All Forum Posts by: Jack Luzecky

I am happy to help with any questions you may have surrounding the Section 8 program, but it may differ market to market. I am in St. Louis. My management team has approximately 3,000 units under management, with about 15% being subsidized, via Section 8 and other voucher programs. 

Section 8 typically has a cap on the rent rate, dependent on bedroom counts. These can be found online by search 'Section 8 Fair Market Rent for 2024'. Section 8 representatives will confirm the rent rate per house once a tenant is secured. This final determination based on various factors such as condition of property, location, and bedroom/bath count. The published cap should be used purely as a guideline, whereas the final determination could vary. 

Each tenant with a Section 8 voucher has a unique rental obligation. Meaning, if the rent is $1,000, Tenant A could be responsible for $200, whereas Tenant B could be responsible for $0. In most situations the tenant is 100% responsible for the initial security deposit payment, and any recurring utility charges. Section 8 will ACH monthly rent payments to the landlord's bank account. 

Section 8 requires an initial inspection of the property, in addition to any other local housing conservation inspections that may already be required depending on the municipality in which the property is located in. The initial inspection may impose additional upfront costs associated with any potential citations. Many times these citations will align with the municipal codes, but sometimes they do not. In addition to an upfront inspection, Section 8 requires an annual inspection upon renewal of the tenant's lease agreement. 

In the event you fail an annual inspection where the property is occupied, then you will have the opportunity to make the appropriate repairs. If you fail to meet deadlines and satisfy the violations during subsequent inspections, Section 8 may abate their rental portion. In this scenario, the tenant remains liable for their portion. 

Lease renewals have a strict deadline. if you miss the deadline and fail to request a rent increase, then you will need to wait until the following year. 

This scratches the surface, but i hope it provides some light. You may want to do some independent research on the respective Housing Authority website as well. 

Hey @Rob Pattison I owe you a phone call. 

Hey @Joshua McIntire, just to reinforce @Laura Marks reply, there are no requirements for on-site managers in Missouri, no matter the size. Depending on the type of property it may be worth having an on-site manager, but that is completely up to the investor. Most property management duties can be achieved while off-site with today's technology. On-site maintenance technicians would be the in between stance to ensure proper turn around time on repairs given the potential work order load with so many units to care for. 

Correction: First Community = 90% LTV

@Scott Goulet I believe First Community Credit Union has HELOC products up to 95% LTV for primary residences. I think you should be able to find local credit unions who are willing to surpass the 70/30-80/20 LTV on a primary residence. If you ever look in St. Louis for a large multi-unit building I'd be happy to discuss any potential properties.

@Crystal Smith I may be bias, but i think St. Louis is a great market to add to your portfolio. I do agree with @Jonathan Klemm to a degree about expanding elsewhere when the current market may be treating you right. But I think being involved in more than 1 market will only increase your deal flow. You may go 6 months on the hunt in your current market with no promising results, but being involved in another geographic market may bring rain to that drought. Its a numbers game as you begin to scale. I have plenty of clients who are involved 2-5 different markets. Many of them have struggles managing more than 1 team of property managers, contractors, etc., but their deal flow is much more consistent. 

If you ever look into St. Louis market I would be happy to chat with you about the ins and outs of our local market. 

Hey @Adam Fox midwest markets are great as @Seth Young mentioned. I am based in St. Louis. I have a couple duplexes in the city of St. Louis that produce great returns. I highly suggest looking in St. Louis's market, especially multi-family to reduce vacancy rates and create a more stable line of monthly cash flow. Anything St. Louis, feel free to reach out. I would be happy to talk it over with you and give you advice on neighborhoods, types of properties, etc. Congrats on what seems to be a very successful endeavor!

Nice work, @Tim Beadle! I love Benton Park/Cherokee area. Good luck with your renovations and enjoy your house hacking journey!

Before committing to an FHA loan, I suggest checking with local lenders to see if any low down payment multi-family products are available in your market. Some may offer 3.5-5% down for a duplex. Most of these conventional low down products were taken away during the COVID outbreak. But some are coming back in St. Louis. I prefer to use low down conventional prior to FHA because you are only allowed 1 FHA loan at a time. If you purchase with a conventional product first, then you still have the FHA product in your back pocket to use on a 2nd property. Otherwise, you will need to refinance out of an FHA to a conventional product before utilizing a 2nd FHA loan. When refinancing out of an FHA loan you are bound by Loan-To-Value requirements. And unless you force appreciation through sweat equity or contracting with rehabbers, the natural appreciation rate in the near term may not bring you to a 80% LTV. All of these remarks are here in case you plan to purchase a 2nd MF building in the near term after your first. Food for thought. I wish you all the best @Carli Schlaker. Reach out anytime for further insight. 

Part 2: when markets crash interest rates rise. This will put downward pressure on housing prices. But what crashed the market? Did the stock market crash with it? Will those waiting for a housing crash be able to afford a home after the market(s) crash? If the average person cannot purchase a home in a down market then people are still forced to rent homes. Rental rates will lean on simple supply and demand. Rental rates should stay strong. Rental rates are typically not directly correlated with interest rates.