Section 8 housing

[Kathy Pinho]

Just wondering what the general consensus is on Section 8 properties from those who are already involved with them?  Do you recommend using a management company?

[Jay DeCima]

Kathy

THE RIGHT INVESTMENT IS THE PATH TO CASH FLOW

Buying rundown houses is the IDEAL INVESTMENT BUSINESS for small-time Mom &. Pop operators. Affordable rental houses are In short supply and profits are the highest in the business. Unlike buying traditional homes where investors must agree to restrictive bank terms, rundown properties are mostly financed by the people who sell them.

With over 40+ years of investing in Northern Calif, and 200+ units at  my high point, renting to Section 8 tenants has been very profitable to me. At any time, 30-50% of my rental homes were Section 8.  I buy groups (5-15) of older, ugly (at purchase time) on a SINGLE PARCEL.  These may be small houses, duplexes, conversions, etc. 80-90% of the time they are seller financed and about 10% down (about the same dollars you would put down on a single family home in the suburbs.

Affordable rental houses are not dependent on appreciation for profits like regular houses. Instead, investors routinely Increase the value by making cost effective (fix-up) Improvements. Cash flow, which is almost unheard with regular tract houses, is pretty much guaranteed with affordable rental properties.

Safety can be a serious concern for leveraged investors! With fix-up properties, “sweat equity” can quickly pump up the property value. Obviously, added value translates to higher earnings – making failure nearly impossible. Take a good look around – how many apartment buildings end up in foreclosure? The answer is almost none – the reason is because they produce positive income for their owners!

In my town it would take a couple,both working full time, to pay for my $800 2 bedroom rental. A screened (by me) Section 8 tenant may only pay $50-$400 for their share. HUD pays the rest on the 1st of the month deposited to your account.

I have very few evictions with section 8 because if evicted they could lose their voucher and then where would they go.

There is a simple yearly inspection for basic safety items.  You need to maintain this stuff anyway.

Final note:  YOU screen and choose the tenant.........NOT SECTION 8.

Keep learning about Section 8.  It will be well worth your time.

By the way here is how you find the fair market rents Section 8 will pay for all units, from studio to 5 bedrooms, for every county in the US.  https://www.huduser.gov/portal/datasets/fmr/fmrs/F...

Good luck.

Fixer Jay DeCima