Can we get an REI general going once in a while? BiggerPockets is hit or miss and isn't a fan of certain questions.
Like this one I guess.
What would be your minimum bedroom to bathroom ratio? I'm thinking of going the Section 8 route, and 4/1 sounds about right. Fuck if I thought there was any demand for 5 bedrooms I'd go 5/1.
A 3/2 is always a great choice. Not too big not too small, good for resale later.
Yeah, i dont know about section 8. They will fuck up shit but the gubment will help pay and u can always fuck up their credit. I would try and find or start a local group of homeowners like i did. Kind of like a blacklist and why. Then u know who not to rent to. Of course the owner coukd lie and they almost always exaggerate, but it reduces risk in renting. The REI route isnt for the fsi t of heart. My profits are a little tighter the way i go but so far i have a lot loss problems and headache and i believe less risk
I buy 3 bedrooms or so in a nicer or newer neighborhood near a school (not college) or a large business. Then i try and rent to new families or groups of people that dont seem like the party tyoe, such as newlyweds with a baby or a grouo of college grads starting new jobs out of school.
Responsible afults not yet ready for home ownership are a lot better than a bunch of welfare crackheads mething your house and breaking shit.
Good luck to u either way user.
Anyone heard of Rich Uncle REITS? They've been advertising to the public. Not sure what the minimum investment for a normal REIT is but maybe they allow lower investment with shittier rates I don't know.
4/3 works well for families. Probably 95% of my neighborhood. They'll want one for a guest bedroom, and another two for their punk kids.
Real estate can only go up long term
/thread
what an ugly shitshack
i never want to own a house
I have a lot of experience with Section 8 housing and things like HUD.
In my opinion it's worth getting your building Section 8 approved. 99% of well kept apartments/buildings don't have to change a thing. The things they do have to change is simple stuff like bathrooms having to have an exhaust fan pushing air out.
Section 8 really boils down to the rent amount and utilities. If all utilities are included in the rent than the tenet simply doesn't have to worry about it. If utilities aren't included then they have to pay it all (depending on state) out of pocket. A lot of tenets dislike this because it drains the little money they do have. This can occasionally discourage them from the upkeep of the place.
HUD Approved/Section 8 apartments/buildings fill up fast. I mean REALLY fast. They HUD offices list each building in the area that is approved and they list them the moment they become available. With the Housing Choice Voucher people will move from town to town just to be able to find a place that falls within their category. There are more people with vouchers than places for them to live.
The good thing is you will always get a check or direct deposit on the 1st from HUD. The rest you get whenever they need to pay.
Lol, smart thinking. My home cost 20 grand.
Absolute shithole.
Probably put 10 in it to keep it standing and repairs this year.
Buy new or rent timm u die.
What are the benefits of going Sec 8?
Seems like the govt has rent control, still requires you to screen the tenant, and requires you to come up with the lease.
Seems like all it's doing is guaranteeing you to have poor tenants who are statistically speaking the worst humans in every way.
OP here.
It's the near-guaranteed occupancy, the 1st of the month government check that's unaffected by your tenant's situation, and the idea that you don't need to upgrade the bathroom or install granite countertops for tenants to jump at it.
Thanks for the info, this would be my first Section 8 dive. Can I ask a few questions?
1) Would you recommend including utilities?
2) When you calculate your operating income, do you generally only count on getting the government portion of rent? I'm thinking of going that route.
3) Not trying to take advantage necessarily, but is 4/1 enough for a Section 8 house? I don't want to throw a few grand at a house just to have it get trashed.
Pic unrealted.
>It's the near-guaranteed occupancy, the 1st of the month government check that's unaffected by your tenant's situation, and the idea that you don't need to upgrade the bathroom or install granite countertops for tenants to jump at it.
Ah. So it's more helpful if you're in a quieter market. Here in CA you're going to get so many applicants you can be pretty choosy and that tends to minimize every risk.
Fuck it do 6/1. If they're poor they'll take it.
Can I start reality with $80k in northern (Sonoma County) California? Should I move before I start?
If you can filter out the general trash, especially the wellfare broodmothers that invite their drug dealing boyfriends in, it's simple easy money. Finding good section 8 tenants is hard, but it's exceedingly low effort if your HUD isn't fucking obnoxious to work with.
That's two big hurdles to overcome. YMMV.
>1) Would you recommend including utilities?
I never include utilities in any of my units. The only thing I include is electrical for common area things. That means stuff like lights in a parking lot of multi unit buildings, or hallways.
I also 'include' water on a couple of my units because they have wells, and its like 30 cents of electricity to pump 1000 gallons. City water around those units is fucking abysmal, and each unit has it's own hot water heater that they pay for. Don't really count that as 'included' utilities.
>2) When you calculate your operating income, do you generally only count on getting the government portion of rent? I'm thinking of going that route.
I evict any Section 8 tenant that doesn't pay. Same as any other tenant. I calculate based on full payments with vacancy rates factored in. Most of my units would still be profitable with just the government check, but I don't play games with that shit anymore. Couple of reasons for that.
First, entitlement. Anyone who thinks they don't have to pay rent generally isn't going to respect my place. I'd rather not deal with the possibility in the first place. Sometimes that means I'll lose an otherwise decent tenant, but uniform policy protects me from liability concerns. Simple clear cut policy is a very convincing legal argument in court. Same reason schools do zero tolerance. It isn't 'right' but it's the way it is.
Second, the HUD doesn't fuck with me anymore. They know I will play hardball and that I can and will just go above them straight to court and won't even notify them until I am legally required to. Saves me a huge amount of headache. They know I'm legally untouchable, and after settling a few lawsuits first over discrimination and then a lawsuit about ongoing harassment after that, they know that once I've filed to evict, it's over
Tangentially related to that. I let a lawyer handle evictions. Evictions are a sunk cost. Do them right, and get your unit back in service, or lose money on holding costs.
So many people try to cheap out on evictions, and it bites them in the ass.
>I also 'include' water on a couple of my units
Clarification. a couple of my multi-units.
If it's a single or a duplex, it's probably cheaper to have separate water lines in the tenant's name than an additional electrical line, panel, and all that other shit in my name that I have to pay for. Units in question are several sets of 6-10 unit 2/1 buildings.
Including utilities is going to be a regional thing. In my area, bundling stuff and splitting costs between tenants is usually illegal. It also encourages really shitty behavior. Section 8 or not, someone with free electricity or water is going to do stupid stuff. It's a gamble, and since I'm legally hamstrung by what I can term 'abuse' of utilities, it's just stupid to include them.
If they want to run a pot grow, they can damn well be the ones on the hook for the utilities. I've already got to spend thousands repairing the mold damage from their operation, I'm not paying a 5 figure electrical and water bill. Similar situation and fire damage for people mining bitcoins.
>3) Not trying to take advantage necessarily, but is 4/1 enough for a Section 8 house? I don't want to throw a few grand at a house just to have it get trashed.
I have a couple 4/1s, but they are hard to rent. Mostly have self employed consultants who want office space, or something to that effect. Did have a bunch of long haul OTR truckers rooming together for a couple years. I guess they were never home at the same time.
I'd normally renovate them to 4/2s if I could. Easier to rent, and far easier to sell.
>Can I start reality
nah dude, you gotta stay in the matrix. sorry
zhest, some questions for you..
>full time?
>how many units?
>how did you start out?
>how/when do you advance getting more units?
>full time?
Sort of full time. Some weeks I put in 100 hours or more including time spent driving. Sometimes I don't leave my house for a week. Some of it's seasonal. Some of it's just how some projects go.
>how many units
I won't provide specifics. I own many units, and my company manages a ton of others. I prefer owning both because it pays better (more risk technically), and because dealing with owners is beyond annoying. Everyone wants the best service, and practically nobody is willing to pay for it.
>how did I start
Bought a few run down FSBO buildings when I had some extra money. Did a lot of renovations myself, and shadowed county and state inspectors, and a few insurance adjusters to learn how to assess values, costs of renovation, damage, code compliance, etc. Some of it was vaguely job related.
Fucked up a few times, but stuck with it as a side job until I did my taxes one year and realized I'd made more doing 2 flips in my spare time and renting a few other units than my salaried job had paid. Sure I didn't have insurance, and did work myself, so I knew it before that, but it just never sunk in until then. Found a couple great deals in the summer of the following year. When my boss hit menopause with all the grace of a stoned giraffe on roller skates I became miserable. She was more than a bit of a cunt before that, but within the span of a week she became absolutely insufferable. After she started throwing furniture and screaming at several of us in a meeting over some dumb project nobody in the company gave half a flying fuck about, I just walked out.
>how do I get more units
Leg days. I trawl foreclosures, FSBO, and word of mouth referrals. There's always stuff out there below market rates, at least outside of the ghetto. You just need to get out there and go to them. Make offers. Most will be ignored or outright rejected. I travel at least 25000 miles a year for business alone, and a sizable majority of it is purely looking at new units.
If you want to get into this game looking at zillow and redfin listings, you're doing it wrong. You can be successful doing that, but the really good deals require someone to get out there and find them.
I also have a substantial bonus system in place for employees that find me good units, but that's not relevant until you get large enough you can't realistically manage things entirely by yourself.
Thanks for all the great info. Since it seams like this is a business you need to get your feet in to learn, can you describe what an ideal first deal would look like?
Cheap unit. Adequate condition (no core structural defects). Decent location. Get it thoroughly inspected. Find out what houses are in demand in your area, and start looking for those, and for buildings you can easily renovate into those.
Things like new cabinets, countertops, bathrooms, or major appliances are surprisingly cheap. As long as the core structure of the house, including electrical and plumbing is solid, most stuff is pretty easy. Even putting in new floors isn't that expensive. Surplus auctions, and rehab places can get you tons of materials as well as good appliances with a few minor dings and scratches. Unless you are renting grade A units, nobody is going to care about very minor cosmetic damage on things like that.
Be ready to spend 3 times what you thought you would. There's always stupid shit that crops up. The people that fail the hardest are those that had a few good deals and then assume that they know exactly where they stand in the margins, only to run into a unit that has asbestos, pcb, radon, or some other nasty contaminants. This is the old "plan for the worst, hope for the best" approach. Starting out, you are limited on capital. Spending extra time on leg day looking for a good deal is well worth it.
Thanks user