[Calc Review] Help me analyze this deal - Sect 8 Condo

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[Calc Review] Help me analyze this deal - Sect 8 Condo

Scott Sweitzer
Member since 2021 · 12 posts · 1 vote

Hi team,

I've purchased two condos in Washington, DC over the last year and I'm interested in taking on cash partners for similar deals. This is one that's available now. Because it is a studio apartment and will be rented by a Section 8 voucher-holder, I've gone below recommended levels for vacancy, cap ex and maintenance. On my most recent purchase, I took a short-term commercial loan and will be cashing out into a 30-year fixed rate product. With my JV, I'd like to work with a cash provider who can obtain conventional financing. Any thoughts about whether this calculation looks ready to share with potential investors?

Thanks!

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*This link comes directly from our calculators, based on information input by the member who posted.

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  • Jack Seiden
    Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 654 votes
    4y
    Quote from @Scott Sweitzer:

    Hi team,

    I've purchased two condos in Washington, DC over the last year and I'm interested in taking on cash partners for similar deals. This is one that's available now. Because it is a studio apartment and will be rented by a Section 8 voucher-holder, I've gone below recommended levels for vacancy, cap ex and maintenance. On my most recent purchase, I took a short-term commercial loan and will be cashing out into a 30-year fixed rate product. With my JV, I'd like to work with a cash provider who can obtain conventional financing. Any thoughts about whether this calculation looks ready to share with potential investors?

    Thanks!

    View report

    *This link comes directly from our calculators, based on information input by the member who posted.


     Looks like a solid deal , given it’s a studio with a section 8 I’d look into self managing and upping you cash flow!

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  • Scott Sweitzer
    OP
    Member since 2021 · 12 posts · 1 vote
    4y

    Jack,

    Thanks for the quick response.  My mentor self-manages for the extra cash flow.  I run a title company and estate planning practice while often traveling abroad, so for me having the property manager is worth it.  But...if I have a partner who would like to manage units, we could save the cash.  Perhaps my property manager might be interested in investing alongside me :)


    Scott

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y

    There isn't a particularly large pool of section 8 tenants for studios. Most section 8 tenants have kids, often multiple kids. Studio and 1 bedroom units have virtually no one in that tenant pool for section 8. Im the end, youll likely end up renting it to a non section 8 tenant. 

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  • Heath Thomas Jr
    Lender · Baltimore MD · Member since 2015 · 201 posts · 66 votes
    4y

    Hey Scott,

    It's been a while! I also agree it looks like a good deal if you have a tenant lined up. I like the idea of going to your property manager for investing as there could be multiple ways of structuring that partnership, just make sure it doesn't come back to bite you.

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  • Scott Sweitzer
    OP
    Member since 2021 · 12 posts · 1 vote
    4y

    @Russell Brazil that's a good point.  One the one hand, my agent/Section 8 mentor has great relationships with the local nonprofits and has been able to find/vet the voucher holders looking for Studios/1BDR on her deals and on mine.  However, at some point the two of us could run through the pool of singles.  Another concern is what happens when our existing tenants move on to greener pastures?  If we couldn't fill the unit with a voucher-holder at that point, we'd have to bank on market rates cash flowing well enough or we'd have to sell the properties. 

    Good concerns to be aware of, thank you.

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  • Scott Sweitzer
    OP
    Member since 2021 · 12 posts · 1 vote
    4y

    Hey @Heath Thomas Jr - nice to hear from you!

    So far, Amanda has been able to source tenants between going under contract and closing.  She's one of the key members of my team.  I'll chat with my property manager and see if he'd be interesting in investing together.

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