out as soon as they closed so they'd be homeless, I guess.

I know this is a business and I got into it for the income. Friends have said it isn't my problem to deal with but I can't stomach the idea of kicking them to the curb.

I have a (ugh!) PM but I rented it before they took over so that is why I know the renters personally.
Thanks in advance for your help!

[SilentC]

Why do you want to sell?  Are you considering the benefits of zero turnover and very low default risk (I assume Social Security is paying the bills)?  On a risk-adjusted basis it might not be that bad even at below market rate.  Talking out of my butt a bit but I’d think you could negotiate down the PM fee too since it sounds like they don’t need to find tenants for you and your leverage is you will sell the place and they can make nothing.

Another option is raise the rent at 1%-2% a year above the Social Security COLA each year until you are closer to market rents. 

[curious_george]

I was in a very similar situation in the past - low income elderly disabled tenant well below market rent. I personally knew her and was aware of her limited financial resources.

I was fortunate and found another landlord to sell the property to at below market value with the agreement that he would keep the rent the same. He was a compassionate individual. Several years later she passed away and the new landlord sold the property for a significant profit.

At the end of the day I lost a fair chunk of change doing this. But it felt like the right thing to do and it makes me feel like I'm a good person - and there is a certain amount of value in that feeling.

Good luck.

[uniwelder]

Do you need to sell now?  If income based housing has a 6-12 month waiting list, is it possible to start that process now?

Do you live in a HCOL area?  Since they don't have family, maybe they can move to a cheaper area.

[franklin4]

If you give one year notice of your plan to sell that gives them plenty of time to figure something out and should ease your conscience. You could help them sign up for subsidized housing too. Of course, this approach is no help if you want to sell soon!

[bacchi]

Can you give them money for moving expenses/rent after you close, without telling them that you're going to do that?

[iluvzbeach]

You say they are low income but does this necessarily mean they are also low asset? These forums are a great example that things aren’t always as they appear. I think you’ve received some great options to consider in the above responses.

As far as any moral or ethical obligation on your part, I don’t think you have any obligation to them outside the tenant/landlord agreement. You’ve already been more than fair by not increasing rents to market rate. That said, I still understand how this situation doesn’t “feel good” to you but I don’t think you’re responsible for how your decision to sell (or not) impacts these tenants.

[Pookie]

You say they are low income but does this necessarily mean they are also low asset? These forums are a great example that things aren’t always as they appear. I think you’ve received some great options to consider in the above responses.

As far as any moral or ethical obligation on your part, I don’t think you have any obligation to them outside the tenant/landlord agreement. You’ve already been more than fair by not increasing rents to market rate. That said, I still understand how this situation doesn’t “feel good” to you but I don’t think you’re responsible for how your decision to sell (or not) impacts these tenants.

I know from seeing her budget when she left it out once that they have basically nothing. Friends have told me the same thing...and you are right, it still doesn't feel good. It is validating to hear that I am not responsible. TY

[Pookie]

Why do you want to sell?  Are you considering the benefits of zero turnover and very low default risk (I assume Social Security is paying the bills)?  On a risk-adjusted basis it might not be that bad even at below market rate.  Talking out of my butt a bit but I’d think you could negotiate down the PM fee too since it sounds like they don’t need to find tenants for you and your leverage is you will sell the place and they can make nothing.

Another option is raise the rent at 1%-2% a year above the Social Security COLA each year until you are closer to market rents.

The PM is already at 8% . Don't see them going any lower.

I was in a very similar situation in the past - low income elderly disabled tenant well below market rent. I personally knew her and was aware of her limited financial resources.

I was fortunate and found another landlord to sell the property to at below market value with the agreement that he would keep the rent the same. He was a compassionate individual. Several years later she passed away and the new landlord sold the property for a significant profit.

At the end of the day I lost a fair chunk of change doing this. But it felt like the right thing to do and it makes me feel like I'm a good person - and there is a certain amount of value in that feeling.

Good luck.

TY - this is a possibility. I know someone looking for properties. I will talk to him. Thank you - great idea and I'd feel better about it all!!

I am just burnt out on the rental thing. Went through a divorce and I can't do all the work on my own. I worry about it! And the GC here - are charging so much. I think the ones working for the PM think that they can charge what they want. Unfortunately, the PM doesn't follow up with costs, etc. and takes the GC at face value - which I feel is way overpriced. I also know that supplies have gone up.
I want to move overseas and don't want the hassle of dealing with a PM and all the headaches. They still need to be managed.

Thank you all for your input. I received some great suggestions!

[SunnyDays]

I just have to say that you're a good person to worry about tenants that haven't been the "nicest folks" and "probably won't pay rent" if they know they have to move.  Maybe those considerations will make it easier for you to do whatever you have to do.  Good luck!

[Mustache ride]

What state is the rental in?

[iris lily]

There is no way I would place an obligation on another owner of a piece real estate to keep rent low. Once the property turns over, it is that new owner's to do exactly as he pleases with it, both legally and realistically.
This might have worked out for one poster here, it’s a nice idea but it’s not enforceable.

I do like it the two  suggestions offered: give it plenty of time to sign up for income-based housing. Give them six months. Put aside a couple thousand dollars for their moving expenses and first and last months rent in the new place. That is more than generous.

[reeshau]

Do you need to sell now?  If income based housing has a 6-12 month waiting list, is it possible to start that process now?

Do you live in a HCOL area?  Since they don't have family, maybe they can move to a cheaper area.

+1. Give them notice; make sure they are aware of resources to help.  You know them, but they aren't family.  They've been nice tenants; give them a stellar reference.

Be fair and communicate.  That is what you owe to them.  Good on you to try and go further, to your own detriment.

[Pookie]

Do you need to sell now?  If income based housing has a 6-12 month waiting list, is it possible to start that process now?

Do you live in a HCOL area?  Since they don't have family, maybe they can move to a cheaper area.

+1. Give them notice; make sure they are aware of resources to help.  You know them, but they aren't family.  They've been nice tenants; give them a stellar reference.

Be fair and communicate.  That is what you owe to them.  Good on you to try and go further, to your own detriment.

Thank you ALL!! Very valid points.

Yes, 6 months would be more than generous.

The rental is in Western NC.

Maybe they will be really mean when I give them 6 months and then I won't worry! :) And thanks for the kind words!

THANK YOU!!!

[aasdfadsf]

I think you're a very good human being for actually caring about this. I've thought about this a lot with my rentals, though I'm not currently trying to sell and I have no elderly tenants like yours, but I do have youngish working-class people with kids who have established their whole lives around where they live and would be in real trouble if I just told them I'm selling it and they need to get the heck out. Being a landlord isn't just an economic relationship, it's a moral obligation to the people who rely on you to provide them with a place to live. And I think that anyone who cannot accept that should never be a landlord.

That said, you've also got your own interests to deal with and every right to look after those. I think you've been given some good advice as to giving them very advanced notice, working with them and ideally their family members to make sure they have some place to transition to long before the sale takes place.   

[Pookie]

I think you're a very good human being for actually caring about this. I've thought about this a lot with my rentals, though I'm not currently trying to sell and I have no elderly tenants like yours, but I do have youngish working-class people with kids who have established their whole lives around where they live and would be in real trouble if I just told them I'm selling it and they need to get the heck out. Being a landlord isn't just an economic relationship, it's a moral obligation to the people who rely on you to provide them with a place to live. And I think that anyone who cannot accept that should never be a landlord.

That said, you've also got your own interests to deal with and every right to look after those. I think you've been given some good advice as to giving them very advanced notice, working with them and ideally their family members to make sure they have some place to transition to long before the sale takes place.   

Thank you so much. Yes, I want to sleep well at night.....Some people may say I have crossed the line between work/relationships but I still have a heart. Thank you for your kind words.

[Missy B]

To help them best, give them 6 months, but tell them 3. Tell them 6, and they will still be in the suite at 5 and half months, having not done any looking, and no purging either, and telling you that there's 'nothing out there'. The shorter time-frame will help them not procrastinate.

[Chris Pascale]

I wonder if there's a pro-tenant group that buys homes like yours. If could be worth creating an anonymous FB or Reddit account and seeing if such a thing exists.

Explain your situation: You have a home with LT renters who are awesome people and cannot afford to move. You can no longer keep the home, but want to ensure someone who cares buys the place.

[former player]

I wonder if there's a pro-tenant group that buys homes like yours. If could be worth creating an anonymous FB or Reddit account and seeing if such a thing exists.

Explain your situation: You have a home with LT renters who are awesome people and cannot afford to move. You can no longer keep the home, but want to ensure someone who cares buys the place.

Presumably that would be any local lo-income housing organisation, particularly one that would be likely to re-house the current tenants into one of their properties.  Might not make a top dollar offer though.

[slugsworth]

There are too few resources for too many low income people in a time with rapid housing cost escalation. If I was looking for housing for more income seniors I would look at the HUD 202 program. This map can help you find a local building (if one exists) and perhaps give them that resource:

https://hudgis-hud.opendata.arcgis.com/maps/5806a25efd4347a299281eae482c9702/about

[SeattleCPA]

Really late to this discussion but two comments:

1. Thank you @Pookie for being the sort of person who thinks about something like this. Also appreciation for all the other commenters in the thread who showed their decency and compassion with their comments.

2. I tried to find the book that said this, but some author ("Mark Anderson?") said in his real estate investment book you never want to be renting to tenants who, if you have to terminate the lease, have nowhere to go. E.g., the reason he advised people to not do really low-income housing was you didn't want to be facing a decision where you're asking in effect "do I make this person 'homeless'?" Always thought that was a good question to keep in mind.

[ClimateMind]

I'm just going to chime in to say that I, too, admire your compassion and consideration for the tenants and their situation. There was a lot of good advice given here, and I agree with most that the best you can do is come up with a solid, generous transition plan and connect them with resources. Be very clear that it is serious and non-negotiable. Then it is up to them; whether or not they take the steps needed is their responsibility, not yours.

[Drink Coffee And Stack Money]

I just have to say that you're a good person to worry about tenants that haven't been the "nicest folks" and "probably won't pay rent" if they know they have to move.  Maybe those considerations will make it easier for you to do whatever you have to do.  Good luck!

Maybe I'm just a terrible person but when I read that they "haven't been the nicest folks" and "probably won't pay rent", my first thought was f**k'em; kick them to the curb and sell the place.

[Dicey]

I love how thoughtfully you are approaching this. I have a few questions, but don't mistake them for having an opinion as to what you "should" do. I'm a LL and all of our rentals are in a 55+ community, so we have a lot of elderly tenants.

1. How old is "elderly" in this case?

2. Are they in relatively good health?

3. How was their financial situation when you originally rented to them?

4. Was their credit good?

5. What do they drive and do they take care if it/them?

6. Why have you decided to sell now?

I have other thoughts. If you wish to answer the above questions, I may be able to add more suggestions to the good advice that's already been offered.

[Pookie]

I love how thoughtfully you are approaching this. I have a few questions, but don't mistake them for having an opinion as to what you "should" do. I'm a LL and all of our rentals are in a 55+ community, so we have a lot of elderly tenants.

1. How old is "elderly" in this case? They are in their 80's.

2. Are they in relatively good health? She is on oxygen. He has had some mental health issues and looks frail.

3. How was their financial situation when you originally rented to them? Wasn't the best decision on my part- they were both on SS. I was still a bit new at being a LL when I rented to them

4. Was their credit good? Not at all.

5. What do they drive and do they take care if it/them? He has a car- in okay condition but I don't think he drives (or can) often anymore.

6. Why have you decided to sell now? Just burnt out on being a LL and I can do okay by keeping some of my better units. I need to invest some money into this one. Also,  I know, without a doubt, that they can't afford another increase in rent.

I have other thoughts. If you wish to answer the above questions, I may be able to add more suggestions to the good advice that's already been offered.

Thank you!!

I just have to say that you're a good person to worry about tenants that haven't been the "nicest folks" and "probably won't pay rent" if they know they have to move.  Maybe those considerations will make it easier for you to do whatever you have to do.  Good luck!

Maybe I'm just a terrible person but when I read that they "haven't been the nicest folks" and "probably won't pay rent", my first thought was f**k'em; kick them to the curb and sell the place.

You aren't the only one who has said that! :)

[Dicey]

I love how thoughtfully you are approaching this. I have a few questions, but don't mistake them for having an opinion as to what you "should" do. I'm a LL and all of our rentals are in a 55+ community, so we have a lot of elderly tenants.

1. How old is "elderly" in this case? They are in their 80's.

2. Are they in relatively good health? She is on oxygen. He has had some mental health issues and looks frail.

3. How was their financial situation when you originally rented to them? Wasn't the best decision on my part- they were both on SS. I was still a bit new at being a LL when I rented to them

4. Was their credit good? Not at all.

5. What do they drive and do they take care if it/them? He has a car- in okay condition but I don't think he drives (or can) often anymore.

6. Why have you decided to sell now? Just burnt out on being a LL and I can do okay by keeping some of my better units. I need to invest some money into this one. Also,  I know, without a doubt, that they can't afford another increase in rent.

I have other thoughts. If you wish to answer the above questions, I may be able to add more suggestions to the good advice that's already been offered.

Thank you!!

I believe in kharma. I would suggest you help them get on a waiting list for whatever affordable senior housing is available in your area and ride it out until they get accepted or pass away. You won't have to invest anything until they move out.

[Pookie]

I'm just going to chime in to say that I, too, admire your compassion and consideration for the tenants and their situation. There was a lot of good advice given here, and I agree with most that the best you can do is come up with a solid, generous transition plan and connect them with resources. Be very clear that it is serious and non-negotiable. Then it is up to them; whether or not they take the steps needed is their responsibility, not yours.

Thank you. I believe that if I do all I can to make the transition easy, then that is all I can do. I don't HAVE to sell it right now so I can be generous time wise. Such a bad situation with housing right now - on every front.

There are too few resources for too many low income people in a time with rapid housing cost escalation. If I was looking for housing for more income seniors I would look at the HUD 202 program. This map can help you find a local building (if one exists) and perhaps give them that resource:

https://hudgis-hud.opendata.arcgis.com/maps/5806a25efd4347a299281eae482c9702/about

Thank you - I checked this and there is one property. It has a good reputation. A friend of mine who works in public housing suggested it as well.

Really late to this discussion but two comments:

1. Thank you @Pookie for being the sort of person who thinks about something like this. Also appreciation for all the other commenters in the thread who showed their decency and compassion with their comments.

2. I tried to find the book that said this, but some author ("Mark Anderson?") said in his real estate investment book you never want to be renting to tenants who, if you have to terminate the lease, have nowhere to go. E.g., the reason he advised people to not do really low-income housing was you didn't want to be facing a decision where you're asking in effect "do I make this person 'homeless'?" Always thought that was a good question to keep in mind.

Excellent advice in hindsight. TY

[partgypsy]

I love how thoughtfully you are approaching this. I have a few questions, but don't mistake them for having an opinion as to what you "should" do. I'm a LL and all of our rentals are in a 55+ community, so we have a lot of elderly tenants.

1. How old is "elderly" in this case? They are in their 80's.

2. Are they in relatively good health? She is on oxygen. He has had some mental health issues and looks frail.

3. How was their financial situation when you originally rented to them? Wasn't the best decision on my part- they were both on SS. I was still a bit new at being a LL when I rented to them

4. Was their credit good? Not at all.

5. What do they drive and do they take care if it/them? He has a car- in okay condition but I don't think he drives (or can) often anymore.

6. Why have you decided to sell now? Just burnt out on being a LL and I can do okay by keeping some of my better units. I need to invest some money into this one. Also,  I know, without a doubt, that they can't afford another increase in rent.

I have other thoughts. If you wish to answer the above questions, I may be able to add more suggestions to the good advice that's already been offered.

Thank you!!

I believe in kharma. I would suggest you help them get on a waiting list for whatever affordable senior housing is available in your area and ride it out until they get accepted or pass away. You won't have to invest anything until they move out.

If this works for your timeline, this is the kindest thing you can do, get them on a waiting list and when they get on (hopefully 6-12 months) then stop renting. Is it possible to convert to a month to month lease until then?

[Dee_the_third]

I’ve been in, sort of, this situation (tenant was a mentally disabled younger person but I also felt bad evicting or forcing her to move).

In my state- I’m not sure if this is universal- incoming buyer is legally obligated to respect the existing lease agreement. So what I did was renew their lease for another year right before listing. Since tenant and their guardian was well aware that their rent was below market rate, they knew no landlord was likely to allow them to renew again at the current rate. At the same time, incoming buyer knew they were obligated to carry the lease for a year before they could raise the rent, and would run their numbers accordingly.

I got to sell the house and rid myself of the mental burden , tenant got a full year to find a new place, buyer got their house and was able to raise rents after a year. I figured it was as close to a win-win-win as we could get.

[Pookie]

I’ve been in, sort of, this situation (tenant was a mentally disabled younger person but I also felt bad evicting or forcing her to move).

In my state- I’m not sure if this is universal- incoming buyer is legally obligated to respect the existing lease agreement. So what I did was renew their lease for another year right before listing. Since tenant and their guardian was well aware that their rent was below market rate, they knew no landlord was likely to allow them to renew again at the current rate. At the same time, incoming buyer knew they were obligated to carry the lease for a year before they could raise the rent, and would run their numbers accordingly.

I got to sell the house and rid myself of the mental burden , tenant got a full year to find a new place, buyer got their house and was able to raise rents after a year. I figured it was as close to a win-win-win as we could get.

They have rented from me for around 8 years so there's only a month to month lease. I am going to go the long route and give them time to find a place and connect them with the resources. The aren't in the best health so I truly believe getting into a situation where, if one of them passes away or goes into a facility, then the other would be able to stay in the income based apartment. Plus, they would be in a community that would possibly be able to look out for each other.
Now, I just need to move forward with this and quit dragging it out!

[Rockies]

Reading stories like this makes me so happy I am not a landlord. I have too good of a heart. I'd just hang on to the property until they died. Hell, I'd probably give them free rent for the rest of their life. Why do I need the money more than them?

I know this is an improper mindset and not super healthy (it would allow tenants to take advantage of me and unfair situations to flourish). Which is why I am not a landlord!

[Embok]

I have an elderly Section 8 tenant in much the same situation.  She pays below market rate.  She is wheelchair bound.  She is *mean* to the other tenants and to the property management staff.  Her helpers break things in the apartment all the time.  She is my *worst* tenant.  We inherited her lease when we bought the property -- this tenant has lived in this unit since the 1960s.

But I cannot face terminating her lease of the only home she has had since the 1960s.  I'm not particularly nice; I don't like her; she's a pain to the property manager and indirectly to me; she regularly costs us money; but we don't need the extra couple of hundred bucks a month and so have left her in place even though she's a month to month tenant.  Both of us, as mom and pop landlords, understand we are lucky not to need the $$.  I think if we were going to sell, we'd try to find someone who would leave her in place.  But maybe not.  I guess I'm an idiot financially.  She may die some day; she may move into assisted living some day; or I will die before her and it won't be my problem anymore!

[Dicey]

I have an elderly Section 8 tenant in much the same situation.  She pays below market rate.  She is wheelchair bound.  She is *mean* to the other tenants and to the property management staff.  Her helpers break things in the apartment all the time.  She is my *worst* tenant.  We inherited her lease when we bought the property -- this tenant has lived in this unit since the 1960s.

But I cannot face terminating her lease of the only home she has had since the 1960s.  I'm not particularly nice; I don't like her; she's a pain to the property manager and indirectly to me; she regularly costs us money; but we don't need the extra couple of hundred bucks a month and so have left her in place even though she's a month to month tenant.  Both of us, as mom and pop landlords, understand we are lucky not to need the $$.  I think if we were going to sell, we'd try to find someone who would leave her in place.  But maybe not.  I guess I'm an idiot financially.  She may die some day; she may move into assisted living some day; or I will die before her and it won't be my problem anymore!

I like the way you think.

[Paul der Krake]

I have an elderly Section 8 tenant in much the same situation.  She pays below market rate.  She is wheelchair bound.  She is *mean* to the other tenants and to the property management staff.  Her helpers break things in the apartment all the time.  She is my *worst* tenant.  We inherited her lease when we bought the property -- this tenant has lived in this unit since the 1960s.

But I cannot face terminating her lease of the only home she has had since the 1960s.  I'm not particularly nice; I don't like her; she's a pain to the property manager and indirectly to me; she regularly costs us money; but we don't need the extra couple of hundred bucks a month and so have left her in place even though she's a month to month tenant.  Both of us, as mom and pop landlords, understand we are lucky not to need the $$.  I think if we were going to sell, we'd try to find someone who would leave her in place.  But maybe not.  I guess I'm an idiot financially.  She may die some day; she may move into assisted living some day; or I will die before her and it won't be my problem anymore!

You're too nice. I am not a landlord but I don't think I'd be able to resist punishing anti-social behavior. I'd probably send her a postcard once a year reminding her of the great deal she threw away.

[reeshau]

She is *mean* to the other tenants and to the property management staff. 

Of all that was in the profile, this would be most concerning to me.  Is she just a grumpy old lady?  Or, does her behavior literally lose you tenants--either one's that move out early, or tour but never sign?  If the latter, she is costing you a lot more than her forgone market rent.

For that matter, how is your employee retention?  Could be another cost multiplier.

Situations like this should be what any prospective landlord considers.  Sometimes, you have to be "mean," to enforce the contract and your rights.  And, the other party's opinion could get around, particularly in a small town.

[Dicey]

She is *mean* to the other tenants and to the property management staff. 

Of all that was in the profile, this would be most concerning to me.  Is she just a grumpy old lady?  Or, does her behavior literally lose you tenants--either one's that move out early, or tour but never sign?  If the latter, she is costing you a lot more than her forgone market rent.

For that matter, how is your employee retention?  Could be another cost multiplier.

Situations like this should be what any prospective landlord considers.  Sometimes, you have to be "mean," to enforce the contract and your rights.  And, the other party's opinion could get around, particularly in a small town.

Agreed, but she also sounds like the kind of person who would be difficult to evict. Even if successful, her vacating the property would also trigger a slew of renovation expenses. Everything's a trade-off.

[Embok]

She’s grumpy and unpleasant but keeps to herself, and hasn’t run off any other tenants.  She’s disagreeable.  But mostly keeps to herself.  I suspect I’d be disagreeable and whiny too, if I were old, alone, and confined to a wheelchair.  I figure it’s a mitzvah to keep her in place.