All Forum Posts by: Harvey Levin

@Shawn York  Thanks for your comments. The HAP contract has a provision for the Housing Authority to terminate in the event that program funding is not available but I do not this counts as the funding is there it just can't yet be released. It is in Part B section 4 b.4.  Section 7 3 states that after the 1st 2 months of the contract late fees can be charged to the HA. I have attempted to collect in the past  but IHA has no process for it and it has been rare that payments have been late enough to warrant the fees. The cost to continue to pursue this was more than the fees.  In this situation, it would not apply as  7 3 goes on to state that no late fee is owed if is due to factors beyond the HA's control. Clearly, this is beyond their control.  Disclaimer: I am NOT an attorney and this is only my personal opinion. 

Congratulations on having yours paid for. All of my low-income houses and doubles are also paid for.  I love all the free cash flow every month and am lucky enough to have reserves for both my portfolio and the company.  Covid was interesting because most of our Section 8 tenants lost income and became 100% government paid through 2020 and most of 2021.     I did speak with an IT consultant who has been involved in a couple of large company ransomware attacks and I was told realistically it could be at least  December before we would see the funds.  With Property tax due next month that is a concern for many of my clients and of course, the city is silent on any assistance in delaying that. 

This may turn into a great time to buy properties as those without reserves have no choice.  Personally, I hope not as I hate to see investors lose.

Here is the latest news clip but it doesn't really offer any new information.
 https://www.wishtv.com/news/lo...

I posted this in a different post yesterday when a  local PM advised asking tenants to pay the Section 8 rent portion  and if they did not pay to replace them with non-Section 8 tenants.   Unfortunately, the Media news is not providing accurate information.  

asking the tenant to pay the section 8 responsibility is a violation of the HAP contract See the Tenancy Addendum known as Part C of the HAP contract. Section 5 d. strictly prohibits this. It also has a provision in the same section that a tenant cannot be terminated for nonpayment by the Housing Authority.

I am an Investor since 1980 and have been utilizing the IHA Administered Section 8 program since 1985. This is the very 1st-time IHA has missed a payment schedule. Our PM company has been the only PM that has specialized in providing housing for Single Family Homes and Doubles since 2011. I fly to Washington DC once per year to cut through the BS and meet directly with the HUD Section 8 representative. I have also spoken on Landlord issues with the Section 8 program by invitation from HUD (not IHA). There is a lot of Mis Information out there. I would urge anyone who has Indianapolis Section 8 tenants to read all parts of the HAP contract and its addendums as well as read the most recent Administrative Plan to fully understand how the process works. The current situation is alarming but the FBI is working on assisting IHA in resolving the situation. This is a short-term issue and will be resolved.

If anyone wants to know more feel free to DM me.

@Shawn York   Hi Shawn, not sure why I didn't show up but I did see your post

@Kenny Hall   asking the tenant to pay the section 8 responsibility is a violation of the HAP contract See the Tenancy Addendum known as Part C of the HAP contract. Section 5 d. strictly prohibits this.  It also has a provision in the same section  that a tenant cannot be terminated for nonpayment by the Housing Authority. 

The FBI has been working with IHA since last week. They also have not had email as that was part of the hack so it is very hard to contact anyone. The city of Indianapolis is also involved in finding a solution as well as HUD. Dealing with government contracts has its pluses and minuses. This is the 1st time I have not received rent since I started with Section 8 in 1985. It has created a big problem for all owners, and tenants (they are not receiving the monthly utility allowance) as well as vendors of IHA. They are working on a temporary solution to provide payments and hopefully, that will be available soon.

Here is a news report from yesterday.     https://fox59.com/indiana-news...

I feel the pain. As an Owner, I have not received rent either on any of my over 40 Section 8 tenants and as  PM we are unable to receive fees on collected rents that we need to pay our staff and operating expenses.  Even with that, I am committed to utilizing the Section 8 program as it has been highly profitable in the past and I am sure it will remain so in the future. 

Lawerence and Warren Township are not Landlord friendly if you need to enforce the lease. The Mayor of Indy and City-County Council iare also not Landlord friendly.  More local landlords need to pay attention to those elections. 

Quote from @Aaron Porter:

I have heard through the grapevine... by no means direct from a source and you should definitely do your research on the matter.... But I have been told that if interest rates go up much more and if the real estate market drops banks are going to start calling HELOC's and if you have unused HELOC's the bank doesn't have to give you access to that money.

But I agree with William Harvey a HELOC would be much cheaper money.

HELOCS are a retail bank product with different rules than a regular mortgage. None of mine were called or reduced in the 2008 financial crisis but I do remember people saying to pull out as much as possible just in case. I was a commercial broker and saw a lot of commercial loans called. Usually, it was due to the Feds requiring the lender to balance the Asset to Liability ratios of the lender.  I do feel that if for a lot of the BRRR refi loans if the market drops by at least 20% AND any payments are missed foreclosure will happen much faster than back then. 

I started buying when investor bank rates were near20%  and inflation was high. Creative financing was the only way to buy.    I still own my 1st property. If you are a LONG TERM buy-and-hold investor and have ample reserves time is on your side. 

Hi I have been manging houses in indy using section 8 since 1985 and have been a speaker for HUD out of Washington DC on landlord issues with Section 8. I have been an advisor to the indy office past presidents, former Section 8 directors and Executive Directors. Reviewed and edited Indy Inspection protocols and on and on. Feel free to DM me.

Harvey 

I Am.not seeing anything except an offer to the current owner. That is a very common practice that investors who only nly want the interest use. I have sold back my right to redeem the real question has the redemption period ended? If so was quiet title preformed correctly? Usually in situations like this they seller has not spent the money on legal fees which usually cost 1500 to 3000. If there is still time to redeem there maybe time. The HOA probably liability for not paying the taxes.

Quote from @Nathan Gesner:

Thanks for sharing this information. 

Question: what's the point of all the different LLCs if you have an umbrella policy to protect you? 120 rentals split into 12 different LLCs? That's a lot of additional cost and paperwork to get started, paperwork to maintain, and adds a lot of complexity to the person tracking it. What's the benefit 

It is an arbitrary number. I use it more to have a basic level of not having my name associated with the houses. Also, I look at each as its own "Mutual Fund" I do not look at each property every month but I do look at each portfolio (LLC). If 1 seems out of wack I dig deeper. yes, the umbrella offers a layer of protection in the event of a Lawsuit but the LLC may help prevent a bogus claim. Lawsuits even bogus eat a lot of time and money even if insurance pays the claim. I am also at the point where I am going to move everything into a Trust. More as an easier transfer of wealth at my death.

@Nicholas Alves @Nathan Gesner @Drew Sygit

This is a topic that gets asked often. I am not an attorney nor am I an Insurance Agent. I use 10 properties per LLC as an easy way to compare. Similar to a "fund". I also carry an Umbrella Policy. I have a client who is a well know Class Action Attorney. He has 7 properties in 1 LLC. When I asked he told me there is no Attorney who wants to seize property. Attorneys want to Settle with Insurance Companies. He also maintains an Umbrella policy. My largest client had 120 SFR. He put 10 in each LLC and carried a large Umbrella Policy. (He also carried zero property damage insurance as the cost was a lot more than what he felt his total claims could be in each year. He was correct as he never had any damages in over 10 years that he would have ever made a claim on.)

Both of these clients have a Net Worth exceeding 20 million.

One item I often see is that someone will create a single-member LLC in a different state than where the property is located. If the LLC is not registered in the state the property is located in the LLC and is not active in that state so all responsibility is personal. LLC unlike S Corp or C Corp is only state based. If you want your LLC to protect you it is very important that you act like a company in every way. Sign everything with your title, LOAN money with a Promissory Note to the LLC with market Interest, and pay the interest, hold annual Board Of Director Meetings are just some of the items to help set the LLC apart from personal.

Again, not an Attorney Nor an Insurance Agent just an investor over 40 years and  PM over 10.