I’m a newbie who after studying and reading all of the boards for about a year now is ready to invest. I’ve been looking for discounted properties, but I’ve decided that for now, don’t want to look at 100 properties, before I find one to buy, so I’ve changed my strategy.
I’m looking to start out buying 1- to 4-family homes that I can rent that produce a cash flow of at least $200 a month. I want to acquire a minimum of four properties a year for the next five years and have just gotten an offer accepted on a fully renovated 3 bedroom, 1 ½ bath SFH for $75K. Houses in the area rent for between $900-$950 a month, so the property meets my criteria.
I’m looking for advice on whether I should rent out to Section 8 (I’ve just signed up with them as a landlord), whether I should put an ad in the paper and rent out, or should I do a lease option. My strategy for the next couple of years is to buy and hold and use the profit to begin doing rehabs, but would a lease option be the more profitable route?
Although I do not rent Section 8, I am a member of the South Jersey Investor’s Real Estate club and keep tabs on many who do work with Section 8 via the club’s web based 'listserv". A current ongoing discussion is the lack of checks for the past several months from the government for their Section 8 rentals. Numerous inquiries to the associated government offices have resulted in nothing more than promises that the payments will be “coming soon”. If you can’t swallow 3 to 4 months of mortage payments while waiting for the government to send you the checks then you should avoid Section 8 like the plague.
According to the discussion threads, this is relatively commonplace.
You are going to lose money on this property from a rental standpoint. That was a very poor decision to just buy something instead of finding a property at a discount that would actually cash flow. Running a successful rental business is a lot of work and not wanting to do the work to find a good one is not going to work. The truth is that the vast majority of new REI businesses fail, primarily because they don’t have adequate cash flow.
jmd,
I’ve never heard of anyone who had to wait 3-4 months to get a Section 8 check. Every one of my checks have been on time for the past 3+ years and I have many Section 8 rentals. However, if there is a problem in NJ, I agree with you - I would avoid Section 8.
From Wikipedia because I’m too lazy to explain properly
Section 8 is a type of Federal assistance provided by the United States Department of Housing and Urban Development (HUD) dedicated to sponsoring subsidized housing for low-income families and individuals. The formal name of the program is Housing Choice Voucher Program; the Section 8 references the portion of the U.S. Housing Act.