All Forum Posts by: Jack Saunders

We bought a house last year that we did see inside of.

It was in a great area.

The house was full of junk and cat poop. It smelled like money and we got a fantastic price!

@Jack Saunders It would be VERY surprising to see a private or hard money loan for LESS than a conventional loan. There may be pre-payment penalties from different lenders. When we lend, we don't have a pre-payment penalty as long as the loan is a certain size.

@LaShae M. Good questions. You might want to join the American Association of Private Lenders. Or go to a conference sponsored by one of the organizations that does them (PitBull has one in AZ coming up next week), if you want to learn about the lending world. 

We require the borrower to be an entity and the loan purpose to be for business use (i.e. flipping). We require title insurance, hazard insurance, 1st position lien, deed of trust, and obviously a Promissory Note. We have the borrower submit a loan application on our website. You can feel free to check out our website to get a sense of it all...Oakwood Lending (we do loans in NC--so things might be different in D.C.).

Hey Matthew.  Not sure what your local state, county, and municipality laws are, but the first step is to see if you're even allowed to reject based upon the applicants voucher.  The Fair Housing Act doesn't bar landlords from discriminating based on Section 8, but some states and municipalities do!  Classified under "source of income".  I find state by state information here on https://www.hud.gov/states to be a great place to keep up on all that.  Here in Maryland, after more than 20 years of failure, lawmakers made it illegal in 2020.  It is illegal in DC as well.  This doesn't mean you cant reject an applicant for other reasons you typically would such as income, poor credit, or criminal background.  Just always be consistent with everyone you speak to and every applicant!

All that said, and to answer your question, I think a guaranteed check for 66% of the rent offers some peace of mind and limits potential loss.  A conventional income applicant, so to speak, could lose their job and pay you nothing.  And as others said, section 8 tenants are often the most quiet and reliable because they don't want to lose this aid and they are grateful to have housing.  I would screen as you always do and if everything else is clear, take the tenant!  I think the risk is exactly the same as all tenants.  Maybe even less for reasons I just touched on.

I'll spare some of the moral and ethical opinions on this, but I do feel we as real estate professionals, investors, and landlords also have an obligation to help provide housing to everyone.  Even the less fortunate.  Housing costs and rents are through the roof while incomes have mostly remained stagnant. There are going to be more and more people using vouchers as time goes on and we certainly shouldn't stigmatize them or view them as more risky.  

Good luck and I hope everything works out.  Please do report back to the post.  Would love to klnow how it turns out!