All Forum Posts by: Account Closed

Section 8 covers many different programs but today, most Section 8 is voucher based. This means that the tenant qualifies with the Housing Auth. and then can go use the voucher where they want provided that the rent is with the voucher limits and accepted by the landlord.

When you say 100% Section 8, I am assuming that you are taking about the Voucher system so that the main reason your property would be 100% Section 8 is that the current owner is accepting the vouchers because the rent he is getting is higher than what he might get at market or occupancy rate is soft.

The second part of your question deals with what is called a HAP contract. HAP is Housing Assistance Program. In the old days we called this the Projects. Under  the HAP program, you have to accept the tenants that the Housing Authority sends you. You have some minor ways to refuse a tenant but generally you get stuck with who ever they send you. (not always good)

Either way, you need to make sure that you are always complying with the HUD rules, even a minor infraction can result in a delay of the entire rent for all the units. I have seen and been in situations where rental payments have been withheld for as long a 90 days or more. Failing a REAC inspection can be a major problem and the things that you can fail at might not even be in your control.

If you do a proforma vs return analysis you will find that most properties have a 5 to 7 year period at which your returns stabilize. Usually, your investment basis vs taxes and need for capital improvement all start coming together around year 7.  My advice is that you plan on turning your properties every 7 years. If you really want to do long term holds, then you should refi and cash out so that you can expand your base and continue to enjoy the long cash flow.

Your are right that when you buy a Class C properties you may be looking at selling dirt if you hold to long but that's why Class C trades at much higher caps. Do not mistake cash flow with the need to spend on maintenance.

Unlike a good wine, multifamily properties do not get better with age.

Lending is a business in addition to an investment. You have more than just interest income and you also have expenses that not get covered. We do lots of Deed of Trust investments for our own accounts as well as manage liens/note for others, and average above the 10%  but like David C. points out, its all about turning your money.

Please feel free to call me if you want some advice on pitfalls to avoid and how to maximize your return.

Not that are completely tamper proof. Try to instigate a CAM policy. You pay a fixed amount and the tenant then gets billed for everything over that amount.

Property looks like it generates less than $30,000 annually in cash flow. On a 10% cap rate the $290,000 value appears right. As for the asking price, I think the 1,176 days on the market says that it is over priced. Is this a land play or is the bank just listing it at its loan balance so as to avoid the large write down? I would not worry about the asking price. If you have a potential client, make an offer, all they can do is say no.

Give me a call, and I can give you a coupe samples based on your needs.

At the very least, you need a copy of the leases. You can then do a quick lease audit to find out if they are correct and who live in the property. After that, you can put together an expense budget and you should be ok. Utility bills are usually available from the utility companies. taxes and insurance can be easily determined. That leaves you with property condition. Have a professional walk the property to assess the roof, foundation, mechanicals, etc..

If you can not get a copy of the leases. run away. To much mystery and you will never know what you are getting into.

One last thing, make sure you review the title to make sure that you are not loaded up with mechanic liens and other unpaid bills.

 Thank you for the suggestion. Unfortunately NMTC do not apply to residential properties. As for the mezz, the project is over 80% complete and getting a mezz in place will be very hard unless its a private lender.

hard to do a Mezz loan with a construction Lender. Need soft second or equity loan