In the market I live in there are duplexes in ghettos for 100-140k. The income is about 1400-1600 currently but they are not section 8. Section 8 is paying around 1150 a month for a three bedroom house. I was thinking of trying to obtain one of these duplexes for 90k that at most would need 10k to get section 8 approval. Totaling my investment at 100k+10k buffer
$110k. Then section 8 out to total gross of $2300.
Is this a common strategy? That is buying low renting properties and section 8 them out for higher rents?
rich i live in manchester… i’m having hard time finding cash flowing properties around here… im looking at new brittian, e. hartford, and manchester trying to find some deals, but its hard round here, wouldn’t you say?
I started looking for cheap homes that a 3/2 that i can expand to 5/2 and turn section 8 since they pay 1700 a month for them by me. PlusI ask for about 300 a month from the renter as well since we all know the boyfriend is not on the program but living there…this allows me to get 2000K a month rent for a house costing me about 150K…
Whoa! This thread is producing a LOT of bad (incorrect) info about Section 8. First, Section 8 does not pay more than market rent. In fact, by federal regulation Section 8 can not pay more than the 40th percentile of local rents, meaning that Section 8 rents are always below average. Section 8 does pay based on bedrooms, but that doesn’t mean that you make more with a 4 or 5 bedroom house than a 3 bedroom. Each tenant is authorized by Section 8 for a number of bedrooms consistent with their family makeup. So, a woman with 2 kids won’t be authorized for more than a 3 bedroom house. If you have a 4 bedroom house, a tenant with a 3 bedroom voucher won’t be authorized to rent your house, unless you’re willing to rent it at the 3 bedroom rate. In my experience, the vast majority of Section 8 tenants have either 2 or 3 bedroom vouchers. Your market for a 4 or 5 bedroom house will be a LOT smaller than for a 3 bedroom house.
Yrush - a house renting for $2000 per month and costing $150K is a negative cash flow property.
Hey Guys I’m in Ct too, Hartford, Middlesex, and New Haven counties, and the market rates you are talking about are indeed lower than section 8. But that is only because those landlords are afraid to raise the rents. I’ve worked with alot of investors who get in there and raise the rents to make the property cash flow. It’s not hard and section 8 helps even in two family houses. Don’t forget, section 8 rates are going up in January, which means we all get a raise.
There are also other ways to make money besides cash flow. It shouldn’t be your only consideration when buying.
I know this already. What I can tell you is this: In my area you get more money if you section 8 the property out. I live in a nice neighborhood that is turning ghetto becuase the rents are too high and average income working families cannot afford them. So they are section 8’d out and now a single mom with three kids is living in these houses because the goverment pays most of their rent.
The 3 bedroom voucher pays higher than the average rent in my area.
As far as filling a 4 bedroom. I grew up in the ghetto, which is
1 mile away from my current house. There are plenty of people there with 4-6 six kids, Believe or not.
Mike…I am using option arms on the house, so my payments are under 700 a month. Taxes/Ins are about 400 a month and then basic maintance in which I have a guy that does it all and cheap. Now I know option arms are the disease of the mortgage industry unless used right. Now the house cost me 150K, but never said thats it value. The value of the home I am referencing to above can easily sell for 275-290K. About 1 1/2yrs ago when market was jumping it would of went for about 330K but SoFl has slowed down alittle…
So I have a very solid equity position and even with the slowing down, I will be fine with my equity positon.
Also in my ghetto area, its very easy to find a single mother with 4-7 kids and what is scarey is they are generally under the age of 30…many are starting at 14-15 with kids and by 20 have 3 or 4 kids…