Going to the next level

[Donald Green]

I am a real estate investor in Baltimore/Maryland. I have been investing for about 10 years. I currently have a portfolio of about 13 units. I am currently trying to grow my portfolio. I have been stuck for a while because I have had occupancy issues. I decided to work with different housing programs to have a dependable stream of income. The inspections for these programs can be costly. I am really trying to take my business to the next level to become a full time investor. Does anyone have any suggestions?

[Clayton Mobley]

The issue with lower-end properties is that, by definition, the people that rent them are like one sick day away from missing rent. One flat tire, one sick kid, one broken leg. Obviously, these people still deserve safe housing, just like everyone else, but from an investment perspective, they are a higher risk pool. People get excited about the 'guaranteed rent' from Section 8 programs, but they don't realize that tenants can lose their voucher, there is a maximum amount the program will pay based on the Fair Market Rent for your area, and that you must have a yearly inspection, even if no tenant turnover has occurred, and that it's very common to fail these inspections, meaning you have to fix things and then be reinspected in order to continue to qualify. 

I am definitely pro-affordable housing, and I think it's great that properties that are clean, safe, and secure are made available to those with lower incomes. But from a purely objective investor perspective, you will have an easier time and more consistent cash flow with fewer doors in higher-end areas.