All Forum Posts by: Andrew Slezak

We have Sec8 in Birmingham, AL. We have yet to find a PM that knows exactly how to drive top $$ rents. There are general guidelines but nothing formulaic. In our area we have 3 different HUD agencies that provide vouchers to qualifying tenants. Each agency has slightly different criteria and limits but the process for setting rents is roughly the same and has 2 components. 1) The tenant voucher is based on the tenant's specific finances and number of people within the family unit. The voucher is the most that Sec8 will pay for that person's rent regardless of where they rent. 2) The second part of the Sec8 equation is the market rates for specific neighborhood's and property types (SFR vs apartment, # bedrooms, # baths, utilities included vs paid by tenant, etc). This is the max that Sec8 will pay for any property and is the information that you can find online. This means that a tenant may have a voucher that says they qualify for say $1500 but Sec8 may only be willing to pay $1200 for that tenant in a specific property. All sec8 rentals are subject to review and approval by the housing authority issuing the vouched. So once you've approved a tenant at an agreed rent, it goes to the authority…. This is where the voucher cap and specific property limits get looked at. We've also found that at least one of the authorities (Jefferson county) started to run some kind of property specific rental comps which can also affect the max they're willing to pay.

Back to your question on maximizing rent: In general, the better the neighborhood the higher possible rent. The more people in the tenant’s approved household the higher the possible rent. Rent increases need to be requested with supporting rental comps annually. 

Rent value is based on the county and number of bedrooms. I can’t r ember where the link is to lists but if you google it it should come up on hud.gov somewhere

@Cheryl J McGrath Personally I don't see why any RTO buyer would enter into an agreement and put down money if you don't own the house yet. If the R2O buyer gives notice on their current place and your deal falls through at the last minute, those tenants would be scrambling to look for a place to live.

Hello community!
New investor here need advice on a deal I am about to do. Feel free to roast, criticize or give any advice you have I can take it. Backstory: 22 years old about to get out of military after first contract. 70k cash saved up & 775 credit score, no debt. Looking to buy duplex to live in and ultimately renovate if the numbers make sense. I am approved to use VA loan at 5.5% guaranteed. Here are the numbers:

Purchase price: 300k @5.5% (might be able to negotiate new exterior paint job credit)

Monthly costs: mortgage- 1703 tax-245 (2933/yr) insurance- 167

Market rents are 1600$ easy for both sides as is but currently being rented at 1410 and 1325 tenets pay all utilities (separately metered)

Planning on putting aside 20% of rents for Maint, vacancy, capex and will be self managing property.

Property is fine as is but if fully renovated in my market I estimate 500k-550k ARV. This is a 2500 sq foot 3 bed 2 bath both sides. After renovation rents would be 1900-2000$ so about 4,000$ total rent for both units. If I did the BRRRR method would this work out perfect? 300k purchase + 10-15k closing + 80k remodel + 5k for refinance costs. 80k remodel number I got from my father who is a general contractor in the area. 500k ARV x .80% refi (because it would be my primary residence) = 400k minus 15k closing, 80k remodel, 5k refi cost = 300k my original purchase price.

Property details: 3 bed 2 bath both sides with attached garages, aluminum siding, copper plumbing, 1972 construction, separately metered, all electric water heater, range, dryer, public water and public sewer on a slab foundation in a great school district right next to brand new construction everywhere.

My only cash investment would be the 10-15k of closing costs as of right now. I am very very new this is the first house I am ever buying.

Any advice is welcome. Am I getting a good deal as is? Should I keep it as is or renovate? Do numbers look accurate?
thanks!

@Andrew Slezak, I am looking at Chattanooga right now, is it where you are trying to do a BRRR or flip? What do you think of the market currently? Cheers