To Buy Or Not To Buy/ Question About Section 8 Housing
Thanks to all of you, because you all are a big help to me a newbie.
I looked at a house in a run down area of city last week. Houses are only in fair shape in the area. In fact the house I am looking at, probably better than most. The property has been on the market for more than 6 months. The owners were willed the property from his parents. He tried L/O once and got burned, won't do it again. The house itself needs repairs like a new roof, sheetrock patching, ceiling repairs (some water damage), but it is a large 2 floors home with 4 bedrooms and 2 baths. Hardwood floors in all the bedrooms, living room and dining room. Owner is asking $29,900, but the realtor told me I could get it real cheap! The son is ready to dump it. The tax value is $46, 900. the realtor told me it would make a great Section 8 house with rents around $600 monthly. My plan is to try to purchase the home for $15,000. I think I can fix up for renting about $25,000. I wish I could say cheaper, but I get so involved with fixups that I have a hard time deciding how much work to do. I do not have any money to purchase this house with, since my money is tied up in other properties at this time. Do you think this is a good investment. I do not think I could make a profit by reselling this property. I have no rental experience. What would you do buy it or leave it alone? Would it be worth all the worry and work? How does Section 8 housing work. Do the renters pay me directly or does the check come from Section 8 office? Thanks a bunch again for your help.
Dianne
I'm not sure from your question how you plan on purchasing this property but for the price your willing to pay it sounds like a good deal.
As far as section-8 goes it will depend on thier income, how much will be paid total for rent as well as the furmula they (hud) use when they inspect the house. Hud will pay a portion(depending on renters income) or all of the rent to you by the 2nd of the mounth every mounth on time. renters are responsible for thier share.
Ed
Section 8 payments are paid directly to you from government.
I would look a little harder at details:
get quotes on repairs to bring up to code (section 8 will require an inspection - check their office for standards),
what is average DOM (days on market) in that area should you decide to flip?
what are comparable sales in the area?
If you don't have money and seller is not considering L/O, how will you finance?
To answer some of your questions about this property:
I will be contacting the HUD office in the morning for the instructions on getting your home approved for Section 8 housing monies.
I will be borrowing the money on a conventional loan through a bank for the purchase and fix up price. I can't decide for how long though. Should I string out the mortgage for a long period of time so I will have more cash per month left after the mortgage pmt?
I am still having a difficult time seeing how this property can pay off for me? Am I blind or can someone help me see the light? I have only flipped properties, did not anticipate renting them until now. But I cannot see how I would make a profit on this one by selling or renting. What is your mindset on this?
it sounds like it will be worth more after the rehab, fmv should go up then sell