On average do you have more tenant problems with properties in low socioeconomic areas?

Claims regularly made by those investing in low socioeconomic areas is that property investing is 'just a numbers game', but in my view that ignores the reality of dealing with people, including the difficult ones, whether through a property manager or if you are self managing.

So my question is for those who've owned property in areas with various demographics (low, middle & high socioeconomic areas)... on average do you have more tenant problems with properties in low socioeconomic areas? If so has this swayed future investment decisions (i.e. selling such properties or avoiding areas in the future ) or does the yield make up for it?

BTW this is not a swipe at those living in such areas, I have family & friends that live in such suburbs and am sure there are lots of good people who do, but there's typically a higher rate of unemployment which might result in more tenants getting behind in rent (higher turnover) and in general I think a lot of people in low socioeconomic areas are less likely to keep a property in good order and treat it with respect.

Vote in the poll and share your experiences if you like (including whether having a property manager provided an impenetrable buffer to the people renting your home).

 

Great question Guest

How can I say this?.....It's not them it's you [the property owner/manager ] (in many instances).

Good tenant selection is a large part of the issue however where lessors and pms don't respond to maintenance and take an active role at keeping up the standard of the property, it implies to the tenant that it's ok not to do x. So starts the downward spiral.

 

We sold our property in a more affluent area, because the tenants just kept trashing it, it was worth more to sell as the property values went up, so a good reno and tidy profit to buy back into a low eco area again.
We live in a low eco area, so we can afford to keep our investments going (long term retirement plans with those, future development blocks).
You tend to get longer staying tenants, because they can afford the rents, and if they are good you can keep them for years/decades. My kids are now my tenants, that comes with its own perils and awakenings as a parent, but in general its all good, they know they have to pay their rents now, or my living expenses as I get older....lol

 

My best paying tenants are those on centrelink. Its the tenants with jobs you need to watch out for....

 

I've had terrific tenants in our lower-end IP's, and had problem tenants in our higher-end IP, and vice versa of course.

But generally; I'd say the most problems will come from the lower-end unfortunately - it is part of their whole fabric of how they live life - less educated in many aspects including school education, more crime, more broken marriages, more domestic violence, more financial mismanagement, more poor health issues (see general life education) and so on.

 

My best tenant was a single mother on centrelink and was very appreciative of being able to get out of a housing commission house, and made no maintenance request she fixed anything herself including TV antenna. My worst tenants were whinging, self entitled, demanding, older wealthier tenants in the so called better areas.

 

From experience i would say no,and as i self manage everything it depends on when you first qualify the new tenant in the first place,one of our long term over 8 years tenants paints the outside of the property every six months from left over paint from his business he just likes the house, we have also had single mums single dads with kids on centerlink
direct payments systems,but i just look at it in simple terms i started like all them ,so it never pays to look down on anyone..

 

I think you took what I said in another thread too literally or perhaps I put it too strongly.

Yes there's more issues - that's why some choose not to invest there. The returns available are higher, and commensurate for what you're taking on. This is the bit i meant by that post you're referencing.

Doing proper background checks on tenants is important as is getting a feel for what they're like as a person. Centrelink may be their sole source of income, and if that is enough to cover their rent who am I to judge? Ensure they setup centrepay and it comes to you 1st; I've never had a tenant disrupt this. You have to remember tenants are people too, they just want a home to live in - majority of them do the right thing. For those that don't, its important to know the legislation backwards to not allow them to play the game - some have been to free tenancy advice places and think they can play the game. They're no match for me

A couple different tenants in my own personal properties - Elizabeth downs and craigmore I've literally heard absolutely zero out of. I fix things for them when legitimate stuff breaks (like HWS) and that's the end of it. Its nice. Some others like TMNT seem to hog all the bad luck for themselves.

You could say the same about the other end of the scale too. Tenants in our high end properties interstate who expect the world revolves around them.

 

For me , any property investing is a numbers game at what ever level of society you invest in .

Our one feral tenant was in Logan ( but I'd guess we would have had close to 100 tenants over the years ) but we have had difficult tenants in all levels . Some of the ones in nicer areas can be quite picky and demanding.

The key thing in lower SES areas is the management .

Cliff

 

My experience so far with tenants in low socio economical areas are, they tend to fall behind in their rent more often than tenants in an expensive post code. As they appear to be in unstable jobs or have poor money skills. With tenants in an expensive postcode, I find they tend to complain more about little things, and demand they be fixed soon. Maybe its because I hike the rent up by $10 every six months. Its akin to someone who stays in a 2 star hotel, will tolerate a dead roach, but not someone who pays to stay in a 5 star hotel.

 

Most of our tenants are on Centrelink - I look at it as getting a better return for my tax dollars since my rental income is coming from their Centrelink money that's funded from my tax dollars in the first place. Most of those tenants have looked after the places very well and have never missed a rent payment. They seem to appreciate having a roof over their head. However, we'll be getting rid of one of the Centrelink tenants at the conclusion of her lease in January, partly to allow us to spruce up the place a bit and get into a higher rental bracket as it's under market rent now, and partly because she's an idiot who does stupid things like pick out solastic in the shower claiming it was dirty and then wonder why the shower started to leak... oh and because her kids used to play with the ceiling fan switch she got her dad to disconnect the wiring of it without consulting us. **** for brains.

 

All my stuff happens to be middle market... I think for this reason I mostly dodge the really bad stuff more or less on both sides!

 

I agree!

Investing is a numbers game. I want good returns, and those returns are mostly in the lower socio areas. Good management is the key.

 

Yup, exactly!
Was saying very similar in the other thread where this first came up.

 

I have managed hundreds of properties and yes there are more problems in the lower socioeconomic areas.

My properties in the $700 plus range are not usually the ones defaulting

Yes they are very well managed but my stats show more problems with the $250/week cheapie properties.

 

of course...they don't call it struggle street for nothing...

 

with absolutely no bias and from what I have seen from other people investing in affluent and slums like me, id say lower is far more problems, and im saying it objectively

people in these areas are more likely to have drug/alcohol habits which means less priority in rent,
plus higher % of income used for this stuff,

plus these people dont really care about their credit rating, tenant history as much as planning isnt their speciality,

so yeah, far more problems being in lower socio areas

 

I been self managing on and off over last 10 years. Have to say lower socio economic areas tend to give more issues.

I had an apartment where a Taiwanese tenant just paid me 1 year rent with only one request promise of no inspections within first 6 months. She kept the place clean and left after 1 year.

However in pt cook u get a couple who broke up become pregnant and lost their jobs and were behind rent. In the end have to evict and claim rent arrears in vcat

 

Did you reach a conclusion that might persuade one type of property over another in view of the type of tenants you might get?

 

I am going to take a different perspective on this. My thoughts are that some (and not all) landlords in lower socio economic areas do not maintain their properties as well as they should do so they generally attract the lesser quality tenant and lessening the tenant selection tends to equal to more problems.

For some (and again not all) landlords in the more affluent areas, they tend to follow the trends and maintain their properties to a higher level hence attracting the better quality tenant.