If you have Class C rental properties, in Class C hoods, then it is a safe bet that you have Class C tenants also.

That being said, how would you describe your Class C tenants? What is it about them that makes them Class C, and not Class A or B ? Is it all about income levels or do they personal traits or habits that put them in the Class C category?

My Class C tenants are Class C tenants because they were not brought up with the concept of Personal Responsibility.

My Dad was Navy when I was young. His Dad was WWII (Army) and then Air Force after that. My Mom's Dad was Air Force in Korea. So my Mom and Dad were both raised military--- and even after my Dad went civilian, we still had those qualities in our upbringing. And since I was the oldest, I got the biggest brunt of it. (The R word! Responsibility!)

But I'm not seeing that in my tenants. So people get raised with a certain code of conduct (Responsibility!) or perhaps a moral code of conduct (not just warming a chair for an hour on Sunday, at most). But when you're missing both of those qualities--- you end up with people who don't take personal responsibility for their obligations to others (let's buy VR goggles with the rent money and get evicted!), or their surroundings (let's spray paint the solar system on the landlady's carpet and if the dog poos in the house, let's not clean it up!), or anything else in their lives.

For around 28 years I have purchased income apartment properties in class "C" areas because my City's had plans to develop in those areas. For example the new Redline Subway Project in Los Angeles. I got a map of those proposed subway stations and purchased buildings near to several locations.

I also got documents for the California Redevelopment Agency that were going to spend sixteen million on a stretch of a major street blending the "A" and "C" areas.

Both of those moves were gold mines.

In the beginning I had to take the best tenants I could find when those "hoods" were troubled. As the area got better I could select better tenants from a better applicant pool. From tenants with only checking account and no savings to tenants with savings and now retirement accounts. The irresponsible to the responsible.

All of the below describe general trends I have observed, some of which does not apply to any one individual Class C tenant.

* Income is typically below median for the area (median household income in Greene County, MO is $42,000).

* Marginal credit.

* Bounce from job to job every couple of years. Jobs have little upward potential.

* Spend more on TV/smartphone data plan than on a month's rent. Just kidding, I don't know...

* Rent-a-center furniture and appliances. Buy-here-pay-here cars.

Biggest difference: sense of priorities.

I've lived in cheap accommodations before that were class C borderline on D. In college, I shared a room in a house with 4-5 roommates. My senior year, I moved into a cinder block garage converted to an "apartment". I ate spaghetti by the kettle. I never went on Spring Break trips to Cancun or other 'party' destinations. Heck, I didn't even 'party' at home much...A bottle of Strawberry Boone's Farm was my Woo-Hoo juice! ;-)

But that was not the long-term plan. That was sacrificing lifestyle today to win tomorrow.

Today, I own a decent-size portfolio of rentals and live in a nice, paid-off house. Some of my renters are folks my age or older who, for one reason or another, haven't even taken the first step towards home ownership or who did once-upon-a-time but then reverted back to renting.

Class B and A will eventually "move up or move out" to something better. Class C simply rests where they are, most times.

Sid,

As Deanna mentioned, a lack of upbringing that teaches personal responsibility. Reliance on government programs to bail them out. Reliance on Democrat party to ‘make things better’. They don’t see the ‘free handouts’ as the monkey traps they are.

Lest I get in big trouble for calling class C tenant monkeys (I am definitely Not doing that,) a monkey trap is a box with a hole in it, the hole is just big enough for a monkey’s paw to slip inside. Inside the box is a tasty, juicy, ripe piece of fruit. The monkey reaches in, grasps the fruit, but, now, with the fruit in its paw, the monkey can no longer pull its paw back out. As the hunter approaches, the monkey struggles, struggles, struggles to get that fruit out. The monkeys that survive are the ones who will let go of the piece of fruit in order to run to safety. The monkeys who will not give up on that very short-term gain of the juicy fruit, get bashed in the head by the hunter, and sold for bush meat. Or so the myth goes.

Whether this is a real method of hunting for bush meat, or a fictional tale, it definitely applies to many situations in life. One has to be willing to forego that tempting ‘fruit’ right in front of us in order to gain the long term goal of freedom and survival.

A very, very, very close family member of mine exhibited such ‘monkey box’ behavior throughout her whole life, AND she made fun of some of MY choices because I would not take the ‘free’ offerings, as I saw them for what they are: a welfare dependency trap, or a popularity dependency trap. At a young age, I saw her suffer dire consequences for her choices, but she refused to give up on the idea of free stuff, or being the most popular. Near the end of her life, she became a terrible hoarder, and then her ‘ monkey box’ behavior almost caused her to become homeless. Fortunately , her son and I did not give up on her, shut the hoarding down, and she was able to live her last few years with her son.

All my mom had to say to change my behavior as a child/ teenager was say, you are acting like so-and-so. I had seen early how her refusal to give up on whatever piece of juicy fruit she was clutching in her grubby paw was trapping her in poverty, sometimes landing her in jail, preventing her from a successful life, even though she had originally inherited brains, beauty, and an incredible singing voice. She put all of her effort at avoiding any real work or drudgery, and that kept her locked in a very dour life.

So, now that I have written a tome to describe the effects of the monkey box, I serve to teach my tenants to let go of that fruit, so they can enjoy a free life on their terms. Slowly, I am having an effect. Not a process for most landlords to try, but, as I’ve mentioned in other posts, I have years of experience and training as a special ed teacher’s aide, and an autism therapy aide, plus a more recent college degree in Human Resources with a focus on training and development. So, I train, I develop.

Lower income population in this country has changed. Decades ago, I used to get low income tenants who had pride. They expected to work for their money and they would keep a house well and pay their rent.

I no longer own cheap rent places because of the entitlement attitude of the lower income tenants. And their anger. They are ticked off because they don't have more, and really ticked off when it is suggested that they work for what they want.

Roy...I don't think we are all in agreement with how you describe tenant. I was very clear that there is nothing inherently WRONG with their decisions.

I get what you're saying, though. I choose to serve Class C because it's a market I can afford to enter fairly easily and I am pretty good at making a good return on it. I'm not interested in catering to high maintenance folks who demand 10 layers of spit and polish on every piece of trim...not am I interested in slugging it out in warzones/slums for the higher cash flow those places bring.

We simply live in a cause and effect world. Or as my financial mentor Dave Ramsey says, "A sowing and reaping world."

I read an interesting Facebook article yesterday about how many bad Medicare/Medicaid nursing homes are cropping up in the country. As the Boomers age and go into these home, the are not enough 'good' ones who can hire the staff and provide the needed facilities for what I consider an acceptable end in my golden years. But, there are many people (probably Class D or C tenants...maybe even some Bs and As) who did not build enough wealth during their lifetimes to hire the best quality care. So they have to settle for what there is. One nursing home in particular is in Kansas City, and it was cited for people dying due to infections caused by bedsores and other improper / insufficient care.

One of my goals many years ago was to be independent financial so I can be with my parents and care for them in their elder years. That is one way I choose to honor them.

By contrast, many (most?) of my Class C tenants will have nothing and no one to care for them, other than the Govt funded Medicaid home. Medicaid homes are a craps shoot...IF you can find an open bed, it may be decent or horrible. I'd say the odds are 50/50 at best.

The irony is that in spite of this home in KC being cited with multiple violations, the residents do NOT want to leave or see it closed down. One resident said, "I've been in worse...it's better than the street."

So Class C money management is basically a life-long craps shoot: as long as times are good, you can get by.

But will there be resources/someone else to take care of me at a level I consider acceptable 5-50 years from now? Unknown. I prefer to spend more time and effort preparing and in exchange the odds tend to work out better in faavor of folks who do likewise. But I guess none of us have any guarantees, do we? I could get hit by a bus today, then where are all my plans and wealth-building projects? The tenant who spent today with no thought for tomorrow may think I was foolish for not enjoying the fruits while I could.

Does that change my view...? Nope. I'm still going to prepare, knowing the odds are in my favor that the payoff will happen, but if it doesn't, my family and/or other causes I deeply care about will benefit from my legacy. It's not all about S i d. ;-)

On the flip side, I'm sure there are some higher income earning people who think my money habits are a joke. Why aren't I striving to buy Lamborghinis and yachts? I simply have no need or desire for such things. I think on the TV show Billionaires, the characters lament they "only" have about $340 million or so left to live on. ;-)

Many fitting characteristics have been described above.

I’ ll Add these:

They are socially poor

They are emotionally poor

They are Spiritually poor

They are intellectually poor.

Sid,

Roy... I'm not saying that at all. I have mentioned that their behaviors will result in consequences that I would consider undesirable most of the time. I'm connecting behaviors with consequences vs. making moral judgments.

I think buying Lottery tickets is a bad decision for Class C tenants. So are Buy Here Pay Here Car lots, Pay Day Lenders, and Rent-a-Centers. Long-term, these behaviors do not lead to financial independence. We're seeing eye to eye on this...I think.

"Why would any self-respecting Landlord choose to have Class C tenants?"

I'm a landlord because I want to have control over my financial future. I don't want to be at the whim of the stock market, or get some piece of paper in the mail that says the investment account I've contributed to for 20, 30, 40 years has barely kept pace with inflation, regardless of how much $$$ I sink into it.

So, where do I put my money? I need to offer a product or a service that people need and are willing to pay to use every day. Under other circumstances, I might have invested in a toothpaste factory or a cigarettes-and-liquor store--- but I ended up choosing real estate as the most realistic biz to enter.

OK, so what kind of real estate? Commercial or residential? I'm scared of commercial, because commercial is tied too tightly to the economy, whether local, regional, or national. Even when a business goes out of business, people still need a roof over their heads at night. So, residential.

Now, what kind of residential? Well, I don't like being in debt or borrowing. I don't like high risk. I want to invest close to home. So, high-rise condos in Los Angeles are totally out. So are historic brownstones in NYC. It looks like my wallet and my comfort zone limit me to sad little houses in need of attention in my poor, rural town.

Who wants to live in those houses? Lots of people, actually, once they get fixed up-- but I don't want to sell them once for a lump sum; I want to rent them over a period of time and get a steady trickle of income. So, who wants to rent those houses? Lots of people--- but oops, now you're looking at the bottom of the barrel, because everyone in my area who is responsible with money is also going to be a homeowner-- because real estate is so reasonably-priced around here, and the population is too stagnant to get people who would normally be homeowners, but they don't want to tie themselves down by buying property, because they'd just have to sell it again in a couple of years.

So, a giant part of my job is screening through my applicants, and figuring out who's an "irresponsible louse" that I don't want to rent to-- I leave those to a different strata of landlord to cater to-- and who's a risk I'm willing to take.

My wallet would be much bigger if I did rent to the "irresponsible louses" in this town, because then I'd be in slumlord territory, and I wouldn't have to bother fixing anything, and I could easily find me a few intimidating-looking guys to make sure rent was a priority-- and if you can't pay your rent, then perhaps the next best option would be to fall off the planet and let me put some other desperate person in their place. :)

But that's not how I do business. :)

Way to go there Deanna,...you summed it up pretty good there! Now, I don't have to answer my own question anymore, you just did it for me.

"Why would any self-respecting Landlord choose to have Class C tenants?"

Locally my Class C tenants are few and far between. Oh they are HERE I just don't rent to many of them anymore. Most of my clientel are imports, come here to do the jobs the local Class C tenants can't be bothered to show up for!

Roy, My tenant pool is much like Deanna's. Because home prices around here are reasonable, like Where you are, most people making enough to pay Class A and B rent levels simply buy a place. Thetefore, there are few A and B rentals here. Class C runs about $500-550 for a 1 bedroom ,$600-700 for 2br, and $750-1250 for 3 br. Houses run $45-150K depending on area and more on the water. So payments on even a 100K house are currently less than rent on the same place.

I typically look for older mobiles on land that need work. I get these cheap, like your Roy specials. Fix cheap. Rent just under market. Basic class C housing.

David in MI, my tenants want some separation from the neighbors. Even if it’s just a few feet of grass between their house and the ones next door. All have mentioned being tired of the chaos in some apartment buildings. And, it turns out, all of my tenants like to have barbecues, where all the other kids in the building are asking to be fed. That gets mentioned a lot.

Roy, we are definitely NOT all in agreement that class C tenants are louses! I think Sisco summed it up very well. I just try to show them something different than what they know. And it’s been working. Though lately I haven’t been writing my monthly newsletter; need to get back to that.

Busy (WI)

Just what is your style of landlording? Is it something completely radical?

Richard,

Since you specialize in Class D MH's, I thought you would like to read my favorite Jeff Foxworthy joke.

"you may be a redneck,...if your house has wheels on it and your pick-up truck in the front yard does not".

Dad drinks Jack and smokes weed, mom drinks box wine and smokes cigs like a chimney, even after major cancer surgery. The kids have no bed sheets and sleep on nasty, sweat and body oil stained mattresses laid on the floor. Dad lost his license 15 years ago for DUI and simply kept driving. Arrested 3 times for driving in 15 years, paid fine and no jail time.

Everything bad that happens to them is someone else's fault.

I don't do "C Class". I prefer to think of myself as dealing with denizens of "workforce housing" :-)

Roy, I’ve described it many, many times, on this forum. I develop my brand, and I view each landlord should develop their own.

We all operate in vastly different markets, but that’s the great thing about this business, in this country with such a vast array of ideas and governance. One size does not fit all. The larger the market share one is trying to capture, the more one has to standardize, and operate off of One Size Fits Most. (Straight out of my marketing class in college.) As I’ve mentioned many, many times, I’m a small-time landlord (I’ll always be less than a dozen units), operating in a town with thousands and thousands of rental units, and hundreds, if not thousands of rental operators.