For all those who strategically invest in more difficult areas… Have you encountered collection difficulties? Did you fear at first…
Original publication date on the United States Real Estate Forum on Facebook:
2018-12-23T21:11:34+0000
For all those who strategically invest in more difficult areas…
Have you encountered difficulty collecting?
Were you initially concerned about this issue because of the collection?
Link to the original post on the United States Real Estate Forum on Facebook - Works on a desktop computer:
http://bit.ly/2CYKbmJ
The original responses to the post can be read at the bottom of the current post page on the site or in the link to a post on Facebook and of course you are invited to join the discussion
Difficulty collecting is one possible result of a root problem of the quality of the tenant. When I refer to the quality of the tenant, it is a socioeconomic profile and a personal rental history. In fact, this risk can be mitigated on several levels. Once in understanding
Positioning the block-level property in more complex environments. A second time with the skill of professional hire filtration, and a third time in the ability to manage the tenants correctly, and a fourth time in the proper management of the evacuation process if necessary. There are also regional parameters here, for example countries where the evacuation process is more friendly to the property owner and less friendly countries.
I dealt with this in a detailed way exactly yesterday in response to an investor in the Tapuz Forum that I am invited to read here:
http://www.tapuz.co.il/forums/viewmsg/2401/183946440/%D7%94%D7%9E%D7%95%D7%9E%D7%97%D7%99%D7%9D/%D7%94%D7%A9%D7%A7%D7%A2%D7%95%D7%AA_%D7%A0%D7%93%D7%9C%22%D7%9F_%D7%91%D7%90%D7%A8%D7%94%22%D7%91
The collection issue is definitely one of the challenges on this issue. One must admit that the first two years with the first two properties were not a problem. After I put in tenants who didn't have a full deposit (a full month beyond the first rent) with them, payment problems started, and we also got a check.
There were times when I would help them get temporary jobs, work with two payments.
With some it worked and some didn't.
In the risk zones, this is the essential part to consider.
On the other hand, when you work with a multi-management company the headache is on the property manager, not on you. If you accept that you receive 9-10 months in a year of payments and not 12, are willing to take occasion sometimes and raise the rent to a level where the yield will still be higher than the rent instead of with a solid yield - you can do wonders in these areas.
Needs an adventurous character, open mind and willingness to materialize.
Or Or Stern Noel
As someone who is strong in the field…
How is your credo on the subject?
In difficult areas and those defined as criminal areas have advantages and disadvantages,
The houses are usually sold at a good price and the profit is large (exceeding 15% in some areas). However, there is a large risk of not receiving payment, destruction of the house, many evictions (each evacuation is accompanied by a loss of two months rent + the cost of sheriff and complaint + And the cost of maintenance is too large a year.
As they wrote in the responses, it is important for a strong management company to know how to filter out areas and tenants.
Successfully!
Certainly, it is part of the package, when you rent to a weak population their payment behavior is not their strong point, for most rents will be the first payment they will give up...
In the beginning my first checks with the management companies were "Are there any neighborhoods they do not enter?" And if the management companies had a problem with one neighborhood or another, I did not continue with the same management company.