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Let's Get REAL For A Minute Section 8 HUD Property Investors
So I just saw this post about Section 8 HUD tenants, and this post stated something along the lines of section 8 tenants being more likely to damage properties because they're section 8 low income tenants, and also something about investors not wanting to put money needed into Section 8 properties because they think they're just going to be ruined by these Section 8 tenants, and as someone who knows the entire process with investors, owners, contractors, tenants, and prospective tenants, this is what I have to say about it:
In my experience, Section 8 HUD tenants are actually better custodians of the property because of many factors, but 3 of the main reasons being, there is an annual HUD inspection that is performed on each property, so this gives the owner an extra 'protection vector' against damages, also, the initial placement of a Section 8 HUD tenant requires a passing HUD inspection, therefore there's a record of the property's initial state prior to move in, and additionally, they want to have an easy renewal voucher process annually, and their unit remaining in good condition is an incentive for those reasons, therefore they are LESS likely to damage a property - their future depends on it! Not only this, but, they have to wait for "the HUD process" before being placed into a section 8 property, and it can take weeks, sometimes even months, and if something goes wrong on their end their RTA packet can be voided, and they would have to start the process all over again. Rarely, does anyone want to repeat this process annually. Not the property manager, the owner, not the tenant. Section 8 HUD tenants are usually families, or the elderly, or single parents that need these vouchers and properties to survive, they're not going to risk their livelihood so recklessly.
Furthermore, I do agree that owners will all too often invest pennies on the dollar into a property and expect it to suffice. If you're purchasing in a low income area, you're already getting a discount on the purchase, BUT it's ridiculous to think that a property purchased at 30k> is going to be "turn key" and rent ready, it NEVER IS! That property will still require 10, 15, sometimes even 30k ON TOP of the purchase price to be rent ready, especially if they intend on passing a Section 8 HUD inspection!! The other frustrating piece to that pie is that folks assume because properties are going for cheap in an area that contractor rehab work is going to be 'discounted' as well, and it is NOT discounted, it's the same going rate, if not MORE in less expensive neighborhoods because it is MORE COMPETITIVE in those areas for licensed contractors. They'll expect to get a "good deal" on everything and they're surprised when they end up with a trash rehab, but only wanted to spend 5k on it, when the property itself was only 15-20k... GET REAL INVESTORS! Folks need to wake up and MAKE the coffee, in order to get to smell the coffee, not just simply wake up and poor, magically the coffee is made, and that's the truth!
Reach out if you're interested, I know a LOT about Section 8 HUD!
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
- Lender
- Lake Oswego OR Summerlin, NV
- 61,602
- Votes |
- 41,803
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Quote from @Matthew Paul:
@Ashley C. @Jay Hinrichs Wait till you step on Legos in bare feet .
its a Grandchild one of 9 LOL . I call him bomber.
- Lender
- Lake Oswego OR Summerlin, NV
- 61,602
- Votes |
- 41,803
- Posts
Quote from @Bob Stevens:
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
Bob I like to think you also listened to me when you sent me examples of what you were looking at and the locations.. South Jackson is simply not anything that is remotely profitable for anyone save a all cash local landlord who is also their own handyman etc.. When i first started lending in South Jackson believe it not all my loans were going to flippers that sold retail basically starter homes.. At some point locals did not want to live there anymore and to keep the business going the ONLY exit was basically to Investors for rentals in addition Katrina brought up a huge amount of folks from New Oreleans that did the area no favor.
So its just deteriorated over time thats why the OP says you can buy houses there for 15 to 30k they price for risk and the 15 to 30k homes are just land lords selling their beat to crap rentals and escaping that ares.. If one wants to invest in Jackson MS it can be done basically in the North west areas North of 20 and East of 55.. thats the safety zone and then you have a few pockets like Fonderen etc.
The other issue with that area these were post ww2 homes and built as cheap as you can build a home so the bones are no good either on most of them.. Add in yazoo clay that screws up foundations and well its just not a sustainable market for Out of state folks Like I said I owned 200 of them sold out to a partner that thought he was smarter than me and the whole portfolio went into BK within 18 months .. NO MONEY in those deals its all Risk and no reward. Give Cleveland everyday all day over this market.. of course I only like W Cleveland Not E but thats my risk tolerance as a BRRRR lender I dont own any of these and have no interest in owning them. Just lending on them and helping others build their portfolios.
Hey Bob, I remember when you flew to town, I'm glad you liked the area and saw the value.
our weather is polar opposite of that, lol I lived in SD and ND for a while and I hated the winters because it was FREEZING, so I understand, everything is more difficult in the snow and ice. I certainly do have contacts and better pricing, let's continue where we left off a few months ago Bob. I'll pm you.
Quote from @Jay Hinrichs:
Quote from @Bob Stevens:
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
Bob I like to think you also listened to me when you sent me examples of what you were looking at and the locations.. South Jackson is simply not anything that is remotely profitable for anyone save a all cash local landlord who is also their own handyman etc.. When i first started lending in South Jackson believe it not all my loans were going to flippers that sold retail basically starter homes.. At some point locals did not want to live there anymore and to keep the business going the ONLY exit was basically to Investors for rentals in addition Katrina brought up a huge amount of folks from New Oreleans that did the area no favor.
So its just deteriorated over time thats why the OP says you can buy houses there for 15 to 30k they price for risk and the 15 to 30k homes are just land lords selling their beat to crap rentals and escaping that ares.. If one wants to invest in Jackson MS it can be done basically in the North west areas North of 20 and East of 55.. thats the safety zone and then you have a few pockets like Fonderen etc.
The other issue with that area these were post ww2 homes and built as cheap as you can build a home so the bones are no good either on most of them.. Add in yazoo clay that screws up foundations and well its just not a sustainable market for Out of state folks Like I said I owned 200 of them sold out to a partner that thought he was smarter than me and the whole portfolio went into BK within 18 months .. NO MONEY in those deals its all Risk and no reward. Give Cleveland everyday all day over this market.. of course I only like W Cleveland Not E but thats my risk tolerance as a BRRRR lender I dont own any of these and have no interest in owning them. Just lending on them and helping others build their portfolios.
No no., we were not looking at the sub 50k market. We were at the 75k plus 20- 30k reno, entirely different world paying 30kish more
True Jay, you have to know where to buy for sure.
You want Madison, Rankin, Fonderan, and North Jackson, like many smart investors do.
- Lender
- Lake Oswego OR Summerlin, NV
- 61,602
- Votes |
- 41,803
- Posts
Quote from @Bob Stevens:
Quote from @Jay Hinrichs:
Quote from @Bob Stevens:
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
Bob I like to think you also listened to me when you sent me examples of what you were looking at and the locations.. South Jackson is simply not anything that is remotely profitable for anyone save a all cash local landlord who is also their own handyman etc.. When i first started lending in South Jackson believe it not all my loans were going to flippers that sold retail basically starter homes.. At some point locals did not want to live there anymore and to keep the business going the ONLY exit was basically to Investors for rentals in addition Katrina brought up a huge amount of folks from New Oreleans that did the area no favor.
So its just deteriorated over time thats why the OP says you can buy houses there for 15 to 30k they price for risk and the 15 to 30k homes are just land lords selling their beat to crap rentals and escaping that ares.. If one wants to invest in Jackson MS it can be done basically in the North west areas North of 20 and East of 55.. thats the safety zone and then you have a few pockets like Fonderen etc.
The other issue with that area these were post ww2 homes and built as cheap as you can build a home so the bones are no good either on most of them.. Add in yazoo clay that screws up foundations and well its just not a sustainable market for Out of state folks Like I said I owned 200 of them sold out to a partner that thought he was smarter than me and the whole portfolio went into BK within 18 months .. NO MONEY in those deals its all Risk and no reward. Give Cleveland everyday all day over this market.. of course I only like W Cleveland Not E but thats my risk tolerance as a BRRRR lender I dont own any of these and have no interest in owning them. Just lending on them and helping others build their portfolios.
No no., we were not looking at the sub 50k market. We were at the 75k plus 20- 30k reno, entirely different world paying 30kish more
Bob the houses you showed me were in SOJACK and one was on a terrible street had you been in them 100k you would have lost your butt.. However you dodged a bullet my friend.
Very old and tired topic. I didnt even read the responses.
My experiences have been outstanding because I know what Im doing. I have not encountered what many here have. If you understand your own craft and understand the dynamics of the culture and community, you will thrive. When you are unskilled and inept, you will lose............
Quote from @Ashley C.:
So I just saw this post about Section 8 HUD tenants, and this post stated something along the lines of section 8 tenants being more likely to damage properties because they're section 8 low income tenants, and also something about investors not wanting to put money needed into Section 8 properties because they think they're just going to be ruined by these Section 8 tenants, and as someone who knows the entire process with investors, owners, contractors, tenants, and prospective tenants, this is what I have to say about it:
In my experience, Section 8 HUD tenants are actually better custodians of the property because of many factors, but 3 of the main reasons being, there is an annual HUD inspection that is performed on each property, so this gives the owner an extra 'protection vector' against damages, also, the initial placement of a Section 8 HUD tenant requires a passing HUD inspection, therefore there's a record of the property's initial state prior to move in, and additionally, they want to have an easy renewal voucher process annually, and their unit remaining in good condition is an incentive for those reasons, therefore they are LESS likely to damage a property - their future depends on it! Not only this, but, they have to wait for "the HUD process" before being placed into a section 8 property, and it can take weeks, sometimes even months, and if something goes wrong on their end their RTA packet can be voided, and they would have to start the process all over again. Rarely, does anyone want to repeat this process annually. Not the property manager, the owner, not the tenant. Section 8 HUD tenants are usually families, or the elderly, or single parents that need these vouchers and properties to survive, they're not going to risk their livelihood so recklessly.
Furthermore, I do agree that owners will all too often invest pennies on the dollar into a property and expect it to suffice. If you're purchasing in a low income area, you're already getting a discount on the purchase, BUT it's ridiculous to think that a property purchased at 30k> is going to be "turn key" and rent ready, it NEVER IS! That property will still require 10, 15, sometimes even 30k ON TOP of the purchase price to be rent ready, especially if they intend on passing a Section 8 HUD inspection!! The other frustrating piece to that pie is that folks assume because properties are going for cheap in an area that contractor rehab work is going to be 'discounted' as well, and it is NOT discounted, it's the same going rate, if not MORE in less expensive neighborhoods because it is MORE COMPETITIVE in those areas for licensed contractors. They'll expect to get a "good deal" on everything and they're surprised when they end up with a trash rehab, but only wanted to spend 5k on it, when the property itself was only 15-20k... GET REAL INVESTORS! Folks need to wake up and MAKE the coffee, in order to get to smell the coffee, not just simply wake up and poor, magically the coffee is made, and that's the truth!
Reach out if you're interested, I know a LOT about Section 8 HUD!
Can you qualify your experience? How many units do you own that are section 8?
I own 60 units, very few of which are section 8 and we manage around 700. We deal with A LOT of section 8 housing in Buffalo NY.
My experience has been a mixed bag.
Pros:
- Semi guaranteed payments
- Can off set some risk
- Property has to be kept to a certain standard to pass annual inspections
Cons:
- Our data shows higher maintenance and CapEx costs on a per unit basis for section 8 or other assistance programs
- People can fall off of payments
-Inspectors can at times be over the top zealous
-Higher % of tenant issues not related to payment of rent in these units. Smoking in units, people not on the lease staying there, police called for various reasons, etc...
- Almost impossible to get any kind of unit damage paid for beyond what you have in a security deposit
The rest of your statements about the homes needing a ton of work, contractors costing the same, and dealing with properties that are very tough to force appreciate are spot on.
I personally do not invest in Section 8 housing anymore because they are normally cash flow purchases. Cash flow purchases usually produce more headaches than cash, have no exit strategy and are a poor investment strategy.
I make WAY more money off of debt paydown and appreciation than I ever have from cash flow. When it comes to Real Estate investing.. Equity is king
-
Real Estate Agent NY (#10401329866)
Sec 8 renters beat the crap out properties. Sure maybe less bad then a d class non sec 8 renter but multiple times as costly of damage on turnover vs a normal A or B tenant. I own both.
I just received this email. THIS is why I love govt programs, I would get 650 MAX, This is for a 1 br in my 7 unit,
Ok, based on the rent reasonable the most we can approve is $909.Do you accept this as the full contract rent amount?
Agreed Bob maximizing the contract amount is half of the algorithm, and if you know how to do that then you're golden.
Quote from @Bob Stevens:
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
Well in my part of Maryland , those prices would be a deal . We are getting $450 sq on a 4/12 or 5/12 straight roof . Move up past 6 /12 with valleys and dormers and it goes up quite a bit more .
Quote from @Matthew Paul:
Quote from @Bob Stevens:
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
Well in my part of Maryland , those prices would be a deal . We are getting $450 sq on a 4/12 or 5/12 straight roof . Move up past 6 /12 with valleys and dormers and it goes up quite a bit more .
CRAZY HIGH, I pay 220- 240 MAX in my market, still about 100 bux a sq for labor, Takes one day so do 2 a week , well, not a bad living,
Quote from @Bob Stevens:
Quote from @Matthew Paul:
Quote from @Bob Stevens:
Quote from @Ashley C.:
I appreciate your insight Bob lol we always end up on the same threads, good to see you here
BTW, we wanted to duplicate what we have done in Cleveland in Jaxson. So, we flew in last September, LOVED the area. So, we put 3 props under contract and were ready to go. Well, the contractor's price was ridiculous, retail or more. 380-400 a sq for a roof, 4k to paint the interior of a 1200 swqft house., 2k labor to install a furnace, just nuts, so we pulled the plug. If you have connections that want unlimited work for a FAIR price, let's talk. Jax #s are similar to Cleveland without the snow, ice and TERRIBLE " working environment".
Well in my part of Maryland , those prices would be a deal . We are getting $450 sq on a 4/12 or 5/12 straight roof . Move up past 6 /12 with valleys and dormers and it goes up quite a bit more .
CRAZY HIGH, I pay 220- 240 MAX in my market, still about 100 bux a sq for labor, Takes one day so do 2 a week , well, not a bad living,
Normal is all relative to where you are standing . Work 5 days a week and make a great living . Just pick up the phone and call the subcontractor and give them the address