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Posted: 6/22/2016 12:47:20 PM EDT
[Last Edit: 6/24/2016 3:20:47 PM EDT by Gunguy87]
I need some advice from people with rental properties. My dad wants to refurbish my deceased grandmother's rental property which is located in the hood. It is going to cost about $40,000 to buy out my aunt and uncle and renovate the place so the city doesn't condemn it. We have calculated the gross yearly profit we can make off the house is roughly $12000-$14,000. He truly believes he can get $1000 a month rent for a place in the ghetto. I have tried to tell him no matter how nice the place is someone who can reliably pay $1000 a month is not going to live in that area. So my know it all dumb shit of a sister over hears our conversation and suggests we do section 8 housing. She says that her friend and his dad have section 8 rental properties and they make a killing off of them without issue. I ask her who pays for the damage when they think they own the place and decide to rip out sinks and shit and fuck everything up. She says the government does. I call BS. So one of my questions is for those who do section 8 rentals is if the tenants wreck the place does the government or welfare agency pay for the damage? Also please share some of your experiences with being a landlord.

**UPDATE**
Thanks for everyones input. We are going to sell the house outright. I convinced my dad renting it was a lost cause and nothing but a PITA. The buyer is going to have the money on Monday.
Link Posted: 6/22/2016 12:50:28 PM EDT
You find people with horror and success stories when dealing with Section 8, it all depends on who you get as a renter. Government is not the friend of the landlord, so if you have a tenant who knows how to game the system, you will get screwed.
Link Posted: 6/22/2016 1:13:51 PM EDT
buy it. fix it up a little and flip it to the guy that already does section 8 rentals
Link Posted: 6/22/2016 1:23:27 PM EDT
section 8 only guarentees their portion of the rent. if it does not cover the whole thing the rest is on the tenant. they do not cover damage by the tenant. most will also require an annual inspection. be careful that when you advertise the rental you do not put in anything that says you will not rent to section 8. in some places it against the law to say that.

if you do decide to do section 8, a house that will rent for 1000 on the open market i would jack it up to 1300 or 1400. if they qualify for all the rent paid by the gov they don't really care as they have no skin in the game. a large percentage of section 8 are single moms with a bunch of kids and a BF waiting to move in as soon she get the house. also, evicting them if needed will be a PITA as they have the gov on their side adn many know how to work the system.

even though its in a bad area, there are many good people that will take the chance if the rent is low enough. Do background and work etc check on them . charge every app a fee to do so. this weeds out the BS people .
Link Posted: 6/22/2016 1:27:09 PM EDT
A buddy I work with has 2 section 8 rental homes in downtown St Louis, (typical St. Louis single moms with multiple kids), he loves them. Rent is always on time, and the tenants usually stay 2-5 years and so far haven't damaged the homes too bad. He's a tinner, so he does all the work on the homes himself, so I'm sure that helps out with expenses.
Link Posted: 6/22/2016 1:32:15 PM EDT
Missing stoves, ac units, plumbing (yes fuckers stole the goddamn pipes), of course damage to walls, doors, glass, etc.

If it can be broke they will find a way to break it then vanish into the fucking wind.

Fuck HUD/section 8 rentals. More headache than it is worth. Better off tryin to flip but even then limit what you put into it as how many motherfuckers are tryin to move INTO such areas?
Link Posted: 6/22/2016 2:35:14 PM EDT
Thanks guys for the input. I will have a talk with my dad mentioning the info here and see what comes of it. I think there is potential to make some money over time if we take it seriously and run it like a business. The situation we are in now is that the land sits on three lots. The land alone is valued at $90000. The deteriorated house on the lot is what is bringing the value down. I am going to crunch some numbers and weigh the risks and see if the outcome is worth it.
Link Posted: 6/22/2016 2:37:07 PM EDT
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Moochin:
Missing stoves, ac units, plumbing (yes fuckers stole the goddamn pipes), of course damage to walls, doors, glass, etc.

If it can be broke they will find a way to break it then vanish into the fucking wind.

Fuck HUD/section 8 rentals. More headache than it is worth. Better off tryin to flip but even then limit what you put into it as how many motherfuckers are tryin to move INTO such areas?
View Quote


Basically my family's experience I have posted before about it. Long story short the "renters" stole everything the could and vanished . We had to fight the government tooth and nail over the missing items, the gov said it was an insurance scam. Caused a lot of headaches and we lost a fair amount of money just selling the house to get rid of the nightmare
Link Posted: 6/22/2016 6:05:32 PM EDT
I wouldn't wish Section 8 ownership on Hillary Clinton.
Link Posted: 6/22/2016 6:07:00 PM EDT
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Mastadon:
I wouldn't wish Section 8 ownership on Hillary Clinton.
View Quote

Sheesh that bad huh.
Link Posted: 6/22/2016 6:12:34 PM EDT
I don't do section 8, the people I know who do have had some bad experiences. Stolen AC units, tearing wiring out of walls, etc. They have good renters usually, but a bad one can do a lot of damage quickly.
Link Posted: 6/22/2016 6:13:23 PM EDT
I have two rentals. Both have had section 8 tenants. It was a nightmare with both tenants. I will not do section 8 ever again.

Non section 8's have been great!!!! I make about 1200 a month on both rentals.
Link Posted: 6/22/2016 6:21:14 PM EDT
I don't do the rental side, but I do property maintenance for a company that owns hundreds of section 8 homes in and around Cincinnati. My advice, don't do it. I have seen some horrid shit in my travels, and if it weren't for the money, I would never step foot on most of the properties that I've seen and worked on. The only plus for the owners seems to be a regular and guaranteed check every month, and the work I do is balanced into the monthly rent cost.

As an aside, the stolen water pipe thing, we do plumbing regularly, and our subcontractor policy is always take out copper or brass fittings & pipes and replace them with PVC/CPVC whenever possible. We'll remove whole lines of good copper and replace them, and use the copper (when possible) on the non-section 8 work. Experience shows that they won't destroy the walls and the floor if they can see or know it's all plastic.

I have horror stories on this subject, but I digress.

Link Posted: 6/22/2016 6:24:45 PM EDT
I have rentals in 2 beef packing towns. The first rentals I bought were low income rentals. Figure 600 a month in a town where it varies from 400 (small crappy apartment) to 1200 (new duplex, 2 bedroom). I inherited some Somalians that slaughtered horse in the living room, built a small fire pit for smoking, and skipped town. My bug guy came to spray outside and noticed roaches on the windowsill. Maggots, blood, it was bad. Broke out part of the slab for the pit.

I had another where they were cooking meth in the garage.

Fast foward to the next town I was going to buy. I found an old complex I could afford that had a great cap rate. I ended up not buying it because they were bottom of the market (450 a month) and I didn't want to deal with losers.

The low income thing is a hassle in my opinion. Every renter is a time suck. Period. Every single human you interact with in a given day is a time suck. Period. I want to generate as much income as I can, from as few nice middle class folks as necessary. That's my goal in life.

If you can get a grand a month in the ghetto, you can get almost double in a nice area. That's how the market works. If there was no price delta then the ghetto would be abandoned.

Would I take 100 shitty section 8 units at 1000 a month or 50 nice units at 1800 a month? I'll take the 50 nice units every time.

Link Posted: 6/22/2016 6:29:45 PM EDT
You don't want to do section 8 . I have a friend with rentals and the bad from above has covered it . Evictions suck ,. His one place they did a home decorating project with concrete on 1 wall . the drywall has to be ripped out to fix it . Stolen AC units . every light bulb gone , holes in the walls nastiness everywhere
Link Posted: 6/22/2016 6:34:26 PM EDT
Section 8 renters are the worst. I had three of them and all ended up wrecking my houses. The rent money is steady from Housing but only cover 85 to 90% of the rent. The renter has to come up with the $100 or so difference and they can't even fucking do that. One had the electricity and water turned off so me tried to hook into neighbor's line and even stole water by the bucket. This went on for months and had to evict him. Needless to say the house looked and smell like a sewer and had to put out about $5000.00 to do repairs. I refuse to take S8 any more and the headaches are way less.
Link Posted: 6/22/2016 6:41:09 PM EDT
[Last Edit: 6/22/2016 6:44:23 PM EDT by Fella]
Also, all markets are different but your numbers sound pretty fucky.

How many units?

What is your definition of gross profit?

You say house but a house is single family, 1000 a month for 1 unit does not equal 12,000 to 14,000 a year in gross profit.

14 grand aint shit if they ruin your unit. If you get some malicious renters that you can't evict, 14 grand won't even touch it.

I would pay attention to business plans and nothing else. Tales of "yo, my friends friends friends are killing it" means nothing. It's not a tangible thing. I've had people say I was "making money hand over fist" when I was losing 20k a month. Why? Because they are morons.
Link Posted: 6/22/2016 6:42:14 PM EDT
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Gunguy87:
Thanks guys for the input. I will have a talk with my dad mentioning the info here and see what comes of it. I think there is potential to make some money over time if we take it seriously and run it like a business. The situation we are in now is that the land sits on three lots. The land alone is valued at $90000. The deteriorated house on the lot is what is bringing the value down. I am going to crunch some numbers and weigh the risks and see if the outcome is worth it.
View Quote


"Time" and Section 8/HUD are two things that don't mesh too well.

You're going to spend $40,000 to possibly make back $12,000-$14,000 a year in rent. So your return on investment based on the top end of that scale is ~3 years, just on the refurb and buyout costs. Then you have insurance, taxes, routine maintenance and well, your return on investment takes much longer. Factor in any abuse and headaches and you might be in trouble.

Chris
Link Posted: 6/22/2016 6:45:00 PM EDT
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Originally Posted By blmff:
buy it. fix it up a little and flip it to the guy that already does section 8 rentals
View Quote
I'd do this.

Buy a rental in a decent neighborhood
Link Posted: 6/22/2016 7:06:23 PM EDT
My Ins guy told me he had just had one of his Section 8 rental Apartments redone.
He got a call from the 1st floor TT that water was coming down from the Apt above.
When he went into the 2nd floor Apt the TT said he took apart the wall in the shower
because he wanted to see what was in the walls. Yeah the TT was a meth head.
Link Posted: 6/22/2016 7:17:11 PM EDT
I have an elderly lady.on city public housing assistance who keeps an eye on the whole fugging neighborhood for me. She was there 4 years before I bought the townhouse and has been there 11 years since. You kooks might need to do a little background and rent history search on your tenants. City housing...if the tenant doesn't cover their portion, they will get kicked off the program!
Link Posted: 6/22/2016 7:21:07 PM EDT
Link Posted: 6/22/2016 7:26:33 PM EDT
I'd never even consider section 8. If I were dealing with that I'd flip it, pay off whoever, then if I wanted to be in the rental game, take the money left and invest in the kind of property I wanted.

Link Posted: 6/22/2016 7:39:00 PM EDT
Stop. Stop now. Unless the area is a rapidly gentrifying area don't do it. If it needs more than 10k in remodel it's not worth it, and not even close. If you absolutely must go with the absolute cheapest of everything as it will ALL have to be redone or replaced after every single hood goblin tenant. DO NOT DO SECTION 8 EVER. Know the laws in your state and county they aren't there to protect landlords. If possible structure a 52 week lease instead of a traditional year or monthly lease. It will make the evictions move slightly faster.
Link Posted: 6/22/2016 7:46:27 PM EDT
Wait til they start a meth operation and the house gets condemned and torn down from contamination.
Link Posted: 6/22/2016 7:49:02 PM EDT
[Last Edit: 6/22/2016 7:49:54 PM EDT by Dash_ISpy]
We had renters for a year we couldn't get rid of because of section 8. No way I'd ever want to do that again.

Ended up having to rent a house for myself when I moved back from Alaska because I couldn't get into my own place.

Nightmare.


ETA. If you think people who rent don't take care of shit, just wait until you have someone who doesn't even have to pay their own rent and see how much they don't care about your place.
Link Posted: 6/22/2016 7:52:33 PM EDT
[Last Edit: 6/22/2016 7:54:44 PM EDT by pale_pony]
Originally Posted By Gunguy87:
...So my know it all dumb shit of a sister over hears our conversation and suggests we do section 8 housing. She says that her friend and his dad have section 8 rental properties and they make a killing off of them without issue. I ask her who pays for the damage when they think they own the place and decide to rip out sinks and shit and fuck everything up. She says the government does. I call BS. ..
View Quote


You call wrong...that's exactly how Section 8 works. You rarely have to wait for a tenant because they usually have another waiting. Money is IN your account on the first day of every month by wire deposit, no more "I had to buy booze/drugs so I'll be a little late with the rent".

Section 8 is the ONLY way to go if you're going to be a slum lord.

If you're going to buy a nice place to rent...get out of the hood.
Link Posted: 6/22/2016 7:57:30 PM EDT
Yes you can do Section 8. For someone to get a Section 8 voucher to live in your place is like winning the lottery. 9 times out of 10 they will behave themselves and be good tenants because they don't want to loose it. If they screw up you can evict just like a regular tenant.
Link Posted: 6/22/2016 8:05:22 PM EDT
Originally Posted By Gunguy87:
I need some advice from people with rental properties. My dad wants to refurbish my deceased grandmother's rental property which is located in the hood. It is going to cost about $40,000 to buy out my aunt and uncle and renovate the place so the city doesn't condemn it. We have calculated the gross yearly profit we can make off the house is roughly $12000-$14,000. He truly believes he can get $1000 a month rent for a place in the ghetto. I have tried to tell him no matter how nice the place is someone who can reliably pay $1000 a month is not going to live in that area. So my know it all dumb shit of a sister over hears our conversation and suggests we do section 8 housing. She says that her friend and his dad have section 8 rental properties and they make a killing off of them without issue. I ask her who pays for the damage when they think they own the place and decide to rip out sinks and shit and fuck everything up. She says the government does. I call BS. So one of my questions is for those who do section 8 rentals is if the tenants wreck the place does the government or welfare agency pay for the damage? Also please share some of your experiences with being a landlord.
View Quote


$1,000 a month is rent does not equal $12,000-$14,000 gross profit
Link Posted: 6/22/2016 8:09:32 PM EDT
Link Posted: 6/22/2016 8:10:24 PM EDT
Been in the business for thirty or so years....section 8? Hell. Fucking. NO.

Find your local apartment/landlord association, take a look at their stats for rents in the area. Or, go to Zillow and subtract 25% from their estimate and you'll have a reasonable idea. Or, check with a few local management groups and see what they'd ask - hell, might even be worth it to pay them to deal with the shit, evictions, PD visits, abandoned cars, bullet holes in the ceilings, encrusted stoves, burned up garbage disposals, dead cats in the freezers, unknown ashes in urns from some dude that died there, etc etc etc.

Oh, and fuck purple wall paint.

Link Posted: 6/22/2016 8:12:54 PM EDT
[Last Edit: 6/22/2016 8:18:53 PM EDT by usjet]
Our delightful rental townhouse is just off the first tee, and is managed by a property manager.

Our major problem has been our elderly widow tenants dying off.

All was splendiferous until we rented to a millennial cat lady- nearly $5000 in repairs after she left, her specious, hollow threats to sue for her lousy $1500
damage deposit, and numerous complaints from the HOA made her the only real problem in 8 years.

Nice 85 yr old widow with a purse dog is current tenant.

With depreciation, fees, repairs, taxes, insurance and maintenance, manage to have a nice loss while banking a bit.

Still, be glad when it's done and gone.

Wouldn't want to deal as a slum lord, but I know guys raking it in.

Edit- the tenants seem to always leave the boxes of golf balls behind, and there is ALWAYS stucco repair to be done while making ready to rent again.

Some day we're going to get sued for wrongful death when Grandma gets beaned with a viscious slice.


Link Posted: 6/22/2016 8:45:47 PM EDT
If you make any sort of money at your real job, then dont expect to be able to claim any deductions/depreciations.

If you want to get into realestate, I would put 40k down on place in a hipster neighborhood. These are hoody areas where you people grossly overpay to live in crappy housing in hip areas.

Link Posted: 6/23/2016 11:22:55 AM EDT
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By Fella:
Also, all markets are different but your numbers sound pretty fucky.

How many units?

What is your definition of gross profit?

You say house but a house is single family, 1000 a month for 1 unit does not equal 12,000 to 14,000 a year in gross profit.

14 grand aint shit if they ruin your unit. If you get some malicious renters that you can't evict, 14 grand won't even touch it.

I would pay attention to business plans and nothing else. Tales of "yo, my friends friends friends are killing it" means nothing. It's not a tangible thing. I've had people say I was "making money hand over fist" when I was losing 20k a month. Why? Because they are morons.
View Quote

There is one unit. It is a 4 bedroom home. By gross profit I mean before taxes etc. I told my dad after everything is paid each month the profit margin is to low to be worth the hassle. That is if their is any profit to be had and not just barely breaking even. As for the friend of a friend thing you are absolutely right I was thinking all that in the back of my head. My dad for some reason has his heart set on this and after all he's been through lately I wanted to help him out anyway possible. Tonight though I am just going to tell him his best option is to fix it up and sell it.
Link Posted: 6/23/2016 11:28:10 AM EDT
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By pale_pony:


You call wrong...that's exactly how Section 8 works. You rarely have to wait for a tenant because they usually have another waiting. Money is IN your account on the first day of every month by wire deposit, no more "I had to buy booze/drugs so I'll be a little late with the rent".

Section 8 is the ONLY way to go if you're going to be a slum lord.

If you're going to buy a nice place to rent...get out of the hood.
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View All Quotes
Discussion ForumsJump to Quoted PostQuote History
Originally Posted By pale_pony:
Originally Posted By Gunguy87:
...So my know it all dumb shit of a sister over hears our conversation and suggests we do section 8 housing. She says that her friend and his dad have section 8 rental properties and they make a killing off of them without issue. I ask her who pays for the damage when they think they own the place and decide to rip out sinks and shit and fuck everything up. She says the government does. I call BS. ..


You call wrong...that's exactly how Section 8 works. You rarely have to wait for a tenant because they usually have another waiting. Money is IN your account on the first day of every month by wire deposit, no more "I had to buy booze/drugs so I'll be a little late with the rent".

Section 8 is the ONLY way to go if you're going to be a slum lord.

If you're going to buy a nice place to rent...get out of the hood.

I was calling BS on the part where she said the .gov pays the damage the tenants caused to your property.
Link Posted: 6/23/2016 11:39:25 AM EDT
Originally Posted By Gunguy87:
I need some advice from people with rental properties. My dad wants to refurbish my deceased grandmother's rental property which is located in the hood. It is going to cost about $40,000 to buy out my aunt and uncle and renovate the place so the city doesn't condemn it. We have calculated the gross yearly profit we can make off the house is roughly $12000-$14,000. He truly believes he can get $1000 a month rent for a place in the ghetto. I have tried to tell him no matter how nice the place is someone who can reliably pay $1000 a month is not going to live in that area. So my know it all dumb shit of a sister over hears our conversation and suggests we do section 8 housing. She says that her friend and his dad have section 8 rental properties and they make a killing off of them without issue. I ask her who pays for the damage when they think they own the place and decide to rip out sinks and shit and fuck everything up. She says the government does. I call BS. So one of my questions is for those who do section 8 rentals is if the tenants wreck the place does the government or welfare agency pay for the damage? Also please share some of your experiences with being a landlord.
View Quote



It all depends on median rents in your area, it's hard to say what the average prices are when we don't know the area.

Around here, I have a few properties in marginal neighborhoods that are in the $800-$1,000 price range on HUD that I've purchased for under $30,000 and renovated. It certainly can be done, and HUD tenants TEND to actually be pretty decent around here, because if they destroy the property they will lose their voucher, and getting a new voucher could take 5 to 10 years to do.

HUD doesn't always pay 100% of the rent, the tenants could be responsible for a small or even large portion of the rent, it just depends on the specific situation.
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