All Forum Posts by: Duarte Marques

@Duarte Marques we'd recommend 10% for each.

Congratulations on mapping out the strategy. However, to me it sounds like you are over simplifying this. You have all these things ironed out on paper but there are dozens, if not hundreds of things in this arena that can go sideways. I want you to do much more research in regards to multiple characteristics and scenarios that could occur. The list is endless. A way to look at it is; if it were basically easy as buying a 100k turnkey and getting $2400 in cashflow just like that, nearly all investors would have hundreds of them. Do you have a competent PM in place? That alone can sink you. In most cases quality PMs wont do super low level areas, leaving incompetent bottom feeders. A bad PM can cost you tens of thousands of dollars. Do you know this community? Do you have any idea of what you are getting into? Do you understand the culture you will be catering to? If not, that WILL sink you. What if your turnkey is not up to section 8 code? What if turnkey providers are inept? Do you know the crime stats? Is this area susceptible to car jackings, murder, stray bullets? Will you be replacing condensers and appliances every few months? Do you understand that some places are nearly unrentable? A dumb assss property manager that could care less about you or your property, will load it up with grimmy tenants who destroy your property for fun. I mean the list goes on and on. You need to just be aware of all the variables or you will be on here in a few months declaring all people on Section 8 are animals.  There are multiple people on BP who have experience in this space and I suggest you study study study, read, read, read, and talk to as many people with experience here that you can. 

I wish you the bast and congrats on jumping in. 

I want you to win! 

@Duarte Marques your first problem is you are clueless when it comes to how Section 8 works!

The $1200 you are referring to is Gross Rent with owner paying ALL utilities - which is financial suicide with S8 tenants. 

You need to figure out the Net Rent without utilities and factor in you paying for water as most cities only install one water meter per building. So, no tenant will put in their name for both units.

Most S8 properties are Class C and 7% for vacancy and 8% for maintenance won't work.

You also haven't accounted for Tenant-nonPerformance, which will happen unless you get real lucky and S8 pays 100% of rent. 

Look into the area/make sure you ave a property manager that will manage in that area. 

Quote from @Duarte Marques:

Quote from @Travis Biziorek:

These numbers don't seem to add up. What market is this?

$100k for $2,400/mo gross rents... it's just not likely to happen.

 It would be a section 8 rental, the fair market rent for section 8 (hud gov site 2024) on that zone is 1200 for a 2 bedroom, since it's a duplex it has two units with 2 bdr so the total rent would be 2400 (both section 8 tenants). The duplex you can buy around 100k-150k turnkey. 

Oh, I understand all of that. Crystal clear. I own 14 doors in Detroit and 3 are S8. 

But you didn’t answer my question. 

What market is it?

Also, FMR’s do not mean that’s what you’ll get. Lots of people thinking this is a guarantee. It’s not. 

These numbers don't seem to add up. What market is this?

$100k for $2,400/mo gross rents... it's just not likely to happen.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $245,000
Cash invested: $5,000

Long term rental property.

What made you interested in investing in this type of deal?

I was not thinking about investing into real estate until I listened to this podcast.

@Duarte Marques

Your base bit of only $200/month will look like a home run in 5-7 years as market rent rises quite a bit and it appreciates. At that point you can do a cash out refi and pull some equity out and scale up. The biggest con I see with a turnkey property is if a tenant moves out in less than 3 or 4 years. Turnovers crush all your properties for obvious reasons. But if you get someone in there for 7-10 years, then it turns into a cash cow.