Section 8 Bible

[Dawn Anastasi]

Has anyone ever read these books (volume I and II)? In it, the guy talks about his strategy for buying and renting out over 300 single family homes.

For the first property, he started off with around $28,000 or so from an insurance settlement, but he talks about taking out a HELOC or getting money from credit cards and buying the property in cash.

Then, once that property is fixed up and rented out, get another loan from a bank on that property for 75-80% LTV, and use that cash to buy another property. Repeat to infinity is what he says. He and his partner did this for over 300 properties.

I have read and read and searched and searched and cannot see how on earth he was able to do this, with the current Fannie/Freddie limits of 10 mortgages per person. Even if he and his partner each were somehow able to get 10 apiece (and I'm only seeing the ability to get 4 per person), that would only make 20.

So what is the secret to how these guys were able to do this?

[Andrew Fidler]

I downloaded the book 1 from amazon ($23 print and $9.99 for kindle)

I'm about halfway through and have enough information to begin commenting.

I think I take the place on BP as one of the larger low-end investors...I own in Toledo and buy in two adjacent neighborhoods...$30k and $20k areas...I buy 3/1 houses for less than $10k and put a pretty significant renovation into them so I'm $15-$20k total by the time I rent...and I have nine sect 8 houses now, three for rent (rental market is a bit slow in Toledo with record cold and snow) and two more in process of renovation)...I've been sect 8 investing for four years now.

The author is a certified cheap a**. I find much of his advice laughable and think a property walk in one of his places would have me leaning on door frames trying to catch my breath from laughing...I do not recommend you follow his advice any further than the knowledge that sect8 rentals can be productive and if you want to get crazy you can minimize your expenses and still pass inspection.

Ok- when I buy a house...circa 1940...my goal is to make the neighborhood better...call me an idealist. By this I mean I want the exterior to be basically maintained, the front respectable, and the yard safe for kids. Since I'm a family business if I don't find something myself I normally get a text from my mother-in-law that we have something amiss that needs to be addressed. I regularly tour BP folks past my buildings and in such instances the properties reflect ME so I want them basically presentable.

I fix anything that I don't want to mess with when a tenant is in place...unlike our author I don't dumb the whole place down because my tenants are animals, I fix them right while it's vacant so I can move a tenant in and start the relationship right...not with a two-page punch list of repairs needing to be addressed. I remove all galvanized pipe AND COPPER (theft-prone) and apex the entire structure. Furnaces are 80% efficient...I just bought a house with a ~40% efficient octopus furnace and got it upgraded to a used 80% efficient furnace for a damned good price...again, I believe in basic upgrades- if my tenant is blowing 100% more heat up the chimney then their bills are double and not sustainable for them to stay with me. 80% is the norm in my area and there are always used units available from the nicer areas of the city. I either finish hardwood floors or carpet the whole house...carpet is cheap. Paint is cheap. A good quality glue-down vinyl is cheap. However I do all my renovations with a some-day sale in mind.

Author recommends boarding over and siding any more than one window in each room. Whaaaa? So you want me to take a 1200sqft 3/1 and board over easily six windows, just because you don't want to maintain them? A new vinyl window is maybe $160...$40 install...and that's IF they need a replacement. There are pictures in the book of houses with windows blanked off. How can we hurt rent appeal and eventual resale more I ask!

Author pulls ceiling fans and 220 air conditioning outlets from the houses...I won't fight this one other than to say I install $30 fans in my bedrooms...to me that cheap and easy. I don't install a circuits but don't destroy them if I find them either.

Author removes all closet doors from his rentals...

Author removes the bedroom door handles and installs a $.50 hook and eye..to avoid a $9 handle expense.

I swear I would walk these places just to see how excessive the author could be.

Anyway, my main take on sect 8 inspections is that they are pretty subjective...if the inspector likes you and is impressed with the first 2 minutes of the walk through and you show honesty and integrity in your place, then you will pass...any minor issue can be fixed on the spot and you will get the benefit of the doubt. I think that an inspector who reached for a door handle and found a hook/eye and no closet doors and painted plywood subfloor for flooring would be looking to fail you...because you would stand out in their mind as the cheap a** they were trained to fail...you would be the talk of the office when they returned.

Renovate reasonably, renovate responsibly, and you will do well. Don't get too high-end with granite and don't put old sidewalk slabs in for countertop simply because they're durable and the sect 8 regs don't say you can't.

Back to reading. :)