First property - help!

[Aaron Singer]

Hi BPers,

I'm in the inspection period on a SFR project in Indianapolis. I'm looking to buy and hold. Property needs some work, but it's currently got a section 8 tenant w/ 100% rent covered through next February. Property comes with the adjacent lot as well.

Let me know your thoughts and questions!

How would you leverage the lot? What do you think about inheriting the section 8 tenant? Would you make any repairs day 1? HUD has already inspected the property and cleared for section 8 with no mandatory repairs.

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[Moises R Cosme]

Aaron, 

Congrats!!! Sounds like a great deal.

1. I would take a look at zoning regs to determine 'highest & best use' of the lot.  The zoning regs are probably available on line and will tell you what you can and cannot do with the lot.  If the lot is big enough, it may be buildable if that is the case selling it is a good way to get a good chunk of profit out of the property very quickly with no loss of income.

2. Section 8 is great, those programs typically pay 95% of the top of the market rent and most of the rent is guaranteed.  

3. I would not make repairs if HUD has already inspected the unit; I would however, try to call the case worker and talk to them about planned repairs and if that would impact the rent you would get from the program. In some cases the programs will pay more if you update the unit, they typically require big things to be updated like heating systems, roofs, windows etc.

I hope this helps!!