Real Estate Deal Analysis & Advice

Meet the Investors: $1,500/Month Cash Flow Per Door & Tenants Who Stay 10+ Years—Here’s How I Do It

Expertise: Real Estate Deal Analysis & Advice, Real Estate News & Commentary, Real Estate Investing Basics
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In this edition of “Meet the Investors,” I’m in Washington, D.C., with an incredible BiggerPockets member, Joseph Asamoah. He has a story that’s unlike any other that we’re going to tell in this entire series.

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Like Joe, I'm a BRRRR investor. However, he does it differently. Joe BRRRRs $500,000+ houses—something I didn't think was possible! But he does it.

In the video below, you’ll meet Joe and we’ll tour one of his latest properties. And in this post, we’ll discuss all the numbers. You won’t believe them—but they’re true.

Let’s get to it.

Meet the Investor: Joseph Asamoah

Hi, everybody! I’m Joseph Asamoah. Some people call me Dr. Joe.

Welcome to Washington, D.C.! Today I’ll do a really deep dive into what I call “big-city BRRRRing with a Section 8 twist.”

So, who am I? I was born in Ghana. And when I was five years old, we moved over to England. I lived in England until about 32 years ago when I came to the U.S.—with $100 in my pocket and two suitcases, knowing one person.

Related: Meet the Investors: Buying Cheap Property With Tax Liens With Ned Carey

How I Got Into Real Estate Investing

The gist of it was that I worked a regular job like most people do. My boss, when I arrived in the U.S., was fired after a few weeks. And so I met up with him for lunch and he said, “No big deal. This is America. These things happen. But whatever you do, Joe, make sure you have a plan B. What happened to me could happen to you.”

It just so happened this guy had 10 houses. To me, I couldn’t fathom how anybody can have more than one house. But he had 10.

He explained, “Yeah, it’s no big deal. I’ve got this residual income coming through, and so I’m OK.”

He said I should check this real estate stuff out: "If you do that, what you want to do, you want to buy the houses and make sure you keep them. Don't sell them, because in the end, they will go up in value. And you'll be very, very thankful for that."

Anyway, the gist of it was that I decided to pursue my real estate dreams based on this story that this guy told me.

And lo and behold, I bought my first house, which was a complete and utter disaster. Everything that could have gone wrong went wrong. (I’m not going to bore you with all the details that I learned from that experience.)

I decided to move on. I bought my second house; then I bought another one, my third house. Fast forward to 2003. My rental income from my properties was equal with the money I was making at that time. Since my plan B was in place, I was able to leave the corporate world.

Through my 30 years of real estate investing, I’ve been through four real estate cycles. I’ve been through the good times and the bad times four times. This is probably going to be the fifth one with COVID!

So, I’ve got a pretty good idea how these real estate cycles work.

Related: Meet the Investor: Cash Flowing Rentals Despite an Incredibly Expensive Market With Russell Brazil

My Real Estate Investing Strategy

What I do is a business model that works regardless of the real estate cycle. Good times, bad times. It really doesn’t matter. It’s guaranteed income. The money is coming in regardless if people lose their jobs or whatever—it doesn’t matter. And that’s what we’re going to talk about today.

I’ve been a member of BiggerPockets since 2014. I heard about it through some forum, and I went to the website and checked it out. I thought, there’s good content, good information, and a lot of good feedback was taking place.

I joined as a Pro member several years ago. It was a game-changer. And I was invited to be on the podcast, episode 356, to discuss my rental properties in Washington, D.C.

Related: BiggerPockets Podcast 356: 30+ Rentals (in a Pricy Market) Through BRRRR and Section 8 with Joe Asamoah

A lot of people want to do the BRRRR strategy. But if you're in an expensive market (like we are in Washington, D.C.) where the cost of acquisition is so high and the cost of labor is high for the rehabs, it's very difficult to cash flow if you want to rent it. You can get appreciation. However, the rent that you get versus what you have to pay out, it really is a mismatch.

To make it work is very, very difficult. So, what I figured out was a way you can get both cash flow and appreciation, which is really—as far as I’m concerned—the nirvana of real estate investing.

You’ve got an asset that’s going to appreciate in value. It can support itself, and over time, it will increase. You also get cash flow, as well. So, I figured that out.

And that’s what the BiggerPockets Podcast allowed me to share with a wider audience. And for whatever reason, it really bloomed and got great feedback, great comments, and a lot of positive reviews. And from there, I’ve written quite a few articles, and I do a live stream video every other Friday at 3 p.m. on BiggerPockets Facebook.

It’s a great community. A great place to learn, to get an education, to get content. It’s a great place to interact with people of your level—whether high level or a lower level. It’s just a great community. You really need to be a part of it and stay part of it, as well.

My Latest Real Estate Deal

In the video above, we tour a recent deal of mine in the middle of the rehab. I talk about the rehab plan.

The money is in the number of bedrooms. Before, this had zero bedrooms in the basement. We created three bedrooms in the basement (and a bathroom). It’s got a shower, a tub and so forth.

On the second floor is the next set of three bedrooms. There’s the master bedroom suite. And then there are another two bedrooms with a common bathroom. It’s got a washer and dryer and a skylight up here, too.

Related: Investor Spotlight: How I Built a $1M Portfolio Using Other People’s Money Featuring Cody Campbell

It’s a beautiful house. And it wasn’t like this when I bought it. But we’ve transformed it from an ugly duckling into a beautiful swan.

This is a dream come true for a Section 8 voucher holder. Never in their wildest dreams do they think they'll get a chance to live in a gentrifying neighborhood, a house that's HGTV quality grade, and rent from a great landlord—the greatest landlord in the world.

That’s all part of the big-city BRRRR strategy.

You’re probably wondering… Yeah, that all sounds good. But what’s the real deal here? What do the numbers look like?

The Numbers Behind the Deal

  • Purchased: $525,000
  • Old Layout: 3 bedroom, 1 bath
  • How I Found This House: Wholesaler
  • Rehab: $225,000
  • Acquisition + Renovation: $750,000
  • ARV: $850,000
  • Refinance: 87% LTV, 3.2% interest, 25-year amortization
  • All-In: $750K
  • Borrowing: $739K
  • Principal + Interest: $3,600
  • Taxes + Insurance: $700
  • Monthly Rent: $6,200
  • Cash Flow After Misc. Expenses: $1,500

Of course, there are a lot of other numbers—closing costs, insurance, property taxes, utilities, all those things. But let's just keep it simple for these purposes.

And yes, you read that right. This little 1,600-square-feet rowhouse is going for $850,000 in this market. Isn’t that crazy? It just is, what it is in these high-priced markets. If you live in one, you know.

With the BRRRR strategy, once the rehab is all done, we're going to refinance. The appraisal will come in around $850K. I was able to find a local lender, a commercial lender who really, really likes what I'm doing. They're very supportive of my business model in terms of affordable housing, in terms of diversification and things like that. They've agreed to refinance all my properties up to 88% loan to value, which is very unusual for a commercial bank at very, very good interest rates.

The last one I did with them, we got 3.2% interest rates on a 7-year loan amortized over 25 years.

Related: Meet the Investors: Husband & Wife Flip Team Aims to Win Big With Nate Cross

So, if the bank loans up to 87% percent LTV, they're going to borrow me $739,000. OK, I'm in it for $750K, and I'm borrowing $739K. At $739K, the PI—that's principal and interest, assuming at 3.2% interest amortized over 25 years—comes up to be $3,600 a month.

Then, I’m just going to assume $700 a month for taxes and insurance. Add those to $3,600, so $3,600 plus $700 is $4,300. Wow—$4,300 a month for PITI?!

You probably think, “There’s no way you can cash flow like that.”

OK, let’s talk about what this thing will rent for. Believe it or not, with the Section 8 strategy, this six-bedroom house in Washington, D.C., will rent for…

Drumroll… $6,200. Yes, $6,200.

Either you’re having a heart attack, or you think I’m lying to you. There’s no way they’re going to pay that kind of money. No way.

I’m telling you, $6,200. You can go to the Section 8 website and see for yourself.

My expenses are $4,300 a month PITI. That gives a delta of $1,900. Obviously, you’re going to factor something in for miscellaneous repairs and so on. But I’m looking for maybe $1,500 a month.

My vacancy cost, which would be the monthly amount for the most expensive car, is essentially zero. The tenant that’s going to be living here, her or his portion is going to be relatively low even though the rent is $6,200. The tenant’s portion is going to be maybe $300-500. The Housing Authority pays the delta.

That's why it's really a recession-resistant strategy. It doesn't matter if the tenant loses their job. All they've got to do is go to the Housing Authority and that rent will go down and the Housing Authority's portion goes up.

Plus, I have a tenant who’s going to love this house. They’re going to be so thankful that I gave them a chance to live in a beautiful house, in a beautiful location, in a beautiful neighborhood, close to shopping, recreation, transportation, schools, everything—all the amenities that most tenants looking for.

I have what I call a “tier-one tenant,” who is going to be here forever. They have no intention of leaving. I regularly have five-, 10-, 15-, 20-year tenants. I expect that the family that moves into this property will probably be here for at least 10 years, possibly 15 years.

And during that time, because of this gentrifying neighborhood, the value is going to be increased to more than the $850,000 it is today.

Related: Investor Spotlight: Prioritizing Financial Stability & Time Freedom—& Attaining It in Under 2 Years With Erin Helle

Advice for Other Real Estate Investors

Here’s my advice to those who want to do what I do.

Build an Excellent Team

Doing this project is a major renovation. But essentially, what I realized is that you cannot do this without a team. That’s the bottom line. This is not a one-man show. This is not just Joe. I cannot do this as an island.

You need to surround yourself with a great team. OK, so who is part of that team?

Wholesalers: I told you how I found this spot. So, you need a good core group of deal-finders. Whether it’s your wholesalers real estate agents, brokers, scouts, bird dogs, whatever it is, you need people who can find you these deals

Lenders: The next most important part of your team is financing. I told you I got financing through banks and private investors. Financing is the key. It’s the grease that keeps this machine going.

Contractors: We did a major renovation in the property in the video. Over $200,000—from a three-bedroom to a six-bedroom. I can’t do this. I don’t hang drywall. I don’t do plumbing. I’ve got to surround myself with great contractors. You’ve got to nurture that relationship, which is what I do. I use the same contractors again and again. We’ve developed a very, very great relationship.

Housing Authority: I do Section 8. I see them as part of my team. You’ve got to have relationships with those folks. It’s a bureaucracy, so if you know people, if you have people on the inside, they can really, really help you navigate some of the things that you have to go through.

Tenants: Really, at the end of the day, the biggest asset (in addition to the house) is the relationship with the tenant. They’re the ones who are generating profits for you. They bring in cash flow. They’re the ones who are staying in your home for five, 10, 15, 20 years, allowing you to realize the appreciation and the wealth vehicle that this asset is.

Actionable Tips for New Investors

Let’s wrap up with some action items.

Set Goals

The first thing is, if you’re interested in what we’re doing, do work on yourself. Identify your goals: Are you into appreciation, or are you into cash flow? Are you looking for short-term money or long-term money? Things like that.

Educate Yourself

Next, take time to educate yourself. Learn and then pick an area of focus. I do the big-city BRRRR strategy. It works for me.

If you're interested in other strategies, whether that is wholesaling, rehabbing, any of those different strategies, pick an area, OK? Because you can't be doing all these different things. You'll end up chasing rainbows, I call it—meaning you end up doing nothing. So pick an area of focus.

Find a Mentor

Then, probably the most important thing is to identify a mentor—someone in the local area, who is doing exactly what it is that you are trying to do. And not just doing it, but successfully doing it. That's the difference. Yeah, people do it. But not a whole lot of people are successfully doing it.

Maintain Momentum

After that, get on with it. Get onto your next deal.

Your first deal, to make it happen, pulling the trigger is not going to be easy. You’re going to make mistakes. But, you know, financial independence is not going to be made by reading the book. At some point, you’re going to have to pull the trigger.

You’ve got to have the confidence. Surround yourself with good people, surround yourself with a mentor. You can make it happen. You can do it.

Hopefully, I’ll give you some encouragement. And I look forward to working with you. I look forward to helping you. If I can help you, reach out to me on BiggerPockets and on Instagram. I’ll be more than happy to help if I can!

What do you think about Dr. Joe’s strategy? Would you consider investing in a big, high-priced city?

Share your thoughts with a comment below.

Alex has spent his career in sales and finance industries and now invests in rental real estate along with working in the underwriting department at a bank in Las Vegas. Alex is an expert in long-d...
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    Alethia Reynolds from Midlothian, Virginia
    Replied 21 days ago
    Inspired by your story. Thanks for sharing.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Hi Alethia, Thanks for the kind words. I hope the video will inspire you to take action towards your real estate goals.
    Daniel Tisdale from Austin, TX
    Replied 21 days ago
    Thanks for the amazing story, Joseph! I am curious how you went about financing this deal and how much cash you had to begin with? I currently live in Austin, TX and have owned a single family house for about 2.5 years now and luckily it has appreciated quite a bit. I'm wondering if I should sell to move into my dream neighborhood or try and hold onto the property and buy another one to live in. My property would be about a break even cash flow property after accounting for all expenses, which is giving me pause over whether to hold onto it or sell and buy another one.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Thanks for the kind words Dan and Keegan. This house, like all my other properties was purchased and renovated via a three part financing strategy: 1. Bank financing 2. Private investors 3. Personal funds Once the renovation is completed and a tenant found and lease-up, the house is refinanced. The short term financing is then replaced with permanent commercial financing. With Washington DC being a relatively expensive market, the challenge has always been to cash flow. Historically, over the long-term, there has never been a problem with appreciation. What I shared in the video was my approach to getting both cash flow and appreciation along with all the other benefits that real estate investing offers. I'm not familiar with the Austin, TX market so I cannot speak for the local nuances. Knowing what I know, if you were in DC, I'd suggest that as long as you can cash flow, then I'd refinance or take a HELOC on your property, buy another primary residence, house hack while living there, keep your housing expenses low and keep acquiring more cash flowing/appreciating properties. In appreciating markets, its always expensive to buy. However, over time, prices tend to increase and you will likely think you were a genius for buying "when prices were cheap!!" The biggest challenge is getting starting. Hope this helps.
    Keegan MacCauley New to Real Estate from Austin, TX
    Replied 18 days ago
    Appreciate the post and insight. I am in Austin, TX and haven't even really considered trying to BRRRR here due to prices so I've been looking in other markets. I have the same question as Daniel, curious how you financed this deal or how you started out financing these larger deals?
    Keith Andrews Real Estate Agent from Colorado Springs, CO
    Replied 19 days ago
    Rents increase about 5% a year, so does equity. So, if your break even is $2000 a month today, you should be cash flowing about $550 a month in 5 years. Something to consider... I lost a ton of money the first few years on the first rental I ever bought. My math was all wrong. I was actually negative $140 a month and that was not considering maintenance and vacancy. Fast forward to 15 years. The house is worth double what it was. I am now more than cash flowing what the entire original rent amount was. Something to consider.
    Brian Cumberledge from Mc Kinney, Texas
    Replied 19 days ago
    $1,600 a month rent. 5% increase each year is $80. You are saying in 5 years rent will be $2,000. That did happen but right now rents have been steady for 2-3 years. I’m in Dallas. Austin could be different. Do you have an e smoke of this 5%. Would like to research and review. Thanks.
    Yinna Wang Real Estate Professional from South Orange, NJ
    Replied 19 days ago
    For comparison, Section 8 Payment Standards for 6 Bedrooms in NYC is $3710. That's how much the NYC Housing Authority will pay. I'm not sure if this is the total chargeable rent, or if there's an additional Tenant portion. Either way it doesn't seem nearly as sweet as the deal you are describing, for NYC at least.
    Brian Cumberledge from Mc Kinney, Texas
    Replied 19 days ago
    If true wow. Section 8 pays $5,700 for one house in DC. Joe didn’t say if this is one tenant or two. One tenant with 6 bedrooms? And I assume it’s not 1,600 sq ft after adding bedrooms.
    Andrei Ponomarenko from Campbell, California
    Replied 18 days ago
    It's here for everyone to see. Google - "washington dc payment standards housing authority". 6 bedroom up to $6608. With gorgeous remodeling it's easy to see why $6200 is not a stretch. One tenant could be a large family. Really a wow story.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    The rents quoted in the video are absolutely true. As Andrei suggested, you can complete a quick google search to confirm. In my Bigger Pockets podcast interview (Episode 356), I discussed my BRRRR strategy in more detail. The important thing I wanted to share was that success with my strategy involves three key elements: 1. Buy properties in desirable areas where you can attract quality tenants 2. Treasure your tenants, treat them with respect and strive to be the best landlord they've ever had so they never leave (i.e. you cut down your turnover and vacancy costs to near zero) 3. Understand the needs of your local housing authority (HA) and develop relationships with key HA staff to fill the market need.
    James Oswill
    Replied 19 days ago
    I just went to Housing authority Los Angeles and checked their payment schedule for section 8 and 6 bedrooms only pays 3800. The following chart depicts the VPS for the Housing Authority of the City of Los Angeles (HACLA). VOUCHER PAYMENT STANDARDS (VPS) (eff. 10/1/20) Bedroom Size Payment Standard SRO $1,026 0 $1,369 1 $1,765 2 $2,263 3 $2,735 4 $2,982 5 $3,429 6 $3,876 I have a duplex 2 units 2bd 2bath renting for 2800 each. Am I missing something? Thanks
    Stacey Harding Rental Property Investor from Los Angeles, CA
    Replied 18 days ago
    I am also in Los Angeles and have the same question. I heard his episode of the podcast when it came out and was so excited but it seems like the Section 8 rents in LA are very different than in DC. Awesome strategy though!
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Unfortunately, I cannot comment on the housing authority rents for LA, NYC etc. The rents quoted are for DC. With this said, I like renting to Section 8 because I've found out there are many voucher holders that are no different than you and I. They just want to live in decent, safe neighborhoods with access to desirable amenities. If you screen right, I've found out that these "Tier 1" voucher holders, generally pay their rent, take care of your property, are pleasant to deal with and stay a long time. As far as I'm concerned this is EXACTLY what EVERY landlord is yearning for. Although your rents maybe lower, it may be possible to make the strategy work, because in my opinion, in appreciating markets, the real money is appreciation. Just my two cents.
    Krystof Pilisiewicz
    Replied 19 days ago
    That is a great story and I am inspired by it. I live in NYC and the plan you described sounds amazing to me. 3 br in mu area goes for 2,800$ from section 8, where I have been collecting 2,100$ for my 3 bedroom right now. I am going to look into this!
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Thanks for the kind words. It looks like in your NYC area, the numbers work for you. As mentioned in my previous posts, the strategy can work. My main caution is you screen prospective tenants well. I reviewed my screening approach in my Bigger Pockets podcast (episode 356).
    Matt Pace
    Replied 19 days ago
    My guess is that the downstairs is a seperate unit so the conversion was a single family into two units which was omitted from the descripotion. In most locations, this isn't feasible due to parking requirements or if you're not comfortable with creating a non-permitted unit (most lenders will require a legal unit). The example is great, however a comment from the author on this in addition to taking on rather aggresively financing would also be helpful. Most banks have a requirements to support low income areas and it seems the loan obtained is part of that regulatory guideline.
    Brian Cumberledge from Mc Kinney, Texas
    Replied 19 days ago
    I thought same. Also - it’s in rehab so until it’s rented and gov pays this is just a story. Why not tell a completed house with real numbers. I don’t know.
    Eric N Harris from Chicago, Illinois
    Replied 18 days ago
    Hello, Brian. When You get a chance, grab a copy of The very first issue of BiggerPockets Magazine with Dr. Joe on the cover. He gives more details in regards to his occupied rentals in DC.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Please note that all my properties are single family homes, not duplexes or multifamily. The basements are part of the main houses and not separate units. The subject property in the video was originally a 3 bedroom, 1 bathroom row (townhouse) house that was converted into a six bedroom 3.5 bath home. Section 8 rents are based on the location and number of bedrooms. Brian: At the time of the video, the house was being renovated. It is now complete. The numbers quoted are correct. If anything, because of the hot local real estate market, the ARV is probably higher. There's no reason for me to make up numbers. I've been implementing this strategy for nearly 30 years and it works. Good times, bad times, up markets, down markets it really doesn't make matter. I'm not saying this is the only strategy that works. All I'm doing is sharing what I'm doing. I don't need to brag about what I'm doing. Its not important and frankly, its unnecessary.
    Del Wratten Realtor from Henderson, NV
    Replied 19 days ago
    You need to fix your heading. "$1,500K/Month Cash" No way you are getting $1,500 thousand a month! Remove the "k".
    Gwen Fyfe Rental Property Investor from Cleveland, OH
    Replied 19 days ago
    I’m so glad I’m not the only person who was bothered by that. $1,500,000/month profit per door!
    Jessa Claeys Managing Editor from Denver, CO
    Replied 18 days ago
    Thank you for pointing this out! All fixed.
    Annie Dinh
    Replied 19 days ago
    Awesome story! And thank you for your encouragement! Sometimes we truly need these when we just first start!
    Brian Garlington Realtor from Oakland CA with multifamily units here in the Bay Area and Cleveland, OH
    Replied 19 days ago
    Joe's story is great! Different areas of the country give out different amounts of money so your area may not give out as much. However....... Some of you may be missing this part in his PODCAST where he lays out how he finds a 3 bedroom place with the right kind of "bones" and makes it into a 6 bedroom place. That's where the magic is. In Oakland, Section 8 will pay $5,125/mo for a 6 bedroom. For those of you wondering about Rent Control and whether or not rent can be raised 5% a year, that's another magical point about Section 8, because if a tenant has their rent subsidized by the government (I.E. Section 8) then they are NOT subject to rent control. That is another reason why I LOVE renting out to PROPERLY SCREENED Section 8 tenants in the (rent controlled) San Francisco Bay Area as well as Cleveland, Ohio.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Thanks for the kind words Brian. I agree with all your points. Well said.
    Veronica Belshaw Investor
    Replied 18 days ago
    Im inspired by your story too, especially the part about having a plan b. whenever one has a plan b, the instability and mind games played at work seem mindless and dont affect my mindset near as much as they used to. in fact, having an active plan b (and plan c) helps to keep your mind on whats important instead of being dragged into many drama-related directions. then, there is the promise that one day i will buy my freedom back and will no longer be indentured into the grid. i cant wait and it truly motivates me.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Veronica: Thanks for the kind words. In these trying times, I think any prudent person should have a plan B. There's no guarantee what tomorrow will bring! With this said, based on the advice I was given very early in my career, I pursued real estate as my plan B. It worked for me, and I'm sure it can work for you. Your local market may be different than mine, however, the basis premise is the same. There is someone/people in your local market who is successfully implementing real estate for their plan B. It may me a good idea to identify these people and learn from them as to how they are making things happen - locally. Its not always necessary to invest across the country or hundreds/thousands of miles away. There are "acres of diamonds" wherever you are. Just my two cents.
    Marcus House Rental Property Investor from Woodbridge, VA
    Replied 18 days ago
    Great story. Did you use Hard money lender prior to refinance? Did you have to make payment or accrued interest to hard money lender prior to refinance? Did your bank require you to have a reserve fund in case something went wrong with cash flow? Does your cash flow number assume using a property manager manage it? When you do a project of this size is your contractor on a firm fixed price budget/contract?
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Marcus: Thanks for the kind words. I'll try to answer your questions: Did you use Hard money lender prior to refinance? No. I used a hybrid of bank financing, private investors and personal funds. Did you have to make payment or accrued interest to hard money lender prior to refinance? No bank payments are made for 12 months. Interest is accrued until the loan is refinanced (before the renewal date). Did your bank require you to have a reserve fund in case something went wrong with cash flow? I've developed a relationship with the bank over several years. They know me, what I do and have checked my track record. I have developed a "credibility kit" which tells my story and articulates why they should do business with me. The terms of the loan is based on the strength of the relationship and me taking the time to understand what they are looking for and positioning myself as a good steward of their funds. Does your cash flow number assume using a property manager manage it? I manage all my properties. as mentioned in Podcast episode 356, I have yet to find a property management company that manages the way I do. My goal is to have zero turnover and vacancy since these expenses will ruin your cash flow. When you do a project of this size is your contractor on a firm fixed price budget/contract? I have used the same contractor for the past 7-8 years. We have a great relationship that is based on trust and each person looking out for the other. You cannot operate in this business without reliable contractors. I realized this many years ago and have taken the time to assemble a great team.
    Clayton Smith Rental Property Investor from Tuscaloosa
    Replied 18 days ago
    Great story and he was awesome on the podcast. My only question is how is he getting a bank to cash out 87% LTV? I have been searching and best I could find is 75% LTV with a interest rate in the 3s. If I wanted to borrow over the 75% threshold the interest rate would shoot up to at least the 5s. Is anybody else able to find a lender with a great rate that will do over 75%?
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Clayton: Thanks for the kind words. The bank I use is a local financial institution. I've taken the time to build relationships with the bank, educate them on what I do and created a win-win relationship. I can't speak for your local area but most banks provide the terms you quoted. However, exceptions can be made. The issue is whether they will grant YOU the exception. This will depend on your RELATIONSHIP with the bank and WHY they should grant YOU the exception. It may be worthwhile to start developing relationships with investor friendly local banks. You'll be surprised what is possible by nurturing and developing strong win-win relationships.
    Kevin Torrence
    Replied 18 days ago
    Dr. Joe, thanks for sharing your system. I’m curious about the level of maintenance required with section 8 tenants.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Kevin: Thanks for the kind words. For the most part, my tier 1 section 8 tenants do not require any more maintenance than my non-section 8 tenants. The main difference is that my section 8 tenants generally stay MUCH LONGER than my non-section 8 tenants. My longest tenant has been with me for over 23 years. I regularly have 5, 10, 15 year tenants.
    Stephen Sloane
    Replied 18 days ago
    Hey Joe, thanks for the video and explanation. I too am a Brit who's lived in the US (California) for a snip over 32 years. Though unlike you, I'm very small potoatoes. I built a duplex in Austin, TX in 2000, sold it in 2012 and purchased a 5-plex in Riverside, CA. It covers my family's financial needs and the increase in value is very favorable, too. My question: I have one Section 8 tenant (1-bedroom apartment) which pays $971 per month. The 1-bedroom apartment next to it has a regular tenant that pays $1300 (both apartments roughly the same size and condition). The Section 8 folks always give me a fight as to how much they're willing to pay. It's certainly time for a rental increase from them; what do you suggest my plan is to squeeze more money out of them? Best, Steve Sloane.
    Deanna Opgenort Rental Property Investor from San Diego, CA
    Replied 18 days ago
    So, think before you post. BP is a public forum, so you might want to consider the old "NYT headline" criteria -- would you like to see "how do I squeeze more money out of them" next to your face on the front page of New York Times? Probably not. I get that you're venting frustration, but anything you post on a public forum you may end up having to defend in front of a judge some day -- and the internet is forever. My personal thoughts - for Section 8; DO charge the full amount allowed (following the exact rules for increases, notification of rent increases, etc etc -- check the laws enacted by the State of CA in late 2019, BTW). DO NOT charge one penny more. If you really aren't happy about the rate Section 8 is paying, contact the Section 8 about the proper procedure for withdrawing from the program (it might take a year if you've recently renewed the lease). After you have figured out if withdrawing is feasible you might mention to your tenants that you are considering withdrawing from the program due to the difficulty in collecting their share, & see if it produces an attitude shift that makes it worthwhile to remain with the program. One suggestion is that you "3rd person" the problem -- rather than "you aren't paying your share, therefore I will be withdrawing" you can phrase it that "Section 8 puts people in a position that they can't afford to pay their share, so I am withdrawing" (in theory they would have to argue that they CAN pay their share if they want you to continue with Section 8).
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Deanna, you make very good points. Stephen, I understand your frustration. You generally cannot "squeeze more money" out of a local housing authority. The published rates are what they will pay. Its highly unlikely they will make exceptions for anyone. With this said, you can increase your chances if you are able to provide them with comparable rents showing that market rents are higher than what they are paying. Before bailing from the section 8 program, I suggest you take the time to get to know some of the program staff. Many are just as frustrated with the bureaucracy and are trying to do the best the can given the realities that exist. When you find someone that is helpful, they will tell you what options are available to you.
    Sri Ram Rental Property Investor from West Palm Beach, FL
    Replied 17 days ago
    Very good points. Nice.
    Eric N Harris from Chicago, Illinois
    Replied 17 days ago
    Loved reading your post, Deanna.
    Matt DeBoth Rental Property Investor from Albia, IA
    Replied 17 days ago
    Great read!!! Love the way you're killing it Joe!!!
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Matt: Thanks for the kind words. I don't see myself as "killing it." In my humble opinion, I noticed a market need, and then systematically took the time to understand how I could fill the need and create a business model that's sustainable and very recession resistant.
    Michael Haynes Investor from Tampa, Florida
    Replied 17 days ago
    Hello Dr. Joe. Just from the beginning of your example, the $750,000 property does not make the 1% Rule with the Rent.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Mike: In my opinion, there are two competing interests for real estate investing: cash flow and appreciation. Usually, you have to take one or the other. I want both. In markets like Washington DC, the real money, in my opinion, is appreciation. The business model I shared allows me to get both cash flow and appreciation. I'm not saying its the only way, but it works for me. The 1% rule is only a guide. Its not always possible to reach that milestone. Ask anyone who lives in an appreciating market and they will probably admit the following: 1. They should have started buying houses earlier 2. They should have bought more, and 3. They should have kept more houses. It's just the way it is. Its always expensive. If you only buy because of the 1% rule, you'll probably not buy anything and remain on the sidelines while others are building wealth. Just my two cents.
    Michael Haynes Investor from Tampa, Florida
    Replied 17 days ago
    Dear Dr. Joe. This Plan worked for you in DC. I can't imagine spending $750,000 for one house in Tampa, Florida and moving in Section 8 tenants. Your just asking for trouble. If I were starting out in the business again, your example would encourage me to study up on Section 8 Rules in my area and plug in the numbers to see what would work out like you are suggesting.
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Mike: I agree with your second sentence. With regards to your first sentence. The prices here in DC (and other expensive markets) are based on supply and demand - which I have absolutely no control over. What should I do? cry that houses are $500K, $600K, $700K etc. I want to invest in real estate and am not interested in buying properties across the country. I only buy local and not long distance. Therefore, the challenge for me was to figure something out locally, given the realities of the marketplace. This is what I shared in the video and podcast. I understand its not for everyone. But it works for me.
    Ashley Carr
    Replied 16 days ago
    Fantastic article! Thank you so much for sharing and shining light on an amazing strategy. I too live in an area that is ‘up and coming’, housing has risen significantly. I’ll certainly be sharing!
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings Ashley: Thanks for the kind words.
    Jamie Mason
    Replied 16 days ago
    I loved the podcast with Dr. Joe! If you haven't listened to it, you should. He gives far more detail about the process, how he gets only the top tier renters, and how he earns his tenants' loyalty. The lack of turnover is a *huge* determinant in profitability, and it makes complete sense that if you provide voucher holders with a beautiful, newly renovated home, they will stay. If you rent a place like that on the general market, tenants paying that much are far more likely to move out in a year or two when they're ready to buy. I was so inspired by the podcast, I am looking into implementing this strategy, and I never would have considered it before. (I live in Baltimore City but I'm researching Harford County, Maryland.)
    Joseph Asamoah Rental Property Investor from Washington, DC
    Replied 16 days ago
    Greetings: Thanks for the kind words Jamie. Great to know you are taking action. Good luck with implementing the strategy in Harford County. Unfortunately, I don't own anything there and so cannot advise on the specifics. Either way, I wish you well.
    Jack Liu Rental Property Investor from Sacramento, CA
    Replied 16 days ago
    Thank you for sharing this deal. It is informative and it is something I want to try in my local market one day (Sacramento, CA). Can you talk a little bit about how you obtained an 87% LTV refinance at 3.2%? That is an amazing rate and a great LTV as far as I know. Thank you!
    Joe Bertolino Developer from El Dorado Hills, CA
    Replied 13 days ago
    Great info. I have been eyeing the new section 8 rates in my city for 5 bedroom homes and I think this strategy could work well in some zip codes.
    Marcin G. Investor from Old Bridge, New Jersey
    Replied 12 days ago
    I have been following Dr. Joe for a few months now; such impressive results! If you have a minute, I would appreciate direction on the following steps to check if this strategy will work here: 1) Where should I go to check the current section 8 rents for a 5, 6, or 7 bedroom single family houses? 2) How do you find section 8 tenants? Where do you advertise to the voucher holders? 3) Is it true that you need to have a Fire sprinkler system installed when you rent to section 8 tenants?
    Fred Sette
    Replied 11 days ago
    Joseph: you made mention of expecting your fifth real estate cycle due to Covid. Would you be willing to share any predictions on the effects of Covid and the residential real estate markets?