Sandra V. I just join BiggerPockets, I came across this website while looking for information on investing in real estate. I own a property in Brooklyn New York which Me and my husband purchase in 1981 with no money down because he is a veteran. The 2 family house was $27,000 at the time in a not so desirable area of Brooklyn, but I made the best of it because it was still better than living in an apartment with my three children. We spend a lot of money fixing it up we had a tenant when we closed on the house and the reason we accepted that was because at that time in New york, if you leave property empty people would break in, and take the pipes out and vandalize your property. This was our first house and we really did not know anything about real estate, we did not know what the laws were, we just know that we just bought a property that we need to fix and a bad tenant that we need to get out. The tenant was living on the first floor where the thermastate was located, we were both working and the tenant was in the house leaving the heat on and had the windows open, my first heating bill was $900. We had to get this tenant out. At that time it took a few months, the tenants were drug abusers and he even pull a gun on my husband but we got them out.
This was a two family house with a 3 bedroom apartment and against my better judgment I convinced my husband to rent out this apartment for $500 per month, because the house needed a lot of renovating. This was another bad tenant with 5 children, he paid cash at that time I did not know anything about section 8. The tenant started to fall behind in the rent and the children was damaging the property. As I mention I did not know the law, all I knew was this our house and this tenants had to go, I decided to turn off the water, I was very angry I am sure many of you can understand this because you are property owners also. Me and my husband was working hard every day and trying to fix up this property and these tenants was living in our house and not paying rent and damaging the property turning off the water worked two months with no water they decided to leave. I later learn that you are not suppose to do that and that it was against the law. We paid off the mortgage a couple of times and then we refinanced and got $40,000 at that time the value of the property about $100,000 we took that money and did some more renovations on the property paid off all my debt and bought two cars cash. Over the year my husband refused to rent to tenants and I tried on several occasions to get him to invest in more property in New York. Before we did our first refinancing, we had no mortgage, no credit cards bills and we had a an Income over $80,000 a year. Long story short, we held on to the property and continue renovating it. I started a Home Daycare on one floor, expanded to another floor my income from the property two floors was about $6,000 per month. In 2003 because of the high cost of car insurance in New york I was paying $3000 per year for liability insurance for 1 car even though I have a good driving record. We got another car and I ask my daughter to insure my car with her in the bronx they gave her a quote of $6,000 per year. Desperate at this point I figure that I could buy a property and get cheaper insurance. We refinance for a second time for $160,000. we paid off our bills including the balance of $40,000 school loan and used some of the money to renovate the Brooklyn property.
My daughter friend gave me a brochure on houses being sold upstate. We were very surprised how cheap these houses were, her friend got a 2 family house with 6 bedrooms for $30,000. We put a $10,000 down payment on our first two family investment property. My insurance went from $3,000 a year for 1 car to $1,500 a year for 3 cars 2 with full coverage. Over the year the equity in the Brooklyn property continued to increased over the years.
In 2006 we refinanced the property and got $200.000 which I went back upstate and invested in a 3 family house for $65,000 cash which we converted to a one family that we moved into, and another 2 family rental property which we paid $65,000 cash. We spend a lot of money on renovating the 3 family house to a 1 family. it needed 50 new windows, new heating system and hot water heater. We fix the attic and put 3 bedrooms up there.The property was over 4,000 square feet after fixing the attic the house have 8 bedrooms 3 bathrooms, a walk out basement with 9 windows, lot is 65' wide and 200' long. I was worth the investment to me I love the house and I also knew that if I wanted to buy a house like that in New York I would have to pay over a million dollars. etc. it took all the money I had left and then some. My thought was if I paid cash for these properties up front I would eliminate 30 years of mortgage, I would have positive cash flow, we eliminate that monthly mortgage and just had to worry about the taxes and water bill. and that I could always refinance in the future and invest in more real estate when the interest rate drop. Which is where we are now I the property in Brooklyn interest rate is 6% which was a good rate in 2006 when we refinanced.
I suggest that if you plan to invest in rental property in New york in a 2 family or 3 family house that you make sure you have a few months mortgage payments put aside to pay your mortgage. If you are investing in a multi family apartment building, you should have enough to cover your mortgage if a couple of tenants is having a problem paying, or you are trying to evict them. The property is not cheap, I watched my neighbor lose her house because the tenant did not pay the rent, the tenant told her that she had to pay them to get out. Someone bought the same house next door to my house for $1.200.000 The rental income is high right now a room in Brooklyn where my house is located $900 per month. On the other hand the cheaper 2 or 3 family homes upstate are easier to hold because you can give a tenant a 30 day notice to get out you don't need a lawyer you can go to the sheriffs office and file the paperwork yourself, and if you took two month to get a new tenant you can still afford to pay your mortgage. In my case I do not have a mortgage. The court system makes it hard to own rental property in New York. I also have section 8 tenants in my 2 family rentals it is true some section 8 tenants are bad tenants but I have one lady who have been renting the apartment for 5 years, and she loves the apartment and keep it clean. I use section 8 because I know that I am getting my rent every month direct deposit into my account. If my tenant lose her job section 8 pays me the full rent. I also have stipulations added to my lease about the condition of my apartment when they move in, I also take pictures of the apartment at the time of rental. If my apartment is damaged in anyway of things are missing, the cost of replacement or renovation will be taken out of the security deposit. I have the tenants sign it, It motivates them to take care of the apartment because they want that security deposit back. I also use section 8 because the tenants know that if they don't pay their part of the rent, they could lose their section 8.
In my area people are renting rooms to college student, I am also thinking about doing that with my rentals. Instead of getting $700 per month rent for one 3 bedroom apartment I would get $450 per month per student I could get 5 students in one apartment $2,250.per month. which includes heat, wifi, water, furnishings. The two family house would bring in $4,500 per month positive cash flow. This is just my experience I learn on my own I try my best to educate myself that is how I found BiggerPockets. Our property in Brooklyn is valued about 1 million dollars, I want to borrow $300,000 to renovate it and invest in more rental properties. we owe about $320,000, we are paying that at 6%interest rate. I was told by a mortgage company that I could borrow the $300,000 and pay almost the same amount per month that I am paying now. Anyway my plan is to set up an LLC, open my business account and get Business credit put a down payment on multiple rental properties. I tried to do that before using my personal credit but the banks would tell you what you can afford and what you cant afford. I heard about trade lines, but I started looking on line trying to understand what I need to do to get funding as an investor on multiple properties. I hope as a small investor I have helped the readers in some small way. I want to thank the Bigger pockets community because I am learning a lot from each members experience.
I have experience with section 8 tenants in New York City. Where do I begin. Like all tenants, you have your good ones and your bad ones. Section 8 is no different. There are some truly hardworking people out there that need help with the high cost of living in this city, and the section 8 program provides that. Then there are the ones that take advantage of the system. They waste limited subsidizes, run up your water bill, and find excuses to not pay their limited portion of the rent. But that I believe comes with being a landlord.
The real difficultly with section 8 in NYC is trying to evict. The court system is pro tenant to begin with; a section 8 tenant only adds a magnitude of complexity. You could hire a lawyer to do an eviction, but that will cost you $1800-$2500; money you will more than likely never recover.
If a tenant doesn't pay their portion of the rent, you first have to get permission from section 8 to evict them! There is a special form that you must fill out, which they essentially just rubber stamp; trying to get the form will take a week or two because it must come from and be mailed back to the Manhattan head office. I keep the form on file but it's a an addition step that you have to take with section 8 tenants that you wouldn't have to with regular tenants.
Once you get the form back, you can find your case, file the necessary paperwork and serve notice on the tenants. You will be given a court date, usually 2-3 weeks later.
In court, the judges will usually give the tenant about a month to come up with the money or face eviction. The tenants will apply for some form of public assistance to pay the back rent. If the time expires, they can ask for an extension and they usually get it as long as they show they have applied for some form of help. This will leave you with no rent for another month. In the end it could take 60-90 days to get your back rent. So if the tenant was already 60 days behind when you file, be prepared to not collect rent for another 2-3 months.
Thats the easy one. If you have to evict for any other reason other than nonpayment (holdover case), they'll get up to 6 months if they prove that they are searching for an apartment. Tenants have proved this in the past by simply bringing a rental application. If they don't find an apartment by then (many don't) it's another 4 weeks to get the eviction order certified (the clerks office takes their time) and the marshal that does the eviction has to wait a week after serving them notice to kick them out.
Being a landlord in NYC is not for the faint of heart.
I'm really glad I read this. I'm getting closer to closing on a 2 family in NY. There is a Section 8 tenant who was given a voucher on January 20th to find another Section 8 house. It's March 26th and she has yet to have found anything. If I close on the house, I would likely have to evict her. According to Section 8 housing authorities, I do not have to accept Section 8, and I could evict. I would want to start the proceedings immediately upon closing. I just read that it could take 6 months (and also this forum just confirmed). I was under the impression that the government would pay the rent in the meantime? Sounds like that was wishful thinking. Best to wait until the tenant leaves to close. "In the end it could take 60-90 days to get your back rent." - is this covered by section 8? by court costs?
I've seen non section 8 tenants squat for 6 months+ recently. I can only imagine how long section 8 tenants could possibly stay; it could very well be longer than a year if they're disabled or elderly. Being a landlord in NYC is no picnic, but the rents are very high and you can pull in more than $100 a door cashflow if you buy right, that's the tradeoff.
Is there any reason you would choose to rent to section 8. I know all about human rights etc. but unless your only applicants are section 8 why would you not choose a non section 8 applicant.
In our area of operation landlords will not normally rent to individuals on government assistance due to their reputation as being a high percentage of bad tenants.
People rent to section 8 because it's supposed to be guaranteed income. I considered it but I think it's the wrong move. Like Phil said they are notoriously bad tenants. The upside is consistent rent. The downside is they don't take care of anything. But what I didn't know was that they could take a really long time to leave and during that time rent is not guaranteed. Or does anyone have a different experience? Would you close on a house that had a Section 8 tenant?
Hi Libby, I would absolutely close on a home that has a section 8 tenant. Reason being is that prior closing you probably have a look inside and you pretty much can tell right away if it is a good tenant or not. If you cant go inside prior closing I would assume it is in descent shape as once a year you got the inspection that it has to pass. So therefore generally speaking they are all up to code. I personally had great experience with the program and can recommend it. Hope that helps, d
Thanks @Dom K. it does help. I have seen the house and it's not in bad shape. I just worry that she will squat and not pay - and NY laws would be okay with that. Anyone else have experience in NY state with Section 8? I think I might go ahead with the deal since the other floors rent will cover the mortgage while I get her to move, but it's not the idea situation. Also - the rent is fixed at below-market rates.
Also I'm not sure if they will trash the house after the inspection when moving out. I've definitely had some bad luck with tenants, especially if they are forced to move.
Hey Libby, sorry i cant help you with specifically NY. But generally you should always be prepared for the tenant trashing your place, we build that in our purchase price / CAPEX. If you need it you got it accounted for, if you dont: congrats you just made some extra money! :)
Update: It's July 3rd and the tenant keeps pushing the date back to move. It was May 31st, then June 25th, then mid July, and I got an email yesterday that it's now late August. How long can this go on? We are clear for close on my side. Seems they are toying with the system and it's looking like we will have to close and then do an immediate eviction, which could leave her with squatting another 6+ months. Any advice? Any idea how much an eviction will cost assuming it's a 6 month process? I am thinking to ask the seller agent to put some funds into escrow as a condition of close and we can move forward with the eviction. It's not something I want to do but it's looking like it will never end otherwise. Thanks for your help.
Two thoughts:
1. Close and rent to existing tenant until they vacate.
2. Ask seller to evict. Seller absorbs cost.
What are your plans for the property? If renting, why doesn't tenant fit into plan?
#2 Might be appealing to seller as seller is waiting indefinitely with you. Split cost?
Jim.
I have 2 Section 8 tenants now and a 3rd starting in the coming 4 weeks in Delaware County, PA. Both seem likely to be long term tenants based on prior rental history.
I have appreciated the guaranteed rent, for sure. The only time I had any issues was a stretch of about 4 months when one of the tenants could not pay her portion, about $150 of $1200 total, due to family job losses. I knew they were looking for jobs and was flexible in letting her fall behind without evicting. She quickly caught up when her family members got jobs and just recently got a full time job herself. I was flexible because I thought it would be a short time until they were earning again and the Section 8 payment more than covered my costs. I think I would move toward evicting a traditional tenant who paid nothing towards $1200 per month rent after the first miss. Guaranteed rent is a wonderful thing and definitely helped this family last year (and me too - no vacancy costs.)
Tenant screening is your most important activity, regardless of Section 8. You are in a good position if you get a "rising" Section 8 tenant who is working towards getting off assistance.
Jim.
I am planning on renting, yes, for a pre-planned co-living group of tenants. Also the rent is below market rate that she's paying, approximately $500/month under market. She's been there for years. I do like consistent rent, and feel badly about asking the tenant to leave, but it's under market and my mortgage approval is also pending market rate rents estimates from the appraisal. I just asked the seller to put rents plus court costs into escrow to, sadly, proceed with eviction upon close. Thank you for the great advice.
Sandra V. I just join BiggerPockets, I came across this website while looking for information on investing in real estate. I own a property in Brooklyn New York which Me and my husband purchase in 1981 with no money down because he is a veteran. The 2 family house was $27,000 at the time in a not so desirable area of Brooklyn, but I made the best of it because it was still better than living in an apartment with my three children. We spend a lot of money fixing it up we had a tenant when we closed on the house and the reason we accepted that was because at that time in New york, if you leave property empty people would break in, and take the pipes out and vandalize your property. This was our first house and we really did not know anything about real estate, we did not know what the laws were, we just know that we just bought a property that we need to fix and a bad tenant that we need to get out. The tenant was living on the first floor where the thermastate was located, we were both working and the tenant was in the house leaving the heat on and had the windows open, my first heating bill was $900. We had to get this tenant out. At that time it took a few months, the tenants were drug abusers and he even pull a gun on my husband but we got them out.
This was a two family house with a 3 bedroom apartment and against my better judgment I convinced my husband to rent out this apartment for $500 per month, because the house needed a lot of renovating. This was another bad tenant with 5 children, he paid cash at that time I did not know anything about section 8. The tenant started to fall behind in the rent and the children was damaging the property. As I mention I did not know the law, all I knew was this our house and this tenants had to go, I decided to turn off the water, I was very angry I am sure many of you can understand this because you are property owners also. Me and my husband was working hard every day and trying to fix up this property and these tenants was living in our house and not paying rent and damaging the property turning off the water worked two months with no water they decided to leave. I later learn that you are not suppose to do that and that it was against the law. We paid off the mortgage a couple of times and then we refinanced and got $40,000 at that time the value of the property about $100,000 we took that money and did some more renovations on the property paid off all my debt and bought two cars cash. Over the year my husband refused to rent to tenants and I tried on several occasions to get him to invest in more property in New York. Before we did our first refinancing, we had no mortgage, no credit cards bills and we had a an Income over $80,000 a year. Long story short, we held on to the property and continue renovating it. I started a Home Daycare on one floor, expanded to another floor my income from the property two floors was about $6,000 per month. In 2003 because of the high cost of car insurance in New york I was paying $3000 per year for liability insurance for 1 car even though I have a good driving record. We got another car and I ask my daughter to insure my car with her in the bronx they gave her a quote of $6,000 per year. Desperate at this point I figure that I could buy a property and get cheaper insurance. We refinance for a second time for $160,000. we paid off our bills including the balance of $40,000 school loan and used some of the money to renovate the Brooklyn property.
My daughter friend gave me a brochure on houses being sold upstate. We were very surprised how cheap these houses were, her friend got a 2 family house with 6 bedrooms for $30,000. We put a $10,000 down payment on our first two family investment property. My insurance went from $3,000 a year for 1 car to $1,500 a year for 3 cars 2 with full coverage. Over the year the equity in the Brooklyn property continued to increased over the years.
In 2006 we refinanced the property and got $200.000 which I went back upstate and invested in a 3 family house for $65,000 cash which we converted to a one family that we moved into, and another 2 family rental property which we paid $65,000 cash. We spend a lot of money on renovating the 3 family house to a 1 family. it needed 50 new windows, new heating system and hot water heater. We fix the attic and put 3 bedrooms up there.The property was over 4,000 square feet after fixing the attic the house have 8 bedrooms 3 bathrooms, a walk out basement with 9 windows, lot is 65' wide and 200' long. I was worth the investment to me I love the house and I also knew that if I wanted to buy a house like that in New York I would have to pay over a million dollars. etc. it took all the money I had left and then some. My thought was if I paid cash for these properties up front I would eliminate 30 years of mortgage, I would have positive cash flow, we eliminate that monthly mortgage and just had to worry about the taxes and water bill. and that I could always refinance in the future and invest in more real estate when the interest rate drop. Which is where we are now I the property in Brooklyn interest rate is 6% which was a good rate in 2006 when we refinanced.
I suggest that if you plan to invest in rental property in New york in a 2 family or 3 family house that you make sure you have a few months mortgage payments put aside to pay your mortgage. If you are investing in a multi family apartment building, you should have enough to cover your mortgage if a couple of tenants is having a problem paying, or you are trying to evict them. The property is not cheap, I watched my neighbor lose her house because the tenant did not pay the rent, the tenant told her that she had to pay them to get out. Someone bought the same house next door to my house for $1.200.000 The rental income is high right now a room in Brooklyn where my house is located $900 per month. On the other hand the cheaper 2 or 3 family homes upstate are easier to hold because you can give a tenant a 30 day notice to get out you don't need a lawyer you can go to the sheriffs office and file the paperwork yourself, and if you took two month to get a new tenant you can still afford to pay your mortgage. In my case I do not have a mortgage. The court system makes it hard to own rental property in New York. I also have section 8 tenants in my 2 family rentals it is true some section 8 tenants are bad tenants but I have one lady who have been renting the apartment for 5 years, and she loves the apartment and keep it clean. I use section 8 because I know that I am getting my rent every month direct deposit into my account. If my tenant lose her job section 8 pays me the full rent. I also have stipulations added to my lease about the condition of my apartment when they move in, I also take pictures of the apartment at the time of rental. If my apartment is damaged in anyway of things are missing, the cost of replacement or renovation will be taken out of the security deposit. I have the tenants sign it, It motivates them to take care of the apartment because they want that security deposit back. I also use section 8 because the tenants know that if they don't pay their part of the rent, they could lose their section 8.
In my area people are renting rooms to college student, I am also thinking about doing that with my rentals. Instead of getting $700 per month rent for one 3 bedroom apartment I would get $450 per month per student I could get 5 students in one apartment $2,250.per month. which includes heat, wifi, water, furnishings. The two family house would bring in $4,500 per month positive cash flow. This is just my experience I learn on my own I try my best to educate myself that is how I found BiggerPockets. Our property in Brooklyn is valued about 1 million dollars, I want to borrow $300,000 to renovate it and invest in more rental properties. we owe about $320,000, we are paying that at 6%interest rate. I was told by a mortgage company that I could borrow the $300,000 and pay almost the same amount per month that I am paying now. Anyway my plan is to set up an LLC, open my business account and get Business credit put a down payment on multiple rental properties. I tried to do that before using my personal credit but the banks would tell you what you can afford and what you cant afford. I heard about trade lines, but I started looking on line trying to understand what I need to do to get funding as an investor on multiple properties. I hope as a small investor I have helped the readers in some small way. I want to thank the Bigger pockets community because I am learning a lot from each members experience.
Nice story, shows you the power of value appreciation.
Your question should have been, does anyone have any good stories with Section 8 tenants in NYC. My response should answer your question. :-)
I was just reading through the thread, and I noticed that you didn't mention where you are purchasing specifically. Is it in NYC? Or somewhere else in NY State? The eviction rules vary dramatically from county to county in New York. For example, I have ample operating experience in the Capital District(area in and around Albany, NY.) In Troy, a bedroom community to Albany, an eviction can take as little as three to four weeks from process service to out-the-door(for non-payment. If it's something else, it can be longer.) In Albany proper, it's usually four to five weeks, though I've had some gnarlier evictions there. And there are plenty of attorneys there who can do evictions for a reasonable cost.
In NYC? Fugeddaboutit. If you have to do an eviction here, I hope you can self-medicate. But apartments here are very scarce- so tenants generally do everything they can to pay, because they know if they lose their apartment, getting another can be quite challenging.
Good luck with your closing,
Michael
Just a quick update for everyone - I was able to get the section 8 tenant out and house delivered vacant prior to close, which happened a few days ago. Come to find out the tenant actually had not been paying. I have increased costs in roach extermination and 2 partial kitchen remodels which I didn't expect, but I am happy to say I saved a lot of headache and money - and I closed on my first property in NYC! Thanks everyone for the help!
congratulations!!!! Some part of the bronx is a tough neighberhood but definitely has good areas as well.
I'm an agent in the Bronx. Of course there are good and bad in section 8. Out of all the rentals only 1 was a good rental for section 8. Nobody wants to rent to them because the eviction laws are crazy in NYC. They are more for the tenants rights than yours. I've had a couple of landlords where it has taken a year to get them out. And the owners need that money. Not all home owners are rich. I have a home owner now who can't even afford to evict the tenant. The tenant clearly told her its gonna take you 6mnts to a year to get her out. The bad outways the good with any programs. They know the system and will use it!!!!!!
My one question after reading this thread is:
Why not seek FULL section 8 tenants? I have partial section 8 tenants here in NJ and I must say it is a pain sometimes. But I do know in future I will only go after full funded tenants.
My one question after reading this thread is:
Why not seek FULL section 8 tenants? I have partial section 8 tenants here in NJ and I must say it is a pain sometimes. But I do know in future I will only go after full funded tenants.
Usually harder to find full section 8 tenants
Congrats on your closing @Libby Tucker if you are looking to get your home rented - there are some very experienced agents available to assist you. That includes me :-)
Answer for @Benjamin Haberman some section 8 vouchers in NYC only cover a certain about of the rent or they only finance a certain amount depending on the number of rooms needed. If however an inidvidual is working and able to cover partial rent, the government will not provide 100% funding.