1st property. Section 8 Tenant. With actual numbers.

12 Replies

If anyone could share their thoughts on this property, that would be great. It would be my 1st property. I would utilize my "First Time home Buyers card" as I do not own a home.

Notes: Investor bought it cheap and put $12-15K into it for upgrades, brought it to S8 reqs and it has a S8 tenant paying $750 per month. It does not need any real work, roof, foundation, appliances are good. Numbers are verified.

AP- $35,000

GSI - $9,000

MTG - $33,000 @4% 30YR = $159.00 ($1,891)

Taxes - $200

Insurance - $500

Management - $810

Max Cash Flow - $5,509

Variables

Vacancy - $900

Repairs - $2,000

Variable Cash Flow - $2,699

I get my investment back in one year.  What do you guys think for a first property? (I have heard both side of the Section 8 Coin)

So the price is 35k? It should be ok at 750 per month. Have you considered doing the same thing that the seller has done, by buying a property and fixing it yourself?

It may be difficult to get a loan that small. I'd be surprised if you can get a 30 year loan at 4%. I think a better assumption would be 20 year loan with 20-30% down at about 5.25%.

What zip code? does you lender do fha under 50k? 

I have thought this over 100 times. If a deal only looks good on a 30 yr amort then I am not being fair to myself. Chance of me selling to another fha buyer is slim. Therefore I must evaluate the property as if I am the same person who I would sell to. Run the numbers as financing 80/20 on 20 yr amort. Do you still make $200+ a month?  If dealing with Section 8 I may want more for the headache it will bring me. Closer to $250 a door. 

I have not used section 8 since 2006. Truth is, there are a ton of renters and I don't need the added government regulations. They do inspections and can with old rent.  Tenants can lose their subsidy.

Curious to know how you are using the first time home buyer "card" but also acquiring it as an investment property with a Section 8 tenant in place. Due on sale clause issue? Lender flag? I say that knowing of course that it is very common for owners to secure the benefits of FHA terms and simply ignore the 1 year occupancy requirement. Maybe you found another legal way to do it? Or quite possible that I read it too fast and missed something. Good luck out there.

The comments about getting a loan for under 50k are correct, it might be easier to see it the owner will do seller financing.

If I changed this to a 20 year 4% it would look like this. $35K is the ASKING PRICE.

AP - $35K

GSI - $9K

Debt Service - $2,400 ($33K 4% @ 20 yr)

Taxes - $200

Insurance - $500

Management - $900

Max Cash Flow - $5,000 ($416.69 pm)

Variables

Repairs - $2,000

Vacancy - $900

Variable Cash Flow - $2190 ($182.50 pm)

I would still get my initial investment back, inside one year.

I don't foresee a need to sell it until the 27.5 year mark, I can out the equity to work with HELOC without selling it. ROI is 6% (From investment cost) but my ROI is 110% (From my initial investment) HOWEVER this is assuming I pay asking price, each 1K cheaper I can negotiate down would have a impact on these for the better.

Thanks!

@Clay Smith   - This is right next to Churchill Downs.

I don't think this looks terrible. Do you have photos? Or let's walk the property together before you decide. 

I really dislike Taylor Blvd but Wyandotte area is a descent place to start.

@Clay Smith  

Its over off of Clara Avenu - its on the MLS. If you want to grab a beer or something on me, just let me know.

Clay Smith.

I don't see where you are buying properties on 20 yr amortization and still cash flowing 200+ per month.

That may be possible on real low class areas, like we are talking about. 

But even here in indiana a good deal, in a decent area, is 200+ in cash flow a month, on a 30 yr amortization. And we are in one of the better cash flow markets.

Originally posted by @Gabe G. :

"Clay Smith.

I don't see where you are buying properties on 20 yr amortization and still cash flowing 200+ per month.

That may be possible on real low class areas, like we are talking about. 

But even here in indiana a good deal, in a decent area, is 200+ in cash flow a month, on a 30 yr amortization. And we are in one of the better cash flow markets."

Of the 9 (buy & hold deals, not flips) doors (sfr/multi) I purchased in 2014, my average rent is $262 a door gross less maintenance.  My properties appraise as follows..

  • 60k (650 rent)
  • 62k (750)
  • 88k (750)
  • 90k (850)
  • 90k (900)
  • 115k (1100)
  • 198k (triplex - 2125)

Totaling $703,000 appraised value *.8 = $562,400 mortgages.  Deduct 1.2% property tax, 6k annual insurance, 4.5 rate, 240 month term (20yr) comes to $4,761 mortgages.

$7,125 in rent per month - $4,761 is $2,364 net a month. $2,364/9 units = $262 per door. All properties have undergone a rehab this year and you can adjust for maintenance as you see fit.  Want to see the properties? Check my website.  I do not consider them low end. If commercial I would say 1 D class, one class B, the rest are C class.  

Originally posted by @Jonathan Napper :

@Clay Smith 

Its over off of Clara Avenu - its on the MLS. If you want to grab a beer or something on me, just let me know.

 If it is 1330 clara then run away, I already walked this 3 months back. The addition is terrible. Call me, let's schedule.

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