All Forum Posts by: Debbie Farmer

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Hi,
First of all I can't say thank you enough for this message board. I've been a landlord/investor for 3 years winging it more or less (usually less) on my own.

Here are a few questions regarding my situation that I hope you can help me with and that may also help others:

Scenario: I own 7 rental properties that I paid cash for, each worth approx 100,000 each with a cash flow of average 1,250/mo. (It may seem I paid alot, but these are California prices) I had to pay cash because I had no documented income at that time. Now I can use the rentals as income because I've owned them for over 2 years.

My main question....where do I go from here? I think I should start leveraging, so I'd like to cash out refi about $200,000 to purchase a few more properties. (Out here, you need all cash to compete in that price range so getting a loan would seriously decrease my buying power.)

Would cashing out $50,000 in 4 or 5 properties be a sound move? (Scary after having no debt). And would having all those HELOCS effect my credit score or just my income, in the case I want to buy a new private residence (where I might need a 30 year fixed) in a few years?

Thanks in advance for your insights.

I've changed one of my 1150 sq ft rentals from 2 to 3 bedrooms and I never regretted it. IMO, definately 3 bedrooms.

@ Chris.. thanks so much for The Secret Formula. Once my head stops spinning I'll figure it out for my rentals.

@ Bill.... just joking about being a "slumlord". When I bought the duets they were all updated..granite counters, tile, pergo, custom paint. Better than my house :) I meant more the area - it's known as - ahem - "undesirable". Yes, I definately need to qualify tenants better. It's slim pickin's in that neighborhood though. It's not a matter of picking the best one, it's more like picking the least bad one. :)

My Big Plan was, instead of buying one average 3/2 bedroom house in an average/good neighborhood for 190,000ish and renting it out for 1600/mo I could buy 2 duets for 80,000 each in a "not so good" neighborhood and rent them each for 1350ish (now 1049...apparently). It worked pretty good (give or take a few evictions) until now. I still have positive cash flow so can't complain too much. But still....the difference of what I was getting from Section 8 for the old tenant between what they offered me for the new tenant equals 3.5 months rent less than what I was getting before. Ouuuch!

Onward.....

Hi, Thanks for your reply. At this point go ahead and tell me the formula and shoot me. I don't care. :) Unfortunatley, the problem is the waiting gap between the lease and the inspection period. Their voucher might say $1250 and the lease might say $1250, but the section 8 offer will ignore it and will come back at $1049 the day before the inspection.

I guess my Big Plan on taking over the slums one duet at a time is better in theory -- like most plans in landlording....

Hi all,
Has anyone noticed Section 8 rental payments decreasing lately? I have several 3/1 1000 sq ft duets that have previously been renting to Section 8 tenants for 1350-1395. Sometimes I will rent to tenants with 2 bedroom vouchers for 1250 (the top out here for 2 beds). But now when we turn the paperwork in for a new tenant for Section 8 to "process" (and wait 2-3 weeks) Section 8 comes back with an offer of only 1049 with no tenant contribution allowed.
My questions are:
1. What do I look for upfront when the tenant applies besides the voucher amount (which says up to 1250). Income?
2. Does anyone know Section 8's magic formula for determining rent? (It's not comparbles, they are renting for more in that area.)
3. Can I leave the house on the market while waiting for the Section 8 process - Or will I get "in trouble" if the Section 8 office sees paperwork for two tenants for the same property?

Unfortunately in that demographic area I can't rent to nonSection 8 tenants (tried that and had to evicit 4 out of 5) Fun. Fun. Fun.

Thanks for your help.
Debbie

@ Minh.. yeah wish it were, too!
@Kyle... property tour? What properties??? LOL! Yesterday was the first time in 5 years that Antioch had 0 new listings. This market is so strange....

Hi Jon, thanks for the welcome. Yes, right now I'm sticking with the same properties (the devil you know...right?) My stable is as full as I can get it without risking decent reserves. Plus now I'm in wait and see mode since homes on the courthouse steps are going near to market value and homes on the market are getting multiple cash offers over asking. If I can't get anymore SFH at a decent price I'm satisfied with what I have so far.

When I found this amazing site a few days ago I felt like I was HOME. So far it's the best resource on the net I've found for investors. I'm a realtor and I started buying rental properties in 2009 Most of my properties were bought for under $100,000 (low for BA standards) but in dubious neighborhoods so I usually work with Section 8 tenants (which is a whole thread by itself). All of the ROI is in the double digits. But landlording has been a roller coaster ride for sure. As they say, guess there's no such thing as free money.

I look forward to participating and learning, and at times commisserating with other landlords. :)
Cheers!

Yes, that's what I thought, too. I'm one of the few backwards landlords that wants to rent to ONLY section 8 tenants because it's hard to get quality non section 8 tenants in that area. Guess I'll just see what happens...

My system is very old school. I own 9 properties and each has it's own checking account and binder. In each binder I keep sections for taxes, insurance, Section 8 communications, and HOA info (if needed). I use pocket dividers for each year and record all expenses in a running column paper inside. Then I insert all receipts - and any other paperwork that has to do with that rental property that year. My PM keeps the deposit. I put the checkbook in the front pocket and I also put a set of extra keys in an envelope in the front pocket.