All Forum Posts by: Bradley Bogdan

@Marcia Maynard has it spot on. The biggest reason for this (other than obviously having all the occupants on the lease) is to ensure the PHA can verify that the people living there are the ones they are paying for. Whenever there are adult children involved, you should always be wary that someone may be trying to sneak an extra person or two into the unit to live on the voucher. That's obviously not always the case, but definitely something to always look out for.

@Rashida Corker Unfortunately they do not, they place that responsibility on the landlord to charge a deposit for damages. 

I hand them out like candy to new folks I meet (the day job buys them for me), and I don't think I've ever thought they weren't worth it. I've met a lot of people through the old "oh, here's that guy'g card I was telling you about" with my cards that I probably would have never otherwise connected with. For the occasional $30 or $50, I'd still think they were worth it.

I think @Joel Owens hits the nail on the head. You don't NEED a lot of money to get started investing in real estate, but it sure helps. If you're buying the $20k house, usually buying the $200k house wasn't an option. If you're looking to make real estate a career any all you've got is local knowledge and handyman skills, then I'd say the tougher neighborhoods have a lot of promise for you. If you've already got a $100k a year day job, then why buy a job? Buy a safer investment, in a nicer neighborhood, and have someone else manage it. 

I view real estate much like graduate professional degrees v. other graduate degrees. The professional degree set are essentially a cost to work X job when you're done. That is low income real estate, you're buying investments that you're going to make money off of through your efforts. Other graduate degrees (the more academic focused ones) are also a form of investment, as they'll likely also cause you to earn more, but you don't have to work X job to get the benefit, however, it also won't magically open a ton of doors that weren't already open. To me, that is mid to high income real estate, its less about cash flow and adding value through your sweat equity, and more about diversification, appreciation, etc. Now, I understand the best among us have both cash and can add a lot through their day to day efforts, and that becomes the holy grail combo, but that's never going to be the majority of investors. 

If you're from 1000 miles away and buying your first property, don't buy low income in a place you've never lived. Odds are, there's something closer that makes more sense. If you're buying in your old neighborhood and don't mind making it a job because Target is only paying you $12/hr, full steam ahead and best of luck. Buy what makes sense for you!

@Philip LaRoche What is her portion of rent to you? How many bedrooms is the house? 

I ask because just because she is on Section 8, that doesn't automatically mean you get nothing. It just means you won't be getting $10k, and the courts aren't going to be any help. Those questions help me gauge her income. 

The key to getting anything out of a tenant in this situation is to work with them in a way that benefits both of you. Low income tenants are used to getting pushed around in life, so usually they have over the top responses. Frankly, there's usually little upside not to, but that's a different discussion.  I would use evicting her immediately as your baseline. You may be able to get some insurance money, you'll be able to do your repairs unimpeded, and then hopefully get someone in there who doesn't attempt to dig up the yard to do sewer work. 

From there, I would offer her the following: She is going to be finding a new place to live one way or the other, so she can either work with you on doing so, or lose her Section 8. An eviction while on a voucher results in an automatic revocation of the voucher, so obviously that's the big incentive to work with you. If you can evict a normal tenant for it, you can evict a Section 8 tenant for it, so I'm guessing doing $10k in damage is covered by something in your lease and this would have teeth. Second, you offer a 1 or 2 year payment plan of payments of about 10% of her monthly income. Low enough where she can likely afford it and won't just balk, but enough over the course of payments to get something out of it, perhaps $2-3k. Third, since she won't be living there, I'd find an asset to put a lien on, such as a car. Now, obviously you're not a repo man, so you probably wouldn't ever be able to collect on the car if she walked away from the payments, but at least you'd have some leverage. 

Now if this sounds overly rosy, I'd point out that it costs you next to nothing and leaves you with the possibility of getting something. Looking at the alternative, I'd say that's an upgrade. 

Finally, if you're still strongly considering trying to keep her as a tenant just to avoid the gap in cashflow, think of it this way: In less than two months of tenancy, she's cost you $10k in repairs. If she's done it once, the odds are very good she'd do it again. Is time #2 going to cost you more than the ~1-2 months you'll need to do repairs and find another tenant right now? Quite possibly, if I could tighten the belt and afford it for a month or two, I'd get rid of her for sure. 

 What do you mean by "pays the difference"? If your tenant has a 2 bedroom voucher, they can only rent a unit that falls into the 2 bedroom price range (even if its larger). If they've made a side arrangement with you to pay the difference, that's not allowed and isn't enforceable on your part, the idea being the PHA determines what is affordable for a tenant to pay based on their income. Side arrangements to pay extra for a more expensive place are strictly prohibited, as it potentially places the tenant in a vulnerable situation, as well as puts them above what's considered affordable. 

 I can't debate that there are definitely the full range of PHAs. Ralegh appears to be the worst of any I've heard and has an awful reputation on this forum, there are plenty of others that are a pleasure to work with. Hopefully everyone here makes their Section 8 choice based on their local situation and not entirely on whats true other places. 

I will point out that tenants don't lose assistance dollar for dollar, they lose it roughly one dollar for every three additionally earned, so even if someone was being taxed at 33% (which of course they aren't), you're still making your situation notably better at a rate of 2/1. Not only that, but you can also rent a more expensive place under the Section 8 program than you would otherwise be allowed. Its much like being on Supplemental Security Income or Social Security Disability, you don't trade them back dollar for dollar (though the trade is a less generous 2/1 pre-tax). You can even earn a decent portion before you lose any benefits. 

@Christopher McGuire Maximum rents are a combination of the FMR (your $950 rate), less what utilities aren't included, and then potentially tweaked upwards a bit depending on your prospective renter's income. Your local housing authority will have the utility standards they use either at their office or online, and then if you use the happy assistance estimator I believe is still in the downloads section of BP, you can calculate within about $5 of what you could rent your place for to someone with 0 income, $1000/mo, etc. Considering the $200 gap between your current rent and the $950 FMR, I think you could probably get about $100 more a month in rent or more, without looking at the exact numbers.

If you want some help using the program to calc it all out, feel free to PM me. Its not the most intuitive thing. 

@Elizabeth Colegrove A local agent lists all of her pocket listing pro formas that way, but to help people narrow down neighborhood (which can often times have fuzzy delineations) she will say "Within 3 blocks of X St and Y Ave". Too vague to figure out which property, as there's 150+, but not too squishy where you're wondering if the property is in the good area of the neighborhood, at the edge, close to transport, etc.  

@Scott K. IMHO you can have a successful, appreciating Section 8 rented property if you're in a city, or section of city, where the Section 8 numbers work correctly for it. A neighborhood that is on the upswing, but is currently cheap relative to the rest of a Housing Authority area is the idea spot for this. As @Marcia Maynard states, Section 8 renters, when screened properly, don't really carry additional risk over other low-mid range income working tenants paying full boat. Obviously any property you buy should be tailored to the tenants you're looking to attract, but don't forget you're still looking to attract tenants. One of my (few) gripes with the Section 8 Bible book is that it operates from the perspective that Section 8 renters have a strong lack of choice, due to various factors, so all you need to do to attract tenants is clean a unit up and bulletproof it to make a profit. That is only true in some areas (and may be true in yours), but if you want the best of any given class of tenant, you shouldn't focus just on the durability aspect. I'm guessing Marcia's better tenants help her cashflow much better than shorter term, higher turnover tenants in places that are simply bulletproofed. Just something to keep in mind.