I have recently come across a program that I think is awesome, but I wanted some other opinions.
I have found a program designed by a builder. He will build your dream home and “give” you 4-5 investment properties that will have a guaranteed cash flow of $500-$700 a month. Those investment properties are given to you in order to make sure you can cover your mortgage payment. The investment propertes are no more than 5 years old and appraise for no less than $100,000. The program requires that you sign those properties up for Section 8 and you must take the Section 8 landlording class. There is also a requirement that you have a credit score of no less than 620 to qualify for the program. The tenants are to be in place before you close on the property.
What do you guys see as being the biggest problem with this program? I am gung ho, but I want to see if there is something I am missing.
The area the builder is working in is the Lake Ridge area in Texas. It concists of Cedar Hill/Duncanville/Grand Praire. I’m not sure what the section 8 rents are in my area, I’ve just begun to dabble in that area and haven’t taken the landlording class yet. I know that they pay according to what the average rent/mortgage is in that particular area, but I don’t know exact amounts.
Allow me to add a little bit more detail. The “dream” houses come fully furnished and they are built in an exclusive neighborhood by the lake. There is a nice golf course and a big park in the area as well.
There is also a phase 2 to the program, where you can come back and get more deals on rental properties. The
purpose of the program is to help potential real estate investors get started with hands on experience. In turn, he’s making big bucks because he’s building the dream homes. Win-win.
These properties are mostly foreclosed properties. He’s not giving them to his clients, they are being 100% financed. He is a builder as well as a mortgage broker. He is basically givng the clients the deal, not the property. The clients own the properties. They are responsible for managing them and interviewing the tenants.
That is the problem, Inittowinit. He is not trying to sell you 1 property, he is trying to sell you 6. You can’t negotiate with his “luxury” house price - he IS after all doing this great favor for you, or so he wants you to believe. And not only that, he’s trying to offload a bunch of foreclosure properties that he picked up at auction.
Contain your excitement for a few minutes, and think it through logically. If these properties were a good investment, he would sell them himself.
Will you get to choose which foreclosure properties of his you will get?
Will you get to negotiate on the prices of any properties besides the luxury home?
How will he secure your financing for 6x homes?
I’m not saying it’s a terrible idea. I think you need more info, though.
I know the houses are worth no less than $100,000. According to the program, that’s how it works and I have an insider who is telling me she is seeing it work. I’ll make sure to bring up this point at the event though.
It just seems like an impossible dream to get $500-700/month out of a 100,000 property. $80-150 seems like a more reasonable cash flow number. All I have to say is that if I was a builder and I had access to hundreds of properties (would have to be 100’s if he is giving 4-5 away at time) that are producing $500-700/month I would have to be a complete moron to give up those EXTREMELY GOLDEN eggs just to sell a house.
I know alot of builders and I know there is money to be made building houses but not enough to justify giving away those kind of golden eggs. There IS a catch, I hate to rain on your parade and I hate negativity just as much as the next guy but I would just make sure to CYA. Something doesn’t sound right…
Lets just say this guy has 50 homes he is willing to give away each giving $500-700/month. This guy is getting cash flow of $35k/month to gain equity…how much is he charging for this dream house? Sheesh???
From what I’ve “heard”, he earns $100,000 a month. I’m not so sure I’m buying that one. I would really like to talk to the people in his test group. They have been participating in the program for a year. I look forward to seeing what they have to say. I just don’t want someone who has been paid or rewarded in some way to tell me what they want me to hear. I should have more information after this weekend and I will share with you all when I get the chance to get back online (my pc at home is on its way out…).
First off, section 8 is a pain in the @**. They have yearly inspections and you have to do the repairs. If a tenant puts a hole in a screen, YOU have to fix it. I know they have changed a little but a few years ago their form marked that the widow ceils were dirty!!
We inherited this tenant when we bought the place. She is now moving, yea
Also, the whole deal sounds fishy. Why would the builder “give” you rentals so you can make the payments. Tell me how that makes sense?
