Has anybody dealt with HASA in NYC

Question

Hello BP,

I have a few questions about the HASA program in NYC. My father in law has been investing in multifamily homes in the Bronx, NY and finds his tenant's through HASA. I spoke with him for hours this past weekend, and he was explaining that the city or government pays him $1,500 per bedroom (not apartment). So in one of his multi family homes he has 11 bedrooms, that HASA fills up for him and pays him $1,500 per bedroom each month ($16,500).

This sounds like an amazing program, but my questions is this true. I am asking if anyone else heard of or dealt with HASA before and can validate that they pay $1,500 per bedroom. Or is this false and could be an exaggeration.

I helped him put together a very quick word document to map out the numbers (nothing professional) just something to get organized and layout all the numbers. I will paste it below, please look it over and tell me if this seems to good to be true, or is it possible. I am definitely a little skeptical so please if you have any advice or experience with this please share your input.

Property Details:

• Fully Renovated 3 Family Home For Sale, 5 Over 4 Over 2 Bedroom, 1 Over 1 Over 1 Bathrooms, All New Kitchen With New Cabinets, Granite Counter Tops & All New Stainless Steel Appliances (Fridge, Stove, Dishwasher, Microwave). Hardwood Floors Throughout, Great Live In and/or Investment Property

• 11 Bedrooms
• 3 full Bathrooms

Finances:

$599,000 (purchase price of House)

20% (Down payment to purchase house)

$12,000 (Closing cost)

$599,000 X 20%= $119,900 (Total down payment)

$119,000 + $12,000= $131,900 (Total out of pocket including closing cost)

Monthly Income:

11 Bedrooms rented for $1,500 per bedroom

11 X $1,500= $16,500 (Gross monthly income)

11 X $700** (per bedroom property management and utilities) = $7,700 (total amount to manage the apartment building and place tenants in each bedroom, with utilities per month)

$16,500 - $7,700= $8,800 (scheduled rental income after property management)

Monthly Expenses:

$2,200 (monthly mortgage payment, 3.48% 30 year fixed)

$2,000 (contingencies monthly expenses)

$450 (property taxes)

$150 (homeowners insurance)

$4,800 (Total monthly expenses)

Monthly cash flow:

$8,800 (scheduled rental income after property management)

$4,800 (Total monthly expenses)

$4,000 (Scheduled net rental income) or $48,000 (Annual net cash flow) or 36.5% ROI

** $700 out of the $1,500 per bedroom will be paid to a property management company that will assign the tenants into the apartment, but will handle all the maintenance and day to day activities. This cost will also cover the Gas and electric bill on a monthly basis, so the $800 that is left over from each bedroom is after property management and utilities**

Edilberto Almendarez · Answer

Hello, I'm a HASA client starting a month ago, I lost my apartment because I have another medical condition, (cancer), my husband is in disability now, we can't work at the moment, HASA sent us to a place in Brooklyn while we was waiting for a Social worker contact me, 2 weeks later no one contacted me and I came to the office, I was really frustrated about my situation, the Social Worker didn't know anything about my case, the place where I'm now is a house, I have a room in a house, sharing kitchen and bathroom, it's nasty all the time, it's like 3 houses but only one kitchen is working but in bad conditions, honestly I'm here because I really need to live here, but it's my worse experience in my life, but my question is, is this the way that HASA work? I'm really frustrated, it's my first time looking foe some help, this Social workers don't care about anything, I'm doing on my own everything.

Derrick Wilson · Answer

The bronx have buildings we drive by everyday and the whole building is occupied by DHS or displaced people. Since there isn't any paying tenants in the building we call them shelters for the homeless. These people rent are paid by DHS so imagine having a 15-20 unit building you dont have to worry about vacancy because as soon someone get back on their feet move out the shelter they have a long list of people wating for that same apt and you dont have to worry about rent this is not section8 these people have no jobs and no way to pay you your rent comes straight from DHS

Eric Schleif · Answer

I would start with the NYC Human Resource Administration as they are the ones who manage the program. You can also google not-for-profits that specialize in this and call them. Also, I'm sure you father-in-law is a good source of knowledge since he's actively using the program. I just haven't seen it too often in my deals. Last time was about 5-6 years ago and I can't recall much about it.

My main concern in your original post, other than the income assumptions, was the $7,700 per month management and utility fee. It's completely out of touch with the outer borough markets. It drives your expense ratio up to 76% and you should be somewhere in the mid 40% to 50% range for a small multi-family in the Bronx.

Best of luck.

Greg Halpen · Answer

No one does that nor should anyone care people into an apartment just to receive the HASA benefit. That’s not how HASA works.

Daniel Aubrey · Answer

What your grandpa told you is very true. Actually they have raised to amount of payment. To about 2200 if I’m not mistaking.

Anthony Caleca · Answer

@Derrick Wilson do you know roughly how much DHS pays? is it similar to HASA as far as per bedroom instead of per unit, and is it as high as $1,500 per person?

I know with HASA it works same way as DHS as far as it covers 100% of rent so you don't have to worry about people not paying, and if somebody moves out they just go and fill up that spot with the next person on the list so there is never any long outstanding vacancy. And supposingly there is a very long waiting list in the Tri state area which would make good for a landlord to be involved in

Les Jean-Pierre · Answer

I don't know what HASA is but I manage a couple of Section 8 units. NYC Homeless Services or something like it called me out of the blue and asked if I was willing to rent to displaced people. The department covers 100% of the rent. Rents are not high. A family of 3/4 would get around $1500.

Anthony Caleca · Answer

Thank you for the response I really appreciate it. I figured it sounded way to good to be true, and even though I was skeptical I still had some thoughts of it being true because my father in law has been in real estate for close to 25 years and is pretty successful. He stated he already has property rented out under that exact system getting $1,500 per bedroom by HASA where tenants use the bedrooms as private living spaces and share the common living space like kitchen bathroom and living room area.

The reason I am looking into because I was going to purchase a property very similar to the one displayed above and rent it through this system, and try to snow ball profits into another one and another one, to generate current cash flow and build long term wealth by having HASA pay off mortgage over long term.

Do you have any advice on where I could go to do more research or due diligence to see if there is a system out there like this, or to educate my self on the actual HASA program

Eric Schleif · Answer

I have limited knowledge on HASA and their rent regulations. I know it normally involves a single tenant and a 2 year lease, making the program ideal for 1-bedroom units. My understanding is that the city will not lump several people into a multi-bedroom apartment. Also, the tenant is responsible to pay rent equal to 30% of their income and the city program will pay the portion of rent that is above this percentage. I'd also imagine that the city has AMI limits on rent based on unit size. I can't see you getting the rents described in your post. I could certainly be wrong and suggest calling the NYC Human Resource Administration for more detailed info on their regulations.

As far as your underwriting is concerned, make sure you lookup the real estate taxes and water charges on the city's website. Water is a killer in NYC and I don't see it in your expense schedule. I'm a little confused with your management/utility/maintenance setup. Seems high as we normally assume 3%-5% of effective gross income for management, $550 per unit for R&M, $325 per room for gas/heat, and $150 per room for electric. I calculate that to a total of $18,150 vs. $92,400. This a quick ballpark but that is a huge swing in the numbers.

Has anybody dealt with HASA in NYC

Has anybody dealt with HASA in NYC

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