Are you saying you think the guy who owns or rents the place takes care of mentally ill people in his home? If so, I definitely think you have the right to be upset and need to confront the guy, and/or get the authorities involved. If he is earning an income doing this, he has the responsibility to not be disruptive to his neighbors.
If it is someone who is living there with his family though, then that requires a lot more tact and empathy, so the letter suggestions and such might be more appropriate.
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