Young Investor/Landlord???
I am 19 years old and have been working as a New Homes Sales assistant.
I have about $10,000 put away but houses are pretty expensive around the washington DC area. Is this enough money to buy a $200,000 Investment/rental property? Of course I want to put down as little as possible but I've been told 20% is standard for Investments. Is there anyway around this?
My plan is to buy a cheep 3-4 bedroom townhome and rent to section 8. I am hoping to get $300 over my mortgage a month.
If I am happy with the Section8 program then i will continue with this plan and purchase a few more homes with the same idea.
Anyone who has tried this plan or has any SECTION 8 rentals please respond!!
Thanks alot.
Most investors here would agree that renting out a nice place. Especially a 200k piece of real estate to a section 8 canidate is a horrible idea. You will be renting to people who do not care a lick about your property or who pays the bills. It will be a endless nightmare of repair and litigation. Buy that condo. But buy it to live in. Get owner financing rates. Then in a year if you decide you want to rent it out you can keep your newly acquired low rates and rent it to a responsible person.
I live in Fairfax county virginia, a $200,000 house isn't a really nice piece of property. For $200,000 all i would get is a small 3 bedroom townhouse in a decent neighborhood, and it would probably be the cheapest one in the neighborhood (not to mention a fixerupper).
I have heard a few success stories form people in this area who own and rent several section8 houses but I am really lookin to get a better view of what other people have done in terms of renting to section 8 and if their plans worked.
Thanks for the response!
I'm currently renting about 20% of my properties to Section 8 tenets. I put them in my cheapest properties. They are very different from your average tenet. I fully expect that when the lease with my section 8 tenet ends I'll need to replace the carpet and paint the walls. You have to basically treat them like teenagers who have never lived on their own, reminding them of everything that needs to be done.
....BUT there's nothing like direct deposit rents that are roughly 30% above market. By the time the year is up you will have well over what will be needed to fix back up the place.
you don't want to rent via section 8 in a "decent" neighborhood- your neighbors may kill you!. if it is a fixer upper and the cheapest on the block, great- buy it, and refi it, using the gains to purchase a cheaper sec 8 prop OR live in it for 2 years (get some responsible roomates to pay your mortgage), sell with no cap gains and use the profit to buy a rental property (or 2) and stay home with mommy and daddy
THANKS SAVVYOUNGSTER
spoons... Sometimes i don't write to clearly. By decent i really ment not the ghetto, but not far from it. I know that there has been and still is some section 8 people renting in that neighborhood. but good point and thanks for the suggestion!!
I have a contact that has 100% LTV laods for investors. I will be happy to share her contact information, if you like. Keep in mind, though, that the less you put down, the higher your PITI will be. So you will really have to be bringing in the rent to have a positive cash flow...and positive cash flow is what it's all about.
I am pretty sure I Understand what you mean by 100% LTV but could you please explain it a little and if you don't mind send me her info!!!!
THANKS ALOT
if you're currently renting, then you should buy a house for yourself. rent it out the extra bedrooms and make some extra pocket money. you also get a much better interest rate, a huge tax break and your credit scores will go through the roof, helping you in future.
---------------------
Remember, to report your rental income on Schedule E and take a depreciation deduction for the "rental" portion of the property. When you sell the property, a portion of the profits will be tax free, while capital gains tax treatment applies to the portion of the house held out for rental use.[ Edited by DaveT on Date 10/01/2003 ]
I am very familiar with section 8. Under the section 8 rules. If the tenant destroys the property they can lose their section 8 immediatley. Make sure your tenants are good people. Don't base this on their financial status.
I have rented out to Section 8 people. They have been good to the property... The rents have been good too.
I would suggest the regular stuff, such as credit checks and criminal background checks before renting to them.
Be gainfully employed would also help...
Good luck and happy investing!
I object to all of your characterizations and general statements as it refers to Section 8 Tenants!As a person who grew up in a high poverty area and as an investor, deal with this segment of the population frequently,I find your remarks offensive!
Yes you have some idiots on Section 8 who won't do right by your property, but I am going to tell you a group of tenants that I found FAR more difficult to deal ****Must Reach Senior Investor status before posting URL's*** students who live in my properties and have 3 or four roomates!What you all may not understand about people, like myself, who grew up with this benefit, is we, like yourself, want to live a better life and raise our kids in nice homes, just like you do.
You folks that posted those comments ought to be ashamed of yourselves for making such sweeping ****Must Reach Senior Investor status before posting URL's***-Examine your thought ****Must Reach Senior Investor status before posting URL's*** is amazing that when you, as investors, go into a contract agreement with Section 8 tenants, your expectations are already low, so it doesn't suprise me that the results you receive are also ****Must Reach Senior Investor status before posting URL's*** of you described them as 'Teenagers', treat them like kids then,set the bar high, and I can promise you,most, not all of the time, you results will also be high!
Has anyone been involved with Section 8 tenants in NJ? Where in NJ?
I'd like to read what some of experiences
were.
Thanks!
-Ariel
Quote:
On 2003-10-01 00:05, briandalegm wrote:
I object to all of your characterizations and general statements as it refers to Section 8 Tenants!As a person who grew up in a high poverty area ...
Obviously Brian, you shouldn't have taken personally statements that don't apply to you.
The original poster wasn't asking for a flowery picture of struggling single mothers trying to make a better life for themselves, he wants to know realistically what the tenets will be like.
Is it possible that he will get a Section 8 tenet like you and your family? Yes, but not likely. By and large our statements apply to a large majority of people who are involved in "entitlement" programs. If real life is a problem for you I recommend you head over to polliticallycorrectinvestor (dot) com.
Savvyyoung Investor,
I think you should read all the posts in this particular ****Must Reach Senior Investor status before posting URL's***he general impression that I, and whoever reads them, would be grouping a group of people together.(As you call them 'Entitlement Getters')One poster did say that his Section 8 tenets were good to the properties,but look at what the rest of them are saying! Real life isn't a problem for me.
Real Life dictates that no group of people, can be bunched together in one category
"People that receive entitlements" are a large array of ****Must Reach Senior Investor status before posting URL's*** am an administrator involved in K-12 Public Schools in Colorado, there are many people receiving "Entitlements" for our Free and Reduced lunch programs who live in $300,000 homes.(Ripping the system off)That don't fit your picture of Entitlement Getters.
As far as whoever asked the question trying to get a realistic picture of these particular type of tenets, I disagree that you, or any of the other posters, have given him ****Must Reach Senior Investor status before posting URL's***ake care!
1furcron,
Section 8 or not, some argue for it and others ageist it. The bottom line is you have to screen your tenants thoroughly. I think one of the most important things to do when you interview a tenant is see how they live. Show up unannounced to drop off an application or another rental document. This will catch them off guard and they won’t have time to clean up for your visit. Look at the way they take care of their personal items because that’s the way they are going to take care of your property.
Second. There are many ways to buy property without putting 20% down. $10,000 is a whole lot of option money to start up multiple investments. Find the motivated sellers and pay them a little for their equity and take over their payments. Just make sure your butt is covered legally.
I too started when I was 19 and made my share of mistakes. The biggest one was investing 20% in cash deals. Take a portion of that 10K and buy “Alternative Financing” by William Bronchick and “How to Find Motivated Sellers” by Scott Rister. You won’t regret it. Good luck!
Quote:
On 2003-10-02 17:14, briandalegm wrote:
I think you should read all the posts in this particular ****Must Reach Senior Investor status before posting URL's***he general impression that I, and whoever reads them, would be grouping a group of people together.(As you call them 'Entitlement Getters')
Nice word play. I said "people involved in entitlement programs" and that becomes "entitlement getters" when requoted.
Quote:Real Life dictates that no group of people, can be bunched together in one category. "People that receive entitlements" are a large array of ****Must Reach Senior Investor status before posting URL's*** am an administrator involved in K-12 Public Schools in Colorado, there are many people receiving "Entitlements" for our Free and Reduced lunch programs who live in $300,000 homes.(Ripping the system off)That don't fit your picture of Entitlement Getters.
As far as whoever asked the question trying to get a realistic picture of these particular type of tenets, I disagree that you, or any of the other posters, have given him ****Must Reach Senior Investor status before posting URL's***ake care!
How about this instead. Anyone who would like to form an informed opinion of what Section 8 people are like, just drop by your local Section 8 office for half hour and chat with the neighborly "entitlement getters". I'll let each of you form your own opinions.
After reading this thread, the advice is straightforward, in all transactions which involve tenants the investor must be comfortable with the developed screening process. (Section 8, blue collar, white collar, etc.) The level of risk you accept as your comfort level is the beauty of America’s freedoms. Unfortunately, the horror tenant stories don’t stop at Section 8 so be wise and be careful not to judge. Our advice is to become successful in business by looking beyond the individuals situation and begin by dealing with people.
Question? Does credit score alone allow you to feel comfortable renting your investment to a known drug dealer? Or Do low income tenants have the opportunity to own a home? Lastly, you have the power and knowledge to help in both situations, the answer to the question reveals itself in how you see the tenant. Because when you are requesting mortgage funding, how will YOU feel after the lender passes judgment upon you?
Isn’t America Beautiful,
Eric & Rosa
[addsig]
As a former property manager of 29 properties located in Chicago I have experience with Section 8. I have managed $5,000 a month condos and Section 8 $100 a month co-pays. This means that Section 8 pays $XXX.00 of their rent and they simply pay an additional $25 or $100 a month. I even had problems collecting that. I have to admit the program is an awesome program from a distance. Up close it can be a nightmare and consistent income. Some people really use and appreciate while others abuse it. I have tried my very best to qualify Section 8 renters. They can be very sneaky and careless of your concerns. This is my opinion and experience and I can say whatever I want. I would personally never ever manage them myself ever again. I have been stolen from, lied to, suckered, and taken advantage more from these individuals than I have ever in my lifetime of doing business with all other people combined. I would never trust them. I properly maintained their properties and even did allot of beautification to the properties, including pure cosmetic stuff to make them happy. Did they appreciate it, rarely. No matter how good I was to them I was always the bad guy. However, I do believe however that a good income can be made from their program. I have plans to do some rehabs in the near future and take advantage of the Section 8 program. The way I look at it, just because I don’t like them, does not mean I will not take their money.
Remember to never trust that someone who gets something for free will value it the same way you do since you paid for it. I have had complete heating and air conditioning systems stolen from the properties by the tenants and “their friends”, not to mention bathroom toilets, vanity’s, light fixtures, doors, fences, banisters, pictures in hallways. So never ever put anything of great value in a unit, if you would not have a problem replacing it if it was taken when the occupants leave.
Regarding purchasing a property with $10k. The magic questions are as follows. Is it your first time buying a home? Are you planning on living in the property? How is your credit? How long have been in real estate? How long have you been in sales? How long have you been employed at this employer? Can you prove the funds are yours? Answer these and I can give you a good idea of what you might expect when applying for financing.
Respectfully,
Phil ~
Well, here's a great story.
Yesterday one of my section 8 tenets called to say that a window was busted in during an "attempted break in". They said they went on an "outing" and came back and it was broke.
(They don't own a car)
So I did what any good Section 8 Landlord would do. I told them that if someone tried to break in that I would call the police and that they would need to fill out a police report.
(can you guess the response?)
Ohh, waittttt....... Maybe it was the kids that did it. She says now that she has suspicions that the kids may have done it. Oh ok, I'll hang up with 911 and fix the window this time. Next time you pay.
The posts on this tread have been GREAT and very helpfull thanks to everyone who has posted and keep it up!!
Well it seems as if the bottom line is I could end up with a good tenant or a bad one, but it is my job to screen properly to find out.
Because the demand for section 8 housing is so high can I ........
Screen and Interview 10 different people, get all of their information and tell them I will get back to them on a certain date(after i have interviewed everyone else). Then just rent to the person that I feel I trust the most (the one who takes best care of their own property and has the best record)......... or do I need a vaild reason to turn down the first person that comes along?
Thanks again!!