What would you tell an NFL player who’s considering Section 8 housing?

[Vince Biegel]

I love the bigger pockets community to bounce ideas off the group. Here’s the opportunity:

I’ve found an experienced operator (250 doors under his belt) who specializes in Home choice voucher program (HCVP) or section 8 housing.

The numbers are a 70/30 split. We forum an LLC together were in 70% owner. I hold majority to all key decisions. I'm providing all the capital while him and his team finds the deal, repairs property, finds tenants, and manages the property. I can be involved as little or as much as I'd like. (I'd like to since interested in this real estate asset class).

His main market is Cleveland, but also has Toledo, Memphis, and a little Jacksonville. Buys single family homes on the $50k - $75k range give or take $5k. 

I’m new to Section 8 housing. I’ve been doing a great deal of due diligence on the team and the asset class as a whole. What are your thoughts? I would love someone’s take who’s invested in HCVP. What are the pros/con? Tips? Any advice would be well received. Thank you all. 

[Jay Hinrichs]

Financial suicide by a 1000 cuts..  your giving up 30% management fee on already a very slim cash flow model fraught with all sorts of headaches..

Just skip that asset class and move to better neighborhoods and assets. Find a very good PM to work with and do this yourself..  Or just invest with really good syndication or REITS.

Your talking about a very ill liquid asset that will only sell for what the cash flow is minus risk.

I have been funding BRRR investors in Cleveland for many years we have done our share of the low end stuff and its simply not worth the pain.. There are great neighborhoods in Cleveland that you can get market rents and market tenants just like any city .. The highly levered ( assuming they want you to put the debt and be responsible for the debt on these) is just way to risky for high net worth individuals in my mind who have all sorts of options out there. I thought the same thing back in 2012 and bought 300 Section 8 rentals and my PM's were partners and I sold out after 3 years Just not worth taking on massive debt for those assets buy yourself some very nice A and B class rentals that will actually appreciate over time and have realistic exit strategies. IE homeowners will buy them not just investors. Those that make the model your talking about work are Hands on locals doing it all themselves and pay cash for a lot of what they buy so they are not saddled with debt.

For you to tie up your purchasing power given your financial status on the cheapest properties you can buy in America to me makes no sense and taking on massive risk.