All Forum Posts by: Jordan Graham

@Dan Heuschele

To your point about Section 8 choosing a regular home over manufactured... my understanding is that the waitlist is so long to even get into a property on Section 8 (7+ years) that it would not be hard to fill the unit quickly. The slowest part would be getting through HUD inspection and red tape.

Also, I saw on Zillow that for instance MH that were purchased in 2012 are now selling for $50,000 more 8 years later and are in rented parks. How do you explain this? Not trying to argue, just trying to understand what is possible in this property type.

@Ryan Weimer

The play here is to purchase a home that is in a rented park... many of them in $100,000-$200,000 price range. Much harder to find them on own land from what I have seen but that is not a deal breaker. Lot rents are like HOA and thus out of your control as landlord but key is to have enough meat on the bone in cash flow to absorb increases in rents.

Look up "HUD Fair Market Rents 2020" and check out different prices in San Diego County... varies by zip codes and amount of bedrooms.

@Nicholas Sheridan, Jr.

Congratulations brother! Love to see some fellow Colorado hustlers. In terms of getting into another property quickly look into seller financed/ subject to/ and lease option deals!

I am currently trying to use these approaches as well.

Hello,

I am very close to purchasing my first rental property and believe that I have potentially discovered the ultimate way to cash flow in higher priced markets.

I know I already made some of you cringe with the title but here it is again. Mobile. Homes. + Section. 8.

Before you run for the hills, hear me out.

So here is my plan and I would love some feedback on if anyone has tried or what their experience with Section 8 tenants has been. I know S8 gets a bad reputation but it all comes down to screening! Have certain screening standards in place for ALL tenants, HUD or not.

Based on HUD Fair Market Rents, rental rates vary in every city, state, and even zip code. But here's the thing, you find an AFFORDABLE home (aka mobile home) in an UNAFFORDABLE part of town. For example, there are areas of SD where you can find a completely updated or new 3+ bedroom manufactured for $150,000 in a zip code where HUD will pay you $4,500+ a month GUARANTEED. Now I'm not a mathematician but after mortgage and lot rent that sure sounds like $2,000 (give or take) in cash flow A MONTH.

And oh yea, contrary to popular belief, mobile homes actually do appreciate in the right cities, especially if the land underneath is owned.

Another bonus is that most mobile homes are seller financed so you don’t have to deal with the scrutiny of a bank or the high down payment of non-owner occupied investments.

If there are any agents in San Diego that can help me narrow down some of these properties within this criteria, please reach out to me and we can discuss a game plan.

Cheers

@Alejandro Romero

My opinion on best approach for house hacking in expensive market like SD (which I am currently shopping around for as strategy as well) is a 4+ bedroom SFH with in-law suite or separate entrance for privacy reasons (3 bedrooms on one side of the house with own kitchen and then your own bedroom/ kitchen/ bathroom in your segment of house).

I'm 29 and do not feel like having arguments over dirty dishes in the sink like when I was in college. The best part about this is that you are pretty much buying a duplex but for the price of a SFH... and there are many more SFH than duplexes/ triplexes and you are typically just competing against regular home buyers instead of investors. Rent out the other 3 bedrooms individually on other side of house and you can easily get $1,200+ per room depending on area of city. 3.5% down and tie PMI into purchase price of home in order to rid yourself of monthly PMI, thus leaving more room for cash flow. ($550,000 x 3.5%= $19,250 down payment... $3,284 mortgage payment with no PMI... $1,100 per room x 3 = $3,600- $3,284= $316 in cash flow a month.)

After a year, move out and repeat the process again with low down payment, convert into owner occupied home into strictly rental (adding depreciation income), and BOOM... do the process all over again for as many years as you can stand and you will have created enough wealth for yourself to last a life time.

@Peter Talbot,

Did you ever end up buying any properties? I am currently living in Denver but am seriously considering moving back to SD to house-hack a 3-4 bedroom SFH. I know it is a great market but my only concern is the cost to get started/ qualifying for a home in such an expensive part of the country.

Hey @Bradley Kirschbaum,

Any updates on this question? From my research, I have noticed that the HUD Fair Market Rents website only shows up to 4 bedrooms... they must have options for properties with more rooms?

I am very interested in getting into Section 8 housing in this market. Some neighborhoods you can get up to $5,400 a month for 4 bedroom SFH's in somewhat affordable parts of the city like inland Carlsbad, Mission Valley, and Tierrasanta.

Do you think Section 8 is worth the extra effort in terms of government red tape and delayed inspections versus house hacking a SFH and renting out each bedroom instead? I like the idea of guaranteed rent, especially in turbulent times like the COVID-19 outbreak.

Hey Connor, did you end up going with a CHFA approach? I am considering doing the same thing for a house hack here in Denver. I have been listening to BiggerPockets religiously for around a year now and I just now stumbled upon the idea of grants. There has to be a reason they aren't more talked about?

I am moving to LA from Denver and am looking to get into my first rental property as well. 

Have you checked out single family homes as an investment option? I have been attending investing classes here and have learned that because multi-family properties (2-4 units) are so limited and expensive in Denver, that it is a better option to house hack a SFH with 4+ bedrooms.

Consider this scenario:

-$600,000 purchase price

-3.5% down payment ($21,000)

-5 bedroom home where you live in one room (preferably an ADU with separate entrance) and rent out other rooms

-mortage/PMI/taxes/ insurance= $3,700 a month

-if you charge $1,100 per room= $4,400 rental income a month ($4,400-$3,700= $700 profit a month)

This is my plan to get started and I plan to do this to 1 new home every year for the next 5 years. 

@Joey Allison I am not a CPA but if you are trying to protect your capital gains and avoid the large tax hit then I would suggest rolling it over into an Opportunity Zone investment (which includes everything from new developments, existing businesses, and new businesses). If you hold the money in the investment for 10 years = 0 capitals gains tax. We have a fund that we are using to acquire single family homes and other qualifying QOZ properties to operate as income producing rental units in targeted Opportunity Zones throughout the country and we are seeing a lot of interest from savvy investors from all ages.

I know the appeal of having a nice car/ nice home but I would most likely sell one of my vehicles and get rid of the bad debt.