Am I hitting this right?

General Real Estate Investing
1

Very excited… just got my first investment property locked. Well actually it is my 3rd deal… but I think this one is promissing.

Let me give you a little history…

1st house purchased back in 98 for 72K. Lived there for 3 years. and purchased my second property for $132K. Did a refin on the 72K property and dropped the interested rate. And got enough Equality to paid for the down payment on the $132K property.

Rented the 72K property (barely broke even) and lived in my $132K which was purchased with a 80/15/5 fixed rate to prevent PMI

1 years later… did a refin. on the $132K and got enough eq. to paid off the 15% and adj. my 80% rate.

Last year. Sold my 72K property for $100K. and sold my $132K property for $245K the proceed of these property used it to purchase my current property of $310K (new build last year. and now the remaining lots are selling for $400K so the property value had risen!)

This year. I took a HELOC of $130K and just purchase this investment property (an estate sale) for $120K… which is appraised at $160K 4BD 2.5BA 1.5 Level Cape Cod. Need some roof repair and update. (paint carpet, finish the basement bath. new kitchen cab. and Roof repair). I figure they will cost around $15K the most.

I am planning to rent this out section 8 and currently voucher is valued at $1400 per Month.

I am also planning on refin. the unit after its rented out (finger crossed) and get the 80% value of the $160K. which should cover the $120K that I borrowed via HELOC and have $8K toward part of my fixing cost that I spent. Let this unit ride for 3-4 years or so with the positive cash flow of around $300 per month.

After refin… I will use the line of credit again to purchase my next property. and the section 8 cycle repeats…

Planning on getting 3-4 property per year. (Playing safe.)

3-4 years later I will sell my $310K property and hopefully it will generate enough eq. to paid off one of my rental and live there mortgage free.

by then I should have about 10 properties and each generate $300 per month. thats $3000 per month. And I will quite my J O B… and live off the rental cash flow.

Does that sound reasonable? Or am I dreaming??

Ant.

Oh… yeah… all these properties will be in a Land Trust.

2

Why stop at 3k cash flow per month? When you quite your job why don’t you invest fulltime and change that 3k per month into 130k per month, just a thought.

3

realstart,
That is a great start keep going!!

                                 Robb
4

I did not say I will be stopping ;). Most likely I will go full time or part time, since so far, it has been a blast… I will feel better when I have a good feeling on the section 8 program.

Ant.

5

I was not trying to get down on you but just wanted to open up your eyes, now with sec.8, I do have some sec.8 renters, it is one of those double edged swords. The good: you get your rents on time, the bad: they are very hard on the property, they do not take care of it like it is their own, after they move out you are looking to put 1k-5k back in just because of the damages, there is a few good ones you run across, try your best to get them. Personal besides that property I have not gone with sec.8 and I do not plan on it. That is my opion.
God speed.

6

Thanks for the warnings… Is that true that Section 8 pays for the damages caused by the tenant? (not the normal wear and tear like carpet and paint.) but if they busted down a wall or something, HUD pays for those type of repairs?

7

That is how it should work Good luck collecting!!

8

How did the Section 8 voucher get valued at $1400? Curious because I’m looking at doing the same thing and was wondering how they come up with their numbers? Thanks

9

they use the average rental rate for the surrounding areas for 4 BD, and 2.5 bath. you can research your state’s value online at www.hud.org. 4 bd is harder to rent out then let say 3 Bd 2 Baths.

Since you need a pretty large fam. for a 4 BD. I might have to take the 3 BD rate to attract renters.

Realstart

10

I have two section 8 properties and am being helped by a friend with about 20. We both invest in a low income area. I disagree that section 8 tenants are harder on a propety. A low income tenant who pays their own rent often wont care about your property and will jump house to house. If a section 8 tenant tears up your property and gets evicted, they lose their section 8. These people are smart enough (usually) to not want to give away free money from the government.

To answer the question though, if a s8 tenant tears up a section 8 property, the repairs are on the owner. At least in my area (ohio), the Columbus Metro Housing Authority does nothing for you in fixup.

The down side for me to section 8 is the yearly inspection. It’s normally not a big deal (from what I see of my friends properties) financially, but it’s a pain in the butt.

Sounds like a GREAT plan to me.