Would you buy this $82k Section 8 rental? Full numbers inside
Member since 2026 · 28 posts · 13 votes
Would you buy this $82k Section 8 rental? Full numbers inside
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votesQuote from @Callum Mathieson:
Looking at a potential deal and wanted to sanity check it with the community.
Purchase price: $82,000
Rent (Section 8): $1,250/month
Tenant portion: ~$150
Condition: Rent-ready (no major rehab)
Monthly costs:
-
Property management (10%): $125
-
Taxes: $110
-
Insurance: $90
-
Maintenance reserve: $125
Total monthly expenses: ~$450
Net before debt: ~$800/month
If financed at ~75% LTV, this still looks like strong cashflow.
What I like:
-
High rent-to-price ratio
-
Government-backed majority of rent
-
Minimal upfront work
What I’m unsure on:
-
Long-term maintenance on properties at this price point
-
PM quality being the main variable
Question:
Would you take this as-is, or would you need a bigger margin of safety?
NEVER trust "rent-ready" or "turnkey" at this price point😏
- This is highly likely a Class C or D property.
You'll want the best inspection you can get, including sewerscope.
How was the tenant screened?
What did their last home look like?
- Many S8 tenants trash homes and then move to the next one when it fails S8 inspection or they just want everything "fresh" again.
----- S8 tenants are supposed to be held accountable for their damages, but not every housing agency holds them accountable with the threat of losing their voucher.
Taxes seem low. Check out if & how they will reset after the sale.
Insurance also seems low for Class C/D property.
RENT: is the total $1400 ($1250+150)?
If so, your PMC fee and MNT metrics are off.
- For Class C properties we recommend 20% MNT
- For Class D properties we recommend 40% MNT
VACANCY - as mentioned, you don't have any metric for it.
Recommend at least 10%
Logical Property Management4.9450 Reviews
9 Replies
- New to Real Estate · Orange County, CA · Member since 2026 · 40 posts · 28 votes5mo
@Jorge Vasquez nailed the two big ones: add capex and model real S8 vacancy. Both solid adjustments.
One thing Id add is the actual debt math. At 75% LTV you're borrowing ~$61,500. At today's rates (call it 7.5% on a 30yr investment loan), that's roughly $430/mo P&I. So your financed cash flow looks more like:
- NOI (before debt): ~$800 posted
- Less capex reserve ($125): $675
- Less 6% vacancy (~$75): $600
- Less debt service ($430): ~$170/mo
Still positive, but a different conversation than $390.
The other number worth running: cash-on-cash. You’re putting in ~$20,500 down plus ~$2,000–2,500 in closing costs, so call it $23K all-in. At $170/mo that’s about 8.8% CoC — which is actually decent for a rent-ready deal, just not the headline number the surface math suggests. Agree with Jorge that neighborhood class and condition of the big systems are the real questions here. What market is this in?- Member since 2026 · 28 posts · 13 votes5mo
Quote from @Hiromi Gonzalez:
@Jorge Vasquez nailed the two big ones: add capex and model real S8 vacancy. Both solid adjustments.
One thing Id add is the actual debt math. At 75% LTV you're borrowing ~$61,500. At today's rates (call it 7.5% on a 30yr investment loan), that's roughly $430/mo P&I. So your financed cash flow looks more like:
- NOI (before debt): ~$800 posted
- Less capex reserve ($125): $675
- Less 6% vacancy (~$75): $600
- Less debt service ($430): ~$170/mo
Still positive, but a different conversation than $390.
The other number worth running: cash-on-cash. You’re putting in ~$20,500 down plus ~$2,000–2,500 in closing costs, so call it $23K all-in. At $170/mo that’s about 8.8% CoC — which is actually decent for a rent-ready deal, just not the headline number the surface math suggests. Agree with Jorge that neighborhood class and condition of the big systems are the real questions here. What market is this in?Thanks for the feedback, I'm also in discussions for seller financing with this property which could swing it either way at this point.
- Member since 2026 · 28 posts · 13 votes5mo
Quote from @Jorge Vasquez:
Numbers look good on the surface. 1.52% rent-to-price, cap rate north of 11%, and if you finance at 75% LTV you're probably clearing around $390/mo cashflow. Most people would say buy this yesterday.
Two things I'd flag though.
First, your $125/mo maintenance reserve is covering day-to-day stuff but you don't have a capex line in there. At an $82k price point you're almost certainly looking at a house that's 30-50+ years old. When the roof goes or the HVAC dies that's a $5-8k hit in one shot. I'd tuck away another $100-150/mo for that. Drops your real cashflow closer to $250/mo which is still solid but just a different number to underwrite against.
Second, Section 8 vacancy works differently than regular turnover. When a tenant leaves you need the next one approved by the housing authority, the unit has to pass inspection again, and the paperwork takes its sweet time. Budget maybe 5-8% vacancy even though S8 tenants tend to stay longer.
The other thing nobody mentions — your $1,250 isn't locked in forever. The housing authority can adjust FMR for your area and your rent comes down with it. And the tenant's $150 portion is the part that's most likely to be late, so make sure your PM is set up to handle that cleanly.
Honestly though I'd still take this deal. Even at the more conservative number it cashflows well and the rent-to-price ratio gives you room to absorb surprises. The main thing I'd want to know is what neighborhood class this is in and what shape the big ticket systems are in (roof, HVAC, electrical, plumbing). One bad surprise on an $82k property can eat a full year of cashflow.
I've been running addresses through DealScope before making offers lately — it pulls comps, scores the neighborhood, flags risk stuff that's easy to miss on a spreadsheet. Might be worth throwing the address in there, first report is free.
Thanks for the advice, always better to be safe than sorry
- 5moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
Quote from @Callum Mathieson:
Looking at a potential deal and wanted to sanity check it with the community.
Purchase price: $82,000
Rent (Section 8): $1,250/month
Tenant portion: ~$150
Condition: Rent-ready (no major rehab)
Monthly costs:
-
Property management (10%): $125
-
Taxes: $110
-
Insurance: $90
-
Maintenance reserve: $125
Total monthly expenses: ~$450
Net before debt: ~$800/month
If financed at ~75% LTV, this still looks like strong cashflow.
What I like:
-
High rent-to-price ratio
-
Government-backed majority of rent
-
Minimal upfront work
What I’m unsure on:
-
Long-term maintenance on properties at this price point
-
PM quality being the main variable
Question:
Would you take this as-is, or would you need a bigger margin of safety?
NEVER trust "rent-ready" or "turnkey" at this price point😏
- This is highly likely a Class C or D property.You'll want the best inspection you can get, including sewerscope.
How was the tenant screened?
What did their last home look like?
- Many S8 tenants trash homes and then move to the next one when it fails S8 inspection or they just want everything "fresh" again.
----- S8 tenants are supposed to be held accountable for their damages, but not every housing agency holds them accountable with the threat of losing their voucher.Taxes seem low. Check out if & how they will reset after the sale.
Insurance also seems low for Class C/D property.
RENT: is the total $1400 ($1250+150)?
If so, your PMC fee and MNT metrics are off.
- For Class C properties we recommend 20% MNT
- For Class D properties we recommend 40% MNTVACANCY - as mentioned, you don't have any metric for it.
Recommend at least 10%Logical Property Management4.9450 Reviews -
- Rental Property Investor · Denver, CO · Member since 2018 · 14 posts · 19 votes5mo
@Callum Mathieson
No. I don’t think this is a good idea, unless you are 100% sure that you will not have moderate repairs over the next 2 years.
Hint: you are not 100% sure of that.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes5mo
You left out the most important piece of any real estate buy/ don't buy decision. How is the location? Given the price point, I would assume the location is bad...
Capex beyond the budget and tenant/management issues tend to eat up any potential profits on properties in this asset class, in my experience.
It would be a hard pass for me but can work for certain buyers (those who are local and specialize in this type of property).
- 5moRod HanksBusiness MemberInsurance Agent · Dallas, TX · Member since 2013 · 743 posts · 462 votes
On paper it looks great, but I’ve learned those lower price Section 8 deals can bite you if the property or management isn’t solid. The numbers work, but one bad tenant, deferred maintenance, or turnover can eat a year of profit fast.
I’d want to really trust the PM and double check the condition—older stuff in that price range is where surprises usually show up.
I’d still do it if everything checks out, just go in knowing the margin can disappear quicker than it looks.
Rod Hanks Insurance4.9152 Reviews
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