Section 8 Tenant experiences in New York City

[Phil M.]

anyone have any negative experiences with section 8 tenants in new york city or in the tristate area?

Feel free to give any positive experiences or comments you have as well!

Thanks

[SANDRA VIRGIL]

Sandra V.  I just join BiggerPockets, I came across this website while looking for information on investing in real estate.  I own a property in Brooklyn New York which Me and my husband purchase in 1981 with no money down because he is a veteran.  The 2 family house was $27,000 at the time in a not so desirable area of Brooklyn, but I made the best of it because it was still better than living in an apartment with my three children. We spend a lot of money fixing it up we had a tenant when we closed on the house and the reason we accepted that was because at that time in New york, if you leave property empty people would break in, and take the pipes out and vandalize your property.   This was our first house and we really did not know anything about real estate, we did not know what the laws were, we just know that we just bought a property that we need to fix and a bad tenant that we need to get out.  The tenant was living on the first floor where the thermastate was located,  we were both working and the tenant was in the house leaving the heat on and had the windows open, my first heating bill was $900.  We had to get this tenant out.  At that time it took a few months, the tenants were drug abusers and he even pull a gun on my husband but we got them out.

This was a two family house with a 3 bedroom apartment and against my better judgment I convinced my husband to rent out this apartment for $500 per month, because the house needed a lot of renovating.  This was another bad tenant with 5 children, he paid cash at that time I did not know anything about section 8.  The tenant started to fall behind in the rent and the children was damaging the property.  As I mention I did not know the law, all I knew was this our house and this tenants had to go, I decided to turn off the water, I was very angry I am sure many of you can understand this because you are property owners also.  Me and my husband was working hard every day and trying to fix up this property and these tenants was living in our house and not paying rent and damaging the property turning off the water worked two months with no water they decided to leave. I later learn that you are not suppose to do that and that it was against the law.   We paid off the mortgage a couple of times and then we refinanced and got $40,000 at that time the value of the property about $100,000 we took that money and did some more renovations on the property paid off all my debt and bought two cars cash.  Over the year my husband refused to rent to tenants and I tried on several occasions to get him to invest in more property in New York.  Before we did our first refinancing, we had no mortgage, no credit cards bills and we had a an Income over $80,000 a year.  Long story short, we held on to the property and continue renovating it.  I started a Home Daycare on one floor, expanded to another floor my income from the property two floors was about $6,000 per month.  In 2003 because of the high cost of car insurance in New york I was paying $3000 per year for liability insurance for 1 car even though I have a good driving record.  We got another car and I ask my daughter to insure my car with her in the bronx they gave her a quote of $6,000 per year. Desperate at this point I figure that I could buy a property and get cheaper insurance. We refinance for a second time for $160,000.  we paid off our bills including the balance of $40,000 school loan and used some of the money to renovate the Brooklyn property.

My daughter friend gave me a brochure on houses being sold upstate. We were very surprised how cheap these houses were, her friend got a 2 family house with 6 bedrooms for $30,000.  We put a $10,000 down payment on our first two family investment property.  My insurance went from $3,000 a year for 1 car to $1,500 a year for 3 cars 2 with full coverage. Over the year the equity in the Brooklyn property continued to increased over the years.

In 2006 we refinanced the property and got $200.000 which I went back upstate and invested in a 3 family house for $65,000 cash which we converted to a one family that we moved into, and another 2 family rental property which we paid $65,000 cash.  We spend a lot of money on renovating the 3 family house to a 1 family. it needed 50 new windows, new heating system and hot water heater.  We fix the attic and put 3 bedrooms up there.The property was over 4,000 square feet after fixing the attic the house have 8 bedrooms 3 bathrooms, a walk out basement with 9 windows, lot is  65' wide and 200' long.  I was worth the investment to me I love the house and I also knew that if I wanted to buy a house like that in New York I would have to pay over a million dollars.  etc. it took all the money I had left and then some.  My thought was if I paid cash for these properties up front I would eliminate 30 years of mortgage, I would have positive cash flow, we eliminate that monthly mortgage and just had to worry about the taxes and water bill.  and that I could always refinance in the future and invest in more real estate when the interest rate drop.  Which is where we are now I the property in Brooklyn interest rate is 6% which was a good rate in 2006 when we refinanced.

I suggest that if you plan to invest in rental property in New york in a 2 family or 3 family house that you make sure you have a few months mortgage payments put aside to pay your mortgage.  If you are investing in a multi family apartment building, you should have enough to cover your mortgage if a couple of tenants is having a problem paying, or you are trying to evict them.   The property is not cheap, I watched my neighbor lose her house because the tenant did not pay the rent,  the tenant told her that she had to pay them to get out.  Someone bought the same house next door to my house for $1.200.000 The rental income is high right now a room in Brooklyn where my house is located $900 per month.  On the other hand the cheaper 2 or 3 family homes upstate are easier to hold because you can give a tenant a 30 day notice to get out you don't need a lawyer you can go to the sheriffs office and file the paperwork yourself, and if you took two month to get a new tenant you can still afford to pay your mortgage.  In my case I do not have a mortgage.  The court system makes it hard to own rental property in New York.   I also have section 8 tenants in my 2 family rentals it is true some section 8 tenants are bad tenants but I have one lady who have been renting the apartment for 5 years, and she loves the apartment and keep it clean. I use section 8 because I know that I am getting my rent every month direct deposit into my account.  If my tenant lose her job section 8 pays me the full rent.  I also have stipulations added to my lease about the condition of my apartment when they move in, I also take pictures of the apartment at the time of rental.  If my apartment is damaged in anyway of things are missing, the cost of replacement or renovation will be taken out of the security deposit.  I have the tenants sign it, It motivates them to take care of the apartment because they want that security deposit back. I also use section 8 because the tenants know that if they don't pay their part of the rent, they could lose their section 8.

In my area people are renting rooms to college student, I am also thinking about doing that with my rentals. Instead of getting $700 per month rent for one 3 bedroom apartment I would get $450 per month per student I could get 5 students in one apartment $2,250.per month. which includes heat, wifi, water, furnishings. The two family house would bring in $4,500 per month positive cash flow. This is just my experience I learn on my own I try my best to educate myself that is how I found BiggerPockets. Our property in Brooklyn is valued about 1 million dollars, I want to borrow $300,000 to renovate it and invest in more rental properties. we owe about $320,000, we are paying that at 6%interest rate. I was told by a mortgage company that I could borrow the $300,000 and pay almost the same amount per month that I am paying now. Anyway my plan is to set up an LLC, open my business account and get Business credit put a down payment on multiple rental properties. I tried to do that before using my personal credit but the banks would tell you what you can afford and what you cant afford. I heard about trade lines, but I started looking on line trying to understand what I need to do to get funding as an investor on multiple properties. I hope as a small investor I have helped the readers in some small way. I want to thank the Bigger pockets community because I am learning a lot from each members experience.