Housing Authority - Guaranteed Rents - Helping Families & Vets

[Mitch Pomeroy]

We own and operate 500+ apartments in California by partnering with great people. We have been working with Housing Authority / Section 8 / VA for 5 years. After flipping 500+ homes in Southern California, I realized this was a tough model to scale and manage. I decided to move to apartments for long term passive income, tax advantages with depreciation / cost segregation and to build long term wealth with partners and investors. When I started analyzing the market rents for apartments, I determined by working with housing authority we could receive 50 – 100% of the rents guaranteed by the Federal, State and Local Governments. I figured out how to purchase mismanaged, deferred maintenance apartments buildings with rents 50 – 100% under market rates. I started with 4 units then 24 units until I was at 40 units. I realized I liked apartments more than flipping housing, as I could get economies of scale for acquiring properties, reduce construction costs, reducing the amount of in-house staffing and forcing appreciation by working with housing authority. I sold off all my single-family flips. Over the past five years, I have partnered with great people. By trial and error, we have learned about housing authority, property management, syndication with investors, wholesale acquisitions, broker relationships, and how to force appreciations in 6 – 12 months. We have determined that housing authority / 8 and VA residents provided as close to guaranteed rents as a landlord could receive. I have also been able to buy mismanaged deferred maintenance apartment buildings with rents 50 – 100% below "Housing Authority market rents" consistently. We have figured out how to increase the rental rates in a neighborhood 25% - 100% in less than a year by working with housing authority. Over the past two years with great partnerships and investors we have grown from 40 units to 500+ doors in California alone. 90% of those units are Housing Authority / Section 8, VA residents. We currently manage 1100+ doors nationally. During Covid 19 we realize this was the right decision for our investor partners. Housing Authority is currently paying 50 – 100% of the rents. A majority of the rents are 80 – 100% paid by housing authority. To be success in real estate, apartment rentals and section 8 comes down to one thing. Management. When I started in multifamily, I interviewed 25+ property management companies to find the best management company for our business model. The company I picked was not the cheapest, however they were very flexible and managed 1000+ doors when we started. I started with a 4-unit apartment building. They had experience with housing authority and section 8. They allowed me to be active in working with their team daily. With trial and error, we have figured out we don't have to many competitors. In the past two weeks housing authority informed me they would continue to pay on the 1st and the 15th of the month. During Covid 19, we have not slowed down in the amount of housing authority section 8 residents applying and moving into our units. In fact, showings and leasing have increased. Our property management team screens all the residents including housing authority, section 8, credit, background and calling references to make sure we pick the best residents for our properties. It’s not perfect but it works well, and our investors have been very happy with the results. In touring all the properties talking with the residents and our management team, I know we are doing great things and helping families and veterans during these challenging times. Be safe and I hope this helps you in your real estate goals.