All Forum Posts by: Matthew Maggy

Regarding hopping in:

Do the math, buy smart, and buy and hold will work great. If the number look good, go for it. The best advice is to get in. Don't do so blindly, but standing by and waiting to jump in is just going to mean losing income.

You can get strong cash flowing properties for under $100k.

Richmond is a rough market, but buy and hold can work on lower end properties. Of course, that's all I have experience in, so I suppose I would say that, haha.

Regarding IRA suggestion:

Another factor to consider that I recently heard and makes sense given my experience:

Investing in an IRA does not reduce your over all tax burden.

With an IRA or Roth, the tax benefits only stick with that IRA.

Outside of an IRA, the money you spend on repairing the property is all deductible and will count as a paper loss on the property for that year per Schedule E return (even though it's actually what you consider your investment into it). That will transfer to a business loss on your personal tax return which will offset your earned income from your 9-5 as well as Uber. As a former Uber, I know those Schedule C self-employment taxes can catch you off guard.

I'm not a tax professional and this is strictly my own opinion.

Section 8 is awesome. The process is pretty easy actually, it just takes a while. I've done it twice so far. 

When we finish reno, we list on GoSection8.com and Craigslist and set up a couple of open houses, and we usually find a tenant at that open house. 

From there you fill out the application packet for them, submit it to RRHA who either approves the rent amount or asks you to lower it, and then they tell you what the voucher covers and the tenant must cover. 

Next, they schedule an inspection of basic safety. It's not very difficult to meet the standards and they give you a chance to reinspect it once if it fails. BUT ONLY ONCE. 

Once inspection is passed, you just sign the regular lease with the HABS contract attachment that represents several guarantees to the RRHA (ie: you won't sell it within a year, raise rents within a year, etc.).  

I'd say the process from app to move in is about a month if you and your tenant are on top of your game.

Tip: Always hand deliver the paperwork and get a receipt. They will mail the paperwork to you, but you should always hand-deliver stuff to RRHA to speed up the process.

We currently rent section 8 in 2322 by the racetrack. Our 2/1 gets $830/month, our 3/2 gets $900/month, but that's because that was my first time doing Section 8 and was trying to rent it at market, rather than what section 8 would pay which is usually above market in Class C neighborhoods.  Our 3/2 could probably be getting $1,000 to $1,100 had we done it right.

We are currently renovating 2 more houses (South side) and will rent those Section 8 for the higher rents. 

One thing to keep in mind is that a tenant gets evicted, they lose their voucher. That voucher is like gold to those tenants, so you'd be surprised how well they keep the property up. You just have to treat them as first class tenants and not like second class citizens as I think many Section 8 landlords might do.

Hello Kentuckyans. I live in Richmond, VA and have some family that lives in Lousville and I noticed that it's a pretty neat place with some great blue collar renter-type jobs at the confluence of rivers and was curious what the real estate market's like there? I'm not looking as much at metrics and numbers (although any that you can offer would be great) but more so about good neighborhoods to look in for Class B/C, recommendation of good teams, what rents are like. Anecdotes? I'd love to have a phone conversation with someone.

My preliminary research shows that it's a good place to invest from an economic perspective, but are the deals hard to find there now? Can good deals be had from wholesalers? Recommendations of property managers and contractors?

Any input is appreciated and I will be happy to share the same information about my market here in Richmond, VA.

Welcome to BP! Richmond is an interesting market right now what with millennial urbanization. It's also a great market for Section 8 rentals in certain neighborhoods. I'm still a novice relative to a lot of folks on here, but I'd be happy to meet up and let you know what I know.

Renovation loans (non-203k, like Homepath for example) are still an option for you since you only have one mortage. Some people shy away from them due to costs and some other limitations, but if as you factor the costs associated with them (draws, etc.) into your numbers and they still make sense, I think it's worth it. 

Once your past your first 4 loans though, Fannie Mae Homepath is no longer an option.

One way that we got enough money to purchase the next w/ a reno loan was paying ourselves rent as if we were a tenant. It's also good because it will give you a chance to simulate what it will be like to rent it once you move out.

To be fair though, we are not in Brooklyn, NY. We live in a market where a solid rental property can be had for $50-70k; so our down payment on a $46k home with an $18k reno was only $17,500 (including closing costs which were a bit high and we will be shopping lenders on the next one!).

Anyone who reads this and knows the neighborhood will probably know this property. It's 3 bed/2 bath, central air, dishwasher, and laundry/dryer built 2008. How much rent could I get? I ran my rental calculator estimates at $900, but would like to get more if possible. The neighbors seem to think I can only get $850. Opinions? It's in Highland Park near the park on Pollock.

Deliver pizzas on nights and weekends. That's an extra $400/month. that. That's $700/month (plus free food) $700x12 = that's $8400 after a year. 

Of course, there's the low and no money down approach, etc which is probably better.

You can do this off of the MLS. I just did it with two properties (I was in a crunch with a 1031). It's not as good of a deal as with direct mail or knocking, but if you're looking specifically for something to rent you can cash flow nicely.

You have to kiss A LOT of frogs using this as there are some properties that are insanely overpriced for the amount of work they require.

If you are looking to flip, this is not going to be a good method. BRRR... maybe, but if you just want to plunk down money, do some small repairs, and get a good cash flow you can find decent stuff.

But make low-ball offers, explain why, and most of the time they'll say no which is why the property has been on the market so long.

I have a lot that I bought at auction for $8400 on the outskirts of a rapidly gentrifying neighborhoods. I have an offer to sell it for $70k and it could probably be divided into 4 or 5 lots. It is seriously overgrown and backs up to a creek. Is it worth paying to have it cleared? Will that add enough value to make it worth the time and cost?

@jon s I have heard the horror stories,but I've also heard that if you Screen section 8 tenants like other tenants, it generally works out. This property is in a class c neighborhood, but I don't keep it crappy just because section 8 folks live there. Maybe it's naivete, but in my neighborhood I think I'll get higher rent though section 8 than otherwise. I'll keep you posted if I lose my shirt!

@daniel harnsberger How long does the process with the housing authority take one the application is in?