Santa Clarita, CA · Member since 2012 · 53 posts · 11 votes
Quick history: I currently own 2 homes. 1 S8 rental, and 1 primary residence. Both purchased pre RE collapse as pre-construction with 100% financing (irrelevant)...
I see a large disparity with the prices of certain homes Im looking at, and the potential Section 8 Income. For example, I see houses all day (even through MLS) for less than 100K. These same houses will rent for $1500-1900. Some have CAPs over 20% and cash flows over 1K each!
Seeing this, my instinct is to buy as many as I can! I have a sec8 rental now and I am aware of the pros and cons (thats another topic). I have checked with the S8 department to verify market rents. I am currently in a good position to buy because I have reserves, the credit, and SOME cash to work with. My Q's are this...
1. Thoughts or opinions from experienced investors?
2. What might I be overlooking here?
3. What would be the fastest way to acquire as many houses as possible?... I can probably get 2-3 single handedly, but will need CREATIVITY going from there.
I became active in public hosuing and section 8 by the mayor appointing me as commissioner of a large public housing agency, having to manage the folks who manage the programs and owned housing units.
Later put some rentals in Sec 8, I never had a problem really. Then sold the properties. :)
I don't do section 8 but 1 of my places has some neighbors who are. on the program.
last summer, 1 evening, i was trying to rent out the place;
there was a nice couple w/ a baby coming over to look at the unit. they were outside & I met them. the neighbor, section 8, with her door wide open, was singing (very badly i might add) at the top of her lungs. maybe she was hoping simon cowell was stopping by?
the tenant stood there with eyes wide open holding onto her baby & couldn't wait to get the hell out.
i scheduled my appts for the early mornings from then on.
For what it's worth, I've made a choice to keep my S8 revenue under 20% of my total revenue. At some point our government at all levels is going to have to cut back, and I don't want to be hit too hard when it happens.
Plus, one rule in business is to diversify your vendors and customer base. If all your properties are S8, you are not diversified and you are at greater risk.