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Updated over 1 year ago on . Most recent reply

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Augustine Cherukunnel
  • Investor
  • Houston, TX
6
Votes |
18
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Section 8 gurus - are they worth it?

Augustine Cherukunnel
  • Investor
  • Houston, TX
Posted

I have a handful of properties that are local to me (Houston, Tx). All of them have a decent cash on cash return and I’ve always been selective of my purchases. Most of my properties have section 8 tenants and I can’t say I’ve run into any major issues. They tend to stay longer, they pay their portion timely & they don’t trash the house. I think that’s in part due to the rules of the program as well as proper tenant screening.

I’ve seen multiple Section 8 gurus on social media advertising their courses to buy properties in medium sized markets in less expensive states & get insane returns. Usually along the lines of 5-700ish net income per property with the properties costing less than $100k. In my most recent personal experience, the housing authority here didn’t pay the full amount the tenant qualified for based on her affordability worksheet for the zip code/tier the property is in. That number would’ve been around $3000/month. The housing agency did a market assessment and determined they’d pay a little above market rent. I was okay with that since I got the property at a good price and it still makes 3-400/month in cash flow.

That said, has anyone used any of these & do those agencies in smaller markets pay the full FMR as determined by HUD, or would they do a market assessment as well? I am open to trying it, but I don't want to commit to a property out of state and the hassles that come with that if the net income would only be $300 or so.

Thanks in advance

Most Popular Reply

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Travis Biziorek
  • Investor
  • Arroyo Grande, CA
1,859
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1,744
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Travis Biziorek
  • Investor
  • Arroyo Grande, CA
Replied

Hey Augustine, to me it sounds like you're doing things 100% correct.

These gurus survive by making too good to be true scenarios sound reasonably accomplished.

I have several section 8 properties and it's the same deal... the FMV's are the ceiling for what the PHA will pay. It is NOT the market rate.

Usually, I'm finding I'm able to get close to the FMV but you aren't going to be grossly above market and have the PHA be like, "OK, that seems fair!".

Don't get sucked in by the gurus. You've got the right idea. Keep at it!

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