All Forum Posts by: Vincent Plant

@Dennis M.

Right now section 8 is paying out $1,019/m.

If I upgrade the basement to a 4th bed (which will cost thousands) the max I can increase it will be 5% (about $50/m).

I know can get about $1,300-$1,400 monthly.

Plus they aren’t taking good care f the place, it needs a lot of work, and I know they will continue to wreck it even worse while I have to continuously make repairs. I want to clear it out and attempt to brrrr this place because I know it will increase in value after I can renovate it.

I’m just worried that once I give this tenant notice she is going to go insane and wreck shop.

Originally posted by @John Underwood:

Section 8 in my area pays 110% of market rents. If your not getting close to this ask for a rent increase. I have had no problem getting rent increases approved.

Then you don't have to spend major money rehabbing the place.

 John, 

I looked into this and unfortunately section 8 will only allow you to increase the rent by 5% with an added 4th bed. Its still peanuts compared to what I could get with a normal tenant. 

I am closing on a property next week that is tenant occupied by a section 8 tenant that I will be inheriting. 

My plan is to either flip this property or to do some work on it and rent it out for much more than what section 8 is paying with the current tenant. I'm concerned about the current tenant however. She has lived there for 9 years and has 4 kids with 2 infant twins coming home from the hospital shortly.... 6 kids and her living there! 

I have met this woman and she is a lunatic. Explosive and even potentially violent. She has expressed to me that she would like to stay and pitched the idea of turning the basement into a 4th bedroom to get more rent from section 8. 

I don't want any of that. The rent I would get for a 4 bedroom is still nothing and it wouldn't be smart to turn the basement into a 4th any way. I want her out, point blank and I have the ability to put her out with 60 days notice to section 8. I'm just concerned that when I tell her she needs to leave she is going to go off and during that 60 days trash the house. 

With the income I'll be receiving from section 8 once I take possession I will still be cash flowing a bit so my current plan is to just let her know that she needs to leave but give her a few months to gracefully do it. I just don't know exactly the right way to go about doing that. 

Any ideas? 

I’m closing on a new property in about 2 weeks. The property is tenant occupied with a section 8 tenant. I already agreed to purchase the property with the tenant and transfer the lease. The reason being was because it was such a good deal I didn’t want to let it go and the tenant had to com me with it so I figured fine, temporary problem. The tenant has 4 kids living in this 3 bedroom home and 2 newborns coming home soon. SIX kids! When I first met her SHE toLD ME SHE WOULD HAVE TO FIND A NEW PLACE BECAUSE SECTION 8 WOULDNT LET HER STAY BECAUSE SHE IS OVER MAX OCCUPANCY. I THOUGHt ThIS IS GREAT BECAUSE SHE CAN STAY FOR A BIT, WITH THE AMOUNT SHE GETS FROM SECTION 8 ILL CASH FLOW A LITTLE AND LET HER NATURALLY LEAVE IN A FEW MONTHS WHILE I GATHER MY RESOURCES AND PREPARE To REHAB THE PLACE ONCE SHES OUT TO EiTHER FLIP OR RENT OUT FOR MUCH MORE THAN SECTiON 8 WAS GIVING. ShE TOLD ME TODAY ShE WANTS TO STAY. ShE ASKED IF I COULD CONVERT IT To A 4 BED FOR HER KIDS AND ASK SECTION 8 FOR MORE RENT.(THEY WILL ONLY GIVE A $50 INCREASE... NO THANKS). THEN I CALLED THE HOUSING AUHORITY (SECTION 8) AND ASKED THEM AbOUT THEIR MAX CAPACITY AnD THEY SAiD 7 PEOPLE IN THE HOUSE IS FINE WITH THEM. THIS IS NKT TURNING OUT THE WAY I HAD HOPED. ACCORDING To SECTION 8 ALL I NEED TO DO IS GIVE HER 60 DAYS NOTICE THAT I WANT HER TO MOVE OUT AND THATS THAT BUT I KNOW THIS WOMAN HAS COMBATIVE TENDANCIES AND WILL POTENTIAL WRECK THE HOUSE. NOT TOO MENTION WHO WANTS TO KICk 6 KIDS OUT ON THE STREET? ANY ADVICE? SORRY MY CAPS GOT STUCK...

I’m about to take on my first rehab and flip a property I’m closing in a few weeks. The property is not in horrible shape but needs a considerable amount of work. I would love to hear the pros talk about he best practices for maintaining a budget (mine is $30k). Do you use a gc for the whole job? Does this save you money as opposed to subbing out everything. Do you try and take on a lot of work on your own? Best ways to not waste repair funds.

@Frank Sanchez My mortgage includes principal interest and taxes insurance which is $608/month. Of course there will be maintenance and utility costs but that’s expected.

@Frank Sanchez Thanks for the insight Frank. What I meant was the rent would probably be about $1,300 so I’d be cash flowing about $7-$800.

@Frank Sanchez I will have a good amount of equity as I got them down to $50k so my loan amount will only be $44,200. Even if I didn’t fix it up at all the market value would be around $60k, if I rehab it it’s going to be worth around $115-$120k. The hard part for me is figuring the rehab cost. I’m hoping to stay under $30k for everything but I’m starting to think that might not be realistic. My thing is if I begin to see that I’m going to go way over budget with a flip, I’ll change the goal to rent it out and do the minimal amount to get it prepped for a decent tenant who will pay about $1,300/m.

My holding costs would be my mortgage payment ($608) plus utilities per month correct? So I'm thinking about $750/month? I upped the rehab cost to $40k in the estimate below. 

I'm an agent so I can sell it with just a 2.5% co-op fee to the buyer's agent.

Check this out:

Obviously I hope to clear more than  $5,200 but these number are conservative and worst case scenario I can rent this place for a nice cash flow if the numbers look bad when I'm done the rehab. 

Am I wrong? 

Here is my deal: 

Single family, 988 Sqft. 3 bed 1 bath. Purchasing it for $50K with a 20% down conventional loan. ($20K total out of pocket including closing costs).  

I figure the ARV to be $115K conservatively and $130K on the high side.

My carrying costs will be $610/month PITI + utilities.

I had the place inspected and it needs a decent amount of work (I have very little experience estimating rehab costs). 

It needs: 

• New roof/gutters/downspouts/soffit. 
• HVAC replacement.
• All plumbing in pretty much shot. 
• Kitchen rehab.
• New windows. 
• Complete interior paint. 
• Complete carpet replacement. 
• Bathroom floor and sub floor installation
• Shower replacement.
• Interior and exterior doors. 

The way I see it is if I were to sell it for $115K, subtract my $44,200 mortgage and closing costs. I'm looking at a cushion of about $50K left over. I don't anticipate the rehab being $50K so whatever I don't spend is profit. 

Am I missing something here?