Section 8 Bible

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Section 8 Bible

Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes

Has anyone ever read these books (volume I and II)? In it, the guy talks about his strategy for buying and renting out over 300 single family homes.

For the first property, he started off with around $28,000 or so from an insurance settlement, but he talks about taking out a HELOC or getting money from credit cards and buying the property in cash.

Then, once that property is fixed up and rented out, get another loan from a bank on that property for 75-80% LTV, and use that cash to buy another property. Repeat to infinity is what he says. He and his partner did this for over 300 properties.

I have read and read and searched and searched and cannot see how on earth he was able to do this, with the current Fannie/Freddie limits of 10 mortgages per person. Even if he and his partner each were somehow able to get 10 apiece (and I'm only seeing the ability to get 4 per person), that would only make 20.

So what is the secret to how these guys were able to do this?

Podcast Guest on Show #29
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Andrew FidlerBusiness Member
Real Estate Broker · Toledo, OH · Member since 2011 · 384 posts · 434 votes
12y

I downloaded the book 1 from amazon ($23 print and $9.99 for kindle)

I'm about halfway through and have enough information to begin commenting.

I think I take the place on BP as one of the larger low-end investors...I own in Toledo and buy in two adjacent neighborhoods...$30k and $20k areas...I buy 3/1 houses for less than $10k and put a pretty significant renovation into them so I'm $15-$20k total by the time I rent...and I have nine sect 8 houses now, three for rent (rental market is a bit slow in Toledo with record cold and snow) and two more in process of renovation)...I've been sect 8 investing for four years now.

The author is a certified cheap a**. I find much of his advice laughable and think a property walk in one of his places would have me leaning on door frames trying to catch my breath from laughing...I do not recommend you follow his advice any further than the knowledge that sect8 rentals can be productive and if you want to get crazy you can minimize your expenses and still pass inspection.

Ok- when I buy a house...circa 1940...my goal is to make the neighborhood better...call me an idealist. By this I mean I want the exterior to be basically maintained, the front respectable, and the yard safe for kids. Since I'm a family business if I don't find something myself I normally get a text from my mother-in-law that we have something amiss that needs to be addressed. I regularly tour BP folks past my buildings and in such instances the properties reflect ME so I want them basically presentable.

I fix anything that I don't want to mess with when a tenant is in place...unlike our author I don't dumb the whole place down because my tenants are animals, I fix them right while it's vacant so I can move a tenant in and start the relationship right...not with a two-page punch list of repairs needing to be addressed. I remove all galvanized pipe AND COPPER (theft-prone) and apex the entire structure. Furnaces are 80% efficient...I just bought a house with a ~40% efficient octopus furnace and got it upgraded to a used 80% efficient furnace for a damned good price...again, I believe in basic upgrades- if my tenant is blowing 100% more heat up the chimney then their bills are double and not sustainable for them to stay with me. 80% is the norm in my area and there are always used units available from the nicer areas of the city. I either finish hardwood floors or carpet the whole house...carpet is cheap. Paint is cheap. A good quality glue-down vinyl is cheap. However I do all my renovations with a some-day sale in mind.

Author recommends boarding over and siding any more than one window in each room. Whaaaa? So you want me to take a 1200sqft 3/1 and board over easily six windows, just because you don't want to maintain them? A new vinyl window is maybe $160...$40 install...and that's IF they need a replacement. There are pictures in the book of houses with windows blanked off. How can we hurt rent appeal and eventual resale more I ask!

Author pulls ceiling fans and 220 air conditioning outlets from the houses...I won't fight this one other than to say I install $30 fans in my bedrooms...to me that cheap and easy. I don't install a circuits but don't destroy them if I find them either.

Author removes all closet doors from his rentals...

Author removes the bedroom door handles and installs a $.50 hook and eye..to avoid a $9 handle expense.

I swear I would walk these places just to see how excessive the author could be.

Anyway, my main take on sect 8 inspections is that they are pretty subjective...if the inspector likes you and is impressed with the first 2 minutes of the walk through and you show honesty and integrity in your place, then you will pass...any minor issue can be fixed on the spot and you will get the benefit of the doubt. I think that an inspector who reached for a door handle and found a hook/eye and no closet doors and painted plywood subfloor for flooring would be looking to fail you...because you would stand out in their mind as the cheap a** they were trained to fail...you would be the talk of the office when they returned.

Renovate reasonably, renovate responsibly, and you will do well. Don't get too high-end with granite and don't put old sidewalk slabs in for countertop simply because they're durable and the sect 8 regs don't say you can't.

Back to reading. :)

[email protected]419-410-3836
LaPlante Real Estate
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  • Rob K.
    Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    I had a Section 8 tenant die. My experience was similar to @David Krulac

    Section 8 paid one more month. In my case, the tenant was only 32 and had four kids. Two of the kids went to live with their dads (plural). The tenant's mom then moved in to take care of the other two children. I signed a lease with her at the same rate that Section 8 was paying and she's been a great tenant.

    I had another Section 8 tenant go to a rehab center for three months. I'm not sure if Section 8 knew about this, but I got the checks like clockwork and his friend kept an eye on the house.

    0Reply
  • Account Closed
    Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y

    Our tenant died Dec 30th Section 8 told the tenant and us that they wouldn't pay for Jan and asked us to return the payment. You may be right because they haven't responded to our request for them to ask for the return of the funds in writing. 

    Your rehab tenant wouldn't have triggered anything because that was only 3 months, we were told Section 8 would stop paying after 6 months of unoccupancy . The point worthy of attention though  is the belief that they are able to "cross-collaterize" tenancies and withold payments from other tenancies in order to claw back monies they think ought not to have been paid on this one. 

    That should worry anyone who has multiple Section 8 tenancies.

    0Reply
  • Account Closed
    Laurel, MD · Member since 2015 · 101 posts · 30 votes
    11y
    Originally posted by @David Krulac:

    @Account Closed

    We did have a Section 8 tenant pass.  Section 8 paid for another full month after the month of death. 

     David,

    See Joel's post here and repayment demands.

    http://www.biggerpockets.com/forums/52/topics/1106...

    0Reply
  • Alex M.
    Investor · Philadelphia, PA · Member since 2013 · 185 posts · 97 votes
    11y

    Just  read the section 8 bible this past weekend and it is FANTASTIC! It was a really easy read. Quick. Straight to the point. Funny at times. Full of great suggestions and useful ideas. Extremely inspirational. And it does not beat around the bush. It is 100% geared to investors who want to make money scaling up a "business" with section 8 housing.

    Some of the reviews I read on here call out the poor grammar or spelling errors, etc. (e.g. the author likes to use John Dough as a reference...). Whatever. If your focus is on grammar and spelling go be an English teacher. If your focus is on learning the pitfalls and how to avoid them - or at least how to get fired up about the possibility - then I would recommend ignoring those issues and reading this book.

    I don't necessarily want to practice everything he preaches - boarding up windows and using 2x4's for legs on a kitchen island... but overall, this is a very practical set of recommendations to providing solid affordable housing to a demographic that can be difficult - recognizing those difficulties this author has come up with a number of strategies to reduce problems and focus on profit, while meeting all section 8 program requirements. 

    I'm in the process of looking at section 8 for my 3rd rental and this book has helped me to understand some of the challenges and strategies to navigate this system.

    1Reply
  • Eli M.
    Investor · Brooklyn, NY · Member since 2014 · 231 posts · 12 votes
    11y

    I have a few questions about section 8: 

    1. Can a landlord get paid straight from section 8, bypassing the management if the landlord lives in a different state?

    2. If a tenant does not have the money to pay the security deposit, will section 8 pay this deposit for him?

    0Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    @Eli M.

    1. Depends on local office, some will direct deposit into owners bank.

    2.  No, tenant must pay security.

    0Reply
  • Mil SanghviPro Member
    Rental Property Investor · Atlanta, GA · Member since 2014 · 57 posts · 10 votes
    11y

    Where can I go on BP to purchase this book? Can someone post a link?

    Mil 

    0Reply
  • Eddie T.
    Rental Property Investor · NY · Member since 2013 · 844 posts · 350 votes
    11y
    Milan Sanghvi Check Amazon... Or I believe they have their own website
    0Reply
  • Richard Fields
    HVAC mechanic · Philadelphia, PA · Member since 2015 · 241 posts · 57 votes
    10y
    Originally posted by @Don Koss:

    Dawn,

    I read them a while ago and found them to be quite informative - even if you aren't doing Section 8 (which I am not). They have a lot of tips on handling tenants (including some great stories) and some info on making all of your rentals the same, so that maintenance is easier.

    It would be nice to know if these guys are still running the biz and see where they are now - but I haven't had time to Google research them.

    All and all - they are no bull books, and good to have on hand.

    Best Regard,

    donko

     They are still around. I just e mailed them to ask about their lease and got an answer right away. All of their properties are in southwest Philadelphia

    0Reply
  • Richard Fields
    HVAC mechanic · Philadelphia, PA · Member since 2015 · 241 posts · 57 votes
    10y
    Originally posted by @Eli M.:

    I have a few questions about section 8: 

    1. Can a landlord get paid straight from section 8, bypassing the management if the landlord lives in a different state?

    2. If a tenant does not have the money to pay the security deposit, will section 8 pay this deposit for him?

     In Philadelphia if you live more then (I think it's) 25 miles from your property you must have a property manager in place

    0Reply
  • Richard Fields
    HVAC mechanic · Philadelphia, PA · Member since 2015 · 241 posts · 57 votes
    10y
    Originally posted by @Mil Sanghvi:

    Where can I go on BP to purchase this book? Can someone post a link?

    Mil 

     www.section8bible.com

    0Reply
  • Eric E.
    Residential Investor · Allentown, PA · Member since 2012 · 95 posts · 29 votes
    10y

    OK quick, who can recommend a good way to attract section 8 tenants?   I have a vacancy right now.   GoSection8 and Craigslist are mostly giving me people who cannot afford the rent, or have the police looking for them.  But NOT section 8 applicants at all, even though I clearly state "we take section 8" at the top of the ads.   

    0Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    @Eric E.

    by top you mean the title of the ad?

    We use "Section 8 OK"

    or "Must have current Section 8 Voucher"

    or "Already passed Section 8 Inspection"

    in the title

    1Reply
  • Eric E.
    Residential Investor · Allentown, PA · Member since 2012 · 95 posts · 29 votes
    10y

    Yes that is normally in the heading and /or first line.    

    0Reply
  • David Krulac
    Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
    10y

    we get bombarded with applicants when we put those lines in the title.

    0Reply
  • KJ L.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 210 posts · 155 votes
    7y

    @Brandon Foster

    0Reply
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