You ever dealt with sect 8 rentals? There is a landlord getting rid of 5.
2 near each other and the other 3 near each other (neighborhood that is).
They already have sect 8 tenants in them and I wondered if I bought the houses would there be a long time to get my rent checks?
Each house has $300-$550 positive cash flow. It would be great if someone showed me how I can take over all 5. Total w/ no discount would be 365k. I would think he would give a good discount to get rid of all 5 at once.
You you get the first check the rest is easy going. It usually takes two months to get the first check. That was here in Austin several years ago when I had ten or twelve on the program. Some love it and some hate it. I used to always advertise that section is great and not require deposits. You have to keep on them not to tear stuff up. Low income for some reason means filthy too and for the life of me I do not know the connection. Soap is cheap and they have no jobs so they have time to at least put a broom to the floor.
I doubt that he is going to sell them to you for the amount of the mortgages so you have the $1900 cash flow.
You need to find out why he wants to sell. Does he want or need the cash? Is he tired of landlording? Depending on why and similar questions can guide you to what type of offer he will accept. He might let you do subject to if you have access to some cash. He might let you do a rolling option. Then he might want 80-100% of FMV cash.
Long term tenants does not mean they will be long term future tenants. There is also likely deferred maintenance.
I’ve dealt with Sec 8 tenants in LA County. While it took a while to get through their process, mainly the inspection, it has been a positive experience. It did take about 3 months to get my first check but have since received payment on time every month.
Keep in mind that you should use the same screening process that you use for all potential tenants. By doing so, you’ll reduce (NOT eliminate) your chances of being sued for discrimination for not renting to a particular family.
just because they are sec8 does not mean that all of their rent is garaunteed. I just has a new renter come into a double a couple months ago who has section 8, and just got the letter yesterday that they are only paying 45.00 of 554.00. Now I have to go collect Jan and Feb back rent (1018.00 after sec8’s 90.00) from a low income tenant. Fun stuff.
Also, I would want a big cut off that price if the rents are only bringing 1900. That sounds like some low rent and very low cash flow. What’s the story on deferred maintenance?
I just took over 19 with Sect 8 in most, on top of a number already present in my existing portfolio. while it is true there might be a couple month delay in the first check from the Housing Authority the current owner (or seller) should still be able to forward a check on to you should it show up on that side. Think mine was only about 30-40 days.
On discounting, I wouldn’t buy in bulk unless there was a discount. Taking over that many means instant relief for him and instant overload for you, ESPECIALLY if there is deferred maintenance involved, tenant complaints, etc. Seems that a very strong sense of “entitlement” consistently exists.
One response asked whether they were month to month and would otherwise be ready to move. I make it a practice to NEVER…NEVER…NEVER buy for the tenants. They are almost always temporary, though sect 8 will be less transient than most types of tenants. In Raleigh, my city, they have instituted a new rule that requires the tenants to remain stationary for 24 months if they have signed a contract in the last 12 months. I am not sure if this is a permanent one but the local Authority seems to be so busy and overwhelmed that this must surely be an attempt to slow the number of changes.
Also, while Authority portion may be guaranteed the tenant portion is not. HOWEVER, they may not transfer their voucher to another landlord with out expressly notifying you first and receiveing your “clearance” that they have paid up their portion of the rent and don’t owe for damages. With a 3-4 year waiting list to get into the program that is almost a better guarantee than the security deposit.