All Forum Posts by: Andrew Martel

I personally found the Section 8 Bible Vol 1 and 2 to be EXTREMELY helpful and would recommend them to any investor looking to go S8.

I would check with your S8 Housing Authority. I will tell you that I have many investor friend with S8 properties that are renting above (though not much ~$25-$75) the rent being paid by the government.  You really need to read into your S8 program in your area though. 

Thanks @David P. . That was one of the harder things to tackle. 

@Dan B. 

Welcome! I was/still am in your boat.  Here's what i did to start getting out of the fog.

1) Realized that analysis paralysis is a real thing and that I need to take action in order to get anywhere

2) Found a mentor.  There are tons of folks on here who want to help you.  Reach out, talk to folks and go to a club meeting in your local area

3) Get organized.  I was a chaotic mess, no rhyme or reason to anything i was doing. So I made a process to get organized. I too work full time and most days start at 6AM and end at 7PM... so the night time is really when I can dig in. I began treating it like a business. I created a 'battle rhythm' for the week with goals to accomplish on each day and stick to that. It helped a lot.

4) Make phone calls.  For me this was the biggest thing. I just never picked up the phone and talked to someone.  Be honest as to what you are trying to do. Be teachable.

5) Pick one topic a day and google the heck out of it. Research it to death.  Once you think you've got it down, bounce your understanding of the topic off of someone as a sanity test.  Rinse and repeat. When I listen to a podcast or read something on the forums, I look it up immediately.  Cash on cash and land contracts were biggies for me a while back.

That's my two (well 4..) cents in regards to getting through the info overload.

In regards to resources:

1) Bigger Pocket's- I LOVE the podcasts, blogs and of course the forums!

2) Investopedia

3) Amazon Used Books

4) Trulia, zillow, MLS (find a good realtor), hubzu, hudhomestore, homepath (10% down fannie mae mortgages), other investors, craigslist, auction.com, newspapers, and word of mouth are all great options for finding the properties you might be interested in. Of course there are many more resources (too many to list). You might also consider reaching out to someone here that could you find what you're looking for.

Hope this helps a bit! 

-Drew

"...you can fail at what you don’t want, so you might as well take a chance on doing what you love."  -Jim Carrey

@Paul Chase Understood on the appreciation portion. However, as a beginning investor, wouldn't the guaranteed cash flow be a good deal? Considering the rehab costs can be kept (potentially) low and you can get into the market at a relatively cheap pricepoint? 

I personally have not done this, but I have a buddy of mine who put laminate floors down on the cheap by pulling this doosey.

He went to lowes, and managed to talk them down on the cost of flooring and installation.  Took that offer and went to the Depot and and they gave him similar flooring for 10% less than the lowes folks. I personally haven't tried this, but they do beat their competitors pricing by 10%...

Morning BP,

My question today is about section 8. I picked up the S8 Bible VI&II the other day and found it to be a rather interesting read.  A local investor turned me on to it saying that he's followed the same methodology as McLean and absolutely loves it.  He buys homes on the cheap... 15-20K fixes them up to the minimum standard for S8 and pulls a check from the gov for the next year.  He claims that he's had very little issues with the properties because he screens his tenants thoroughly.

All that being said, I don't really see much on BP about this strategy.  As a beginning B&H investor, wouldn't this be a decent way to start off, especially if you paid cash. 

For example:

Buy a home at 15k put 5-8k into it for repairs. Rent the home for 600. Lets say S8 give yous 500 of that. The tenant is responsible for the other $100. Assuming 100/month for taxes 10% vacancy rate, and 5% repair costs thats roughly 330 Net a month or 19% CoC. If the tenant doesn't pay, you're not out an entire months rent because you've got the check from the governement. You can still go after the tenant for the money and you have a little more leverage because you can use the Voucher to your advantage (evictions= tenant loses the voucher).

If you've gone through and done some due diligence in regards to removing "problem areas" for repairs (ceiling fans, etc..), wouldn't the likelyhood of repairs be reduced?

So what am I missing on Section 8? I've always gone by the old adage of "if it sounds too good to be true it probably is". So what are the serious Cons? I know about the potential terror tenants who destroy the property, but that can occur anywhere right? Proper screening takes care of that issues. What about financially? Are banks less likely to do a LTV on a property with S8? Some of the home I've looked at here in my are are distressed, selling for 15k or so, but rehabed values is ~40K. So what am I missing? Why would this be a less desirable option than "traditional" renting?

As always, you guys are great and thanks for your responses!

-Drew

Sorry, the spreadsheet didn't paste correctly when posted.. Here is an image.  

Ok BP I've been looking for a few months, run into a few potential deals and lost out on them due to moving too slow.  I've finally run into one that I think I can swing and I've run the numbers... but I need a sanity check.  This is my first investment property to start my buy and hold investing strategy.  Tell me what you think.

The house is in a great little neighborhood, clean, and needs minimal repairs. the house is a 3 bed 1 bath 1090 sq ft, with a carport and is nearly turn key. Very little needs to be done to get this thing moving. I've pulled the comps and FMR for this sort of home is between 700-800. I'm about 90% certain I can pull 750 a month with this home, especially if I did a few upgrades.

Asking price is 55K, FMV is ~67K. I am going on the assumption that I can only negotiate down to 50K... I need to in order for this to work.

The banks I have spoken with will not do traditional financing under 40K so I with 25% down I would need to put some renovation money down on the loan, which is fine, to finance at 40K.  Is there another financing option I could be persuing?

Here's the breakdown I have. Please let me know if I missed something. All advice is appreciated!

The numbers work, the location is good. Is $232/month worth it? That means 4.5 years to make my money back that I invested...

Hello Everyone!

I have a few questions in regards to LLC's. Here's a quick background

I have one property right now (the one i live in) but will soon be moving out of state and renting it out.  I'm looking at going into the lower income market here and trying my hand at section 8 to start cash flow going.  So far my strategy is this (opinions welcome!):

-Purchase distressed properties at deep discounts. Currently I'm looking at SFH's around the 15-20K price range. Avg payout from S8 is ~550-600 for 3bd 1bth home. I can fix these homes up typically for under 5K. I have the ability to pay this all out of pocket but am considering financing options (would love to hear advice on this if you have any).

-The Goal is to buy 1 or 2 homes this way prior to moving in march. 

-My mentor, who has a majority of S8 properties, suggests starting an LLC right off the bat for protection purposes. I am not super smart in this area but understand the basics of LLC's... here are my questions.

1. If I go the LLC route, is it more beneficial to register the company in a state like Nevada then just do a foreign filing the different states I end up moving to?

2. Tax-wise, would it be beneficial to elect for LLC to be taxed a corp shielding me from the income tax bracket increase (is that how it works?). Right now, the income from the one property would bump me into the next tax bracket.

3. I've always been curious as to the most efficient way to pay yourself. If I am the single employee for the LLC, how does my pay check work? I've read that you can "loan" yourself money from your LLC up to 13K per year without incuring a tax on the money. So if that is the case, lets say I have LLC "A" and each year it gives me a 13K loan... can I just make LLC "B" and have it "loan" out another 13K? Is this even the most effective way to do this? If the LLC was being taxed as a Corp would I then claim the 13K "unpaid loan" as a loss on my taxes?

4. What profesional should I seek out for answers to these questions? Lawyer or CPA?

5. Are there any resourses you can point me to in order to get the skinny on creating a LLC?

As always I appreciate you guys and your help!  Always a plethora of information.  Hope you have a great week!

-Drew