Flip, Rent, or Section 8 ?

Question

As a newbie I came in strong on the Flip idea...  But most people here seem to push rentals as a way to really make a sustaining income.

With some of the deals out there I can see coming into a transaction and being immediately in the Black on a rental!  Which is very exciting and opens new horizons to my investment strategy...  Granted rental in my mind = stress to get people to sign the rental agreements.

... Which leads to Section 8 housing.  Guaranteed income and guaranteed renters...  The bad of course is that you are dealing with low low income tenants and neighborhoods which can be risky.

Is there any books or web info related to Section 8 that is of value?  Pros / Cons of such properties?

Thanks!

Account Closed · Answer

You can go to the blog section on BiggerPockets and find it there, or you can read it from his site here:

http://www.1minutetorentalpropertyriches.com/id53.html

Account Closed · Answer

Section 8 is  a hard way to make your money, and it would be really rough going into it with no landlord experience.

The housing authority is NOT on the landlord's side, and they have a lot of resources.

Each housing authority is different and some are easier to work with than others. You might want to talk to local landlord's and see what their experience has been with the local housing authority.

Account Closed · Answer

I know hand holding can be a drag, but can you expound more on this?

I saw where Will also stated about "looking into HUD particulars for each specific area".

What are the implications or mistakes that would be made?

Josh Sanders · Answer

First good luck on building your business and congrats for getting out there buying low which ever route you take. We are currently doing both renatls and flips. One of the best rental lessons I have learned is don't fear students. We are in a college community and although maint. is higher due to their lack of home ownership experience, students tend to be well funded (parents). In our area of Texas, college students pay higher rents, and as long as you time your leases to coincide with the academic calendar, we never have issues staying rented. It also helps to have a gimic, and advertise such in the college paper. We provide a 50"plasma in every unit. That line item alone is like a neon sign in the college want ads. There is nothing a college kid will tke care of better there than TV, and it's been the best $1k we have spent in pre-lease improvements.

Josh

Will Barnard · Answer

With the lending market continuing to tighten, the increased housing inventory, and the recession, it is much more difficult and "risky" (very loose term) to flip in these market conditions. Of course there is always the exceptions and if you have the ability to buy correctly to avoid/minimize the risk. The other negative item to flipping is the larger tax implications, unless you utilize a 1031 exchange each time. Flipping and wholsaleing is taxed at much higher rates than a buy and hold strategy as the cash flow is taxed at passive income ratios and the gain from the sell (after 365 days) is taxed at long term cap gains rates, currently at 15%.
Jsut food for thought.

Mike Wilcbon · Answer

If you are in an area where you can get buyers, then flipping is the way to go as it is in and out.  As for buy and hold, get an area that will appreciate fastest in this market...You can retire early :D

T A · Answer

If you're interested, I'm about to list Hal Roark's section 8 course on ebay for sale in a day.  I've never used it because I've been too busy.  I bought it from an ebayer and it hasn't been put to use over here at all.  Let me know by emailing me or something.

Aly W. · Answer

I just bought the Section 8 Bible by MikeOH and it was definitely worth it. The info on what to eliminate from the rental prior to inspection saved me far more than the cost of the book.

Will Barnard · Answer

Section 8 is a good way to go but you still must screen your potential tenants very carefully and also look into the HUD particulars for each specific area you intend on investing. Some areas are good for section 8, and others are not. Do your homework!