It's good that BP does not shy away from all areas of landlording. More knowledge about everything that is "out there" in the investing world is good. Kudos to BP for that. With this episode, they should have been brutally honest about the advantages and disadvantages of section-8 investing. This would be more helpful than this particular landlord's way of operating. There are so many things that are important to say about subsidized housing; I will try to hit the highlights or should I say lowlights?? I have been a landlord in Baltimore and Columbia MD since 2005 and have rented to section-8 and market renters for 17 years so I speak from experience. 1. It is nice to have the rent deposits (usually) come in on time every month but you should know that if your annual section-8 inspection fails twice then the PHA (Public Housing Authority) will stop paying you. They may even decide to not pay you for the rent owed even after the reason it failed has been corrected. This happened to me more than once. It is completely up to the discretion of the particular inspector whether they use reasonable standards to fail properties; for major problems or just minor problems. I had one property fail inspection because the tenant failed to be present. I lost two month's rent even though this was out of my control. Even after months of contacting the bureaucrats at the PHA they never sent me the rent owed. Section-8 inspectors failing properties for trivial reasons is very common in Baltimore resulting in lost revenue. 2. The rent paid by the PHA is adjusted according to how much the tenant makes. The difference is supposed to be paid by the tenant. Often the tenants just don't pay their rent. Eviction is a lengthy and expensive process that usually is not financially worth it to pursue. Often small landlords don't have the cash or time available to evict a tenant who is not paying $100 per month when the PHA is still sending the $1,100 subsidy. 3. In Baltimore, the city, by law, places a lien on your property if your tenant fails to pay the water bill. The city intentionally forces landlords to pay for the water bills of their tenants. Naturally, the tenants discover this and most tenants will not pay their water bills because their are no consequences to them. A $200 water bill every month can reduce your cash flow to zero or negative. 4. A typical section-8 tenant is a single mother with kids. This is not a stable family environment because there is no responsible male in the house (in fact it is illegal for a section-8 woman to house a boyfriend). Normally, section-8 tenants do not treat your property well (there are some rare exceptions). When they move out you will have a major renovation to conduct to simply make the property livable again. This is expensive and the rents don't justify the expense. 5. The HUD publishes (suggested) annual rent amounts for section-8 housing that are supposedly a measure of market rents in all areas throughout the USA. It is the PHA in each metro area that administers the sec-8 program and they are not obligated to comply with HUD rents. In Baltimore, the rental amounts that the PHA offers to landlords is significantly and consistently under-market. Especially when you consider that landlords must comply with all the extra regulations and hassles, the rents should be higher. Over the long term this is one of the biggest disadvantages of the section-8 strategy; your properties are no longer tied to rent appreciation in the market because the PHA intentionally suppresses your "allowed rent". Normally your section-8 properties will be in an area consisting of mostly renters; so you cannot expect very much appreciation in the market value of you properties either. 6. If you have section-8 properties in a city that has a PHA which treats its landlords fairly and pays them on time, provided they are complying with their end of the deal (the HAP contract), then you may be able to cheaply build a portfolio that , with lots of aggravation, can make you some money. Section-8 does not work well for cities that are CERTAIN that all landlords are the enemy (Baltimore I am looking at you) or inexperienced landlords or people who don't know their area well. I do not think that newbies should be told that section-8 investing is a viable strategy. I don't have experience in cities outside of Maryland. Maybe it works better in other parts of the country. But there are better RE investing approaches.
@@wesleyturverey Happy to. Well first off Section 8 is not uniform State to State. Some states are handled differently. Then there are Federal Section 8 programs and State Section 8 programs which are also handled differently. So much depends on the program guidelines in your area. So I can talk of experience from MA and CT. So why/ how these are not guaranteed is these programs first off can run out of funding, if the tenant does not do what they are required the program will not pay you ( even though it was the tenant's fault ), If their inspectors drop the ball you can again not be paid. Don't get me wrong there can be benefits here, but often the picture is painted with rose colored glasses. - Matt T.
Let me save y’all the trouble, DONT FUCK W SECTION 8, they have zero respect for the property or themselves because most people stay on that program FOREVER. Also much harder to evict!! NOPE NOPE NOPE!!!
and you can never get ride of them , grandma moves in, the teenage gang banger son outs holes in the wall and breaks windows ,17 daughter excpceting baby #2 ,bunk beds in the dining room , a rv in the driveway ,10 cars and dogs etc.... this is why I don't rent to sec 8, why are you getting subsidized housing ??
Is it me or does almost every single guest have a book or a course to sell you or a mastermind why can’t you just be happy with what you’re doing and not wanna capitalize and grow and grow and grow and fucking grow
Of course they all have something to sell😂. This is business and most folks really are not rolling in dough as much they want you to believe. The courses, books, speaking engagements, etc is how they make money.
@@JGuagliardo22to get started she actually just used her tax returns. Detroit had houses for 6..7k back then. She started using hard money lenders later on
This was a really good interview, I've been looking into this kind of investment and it was very useful information! Thanks Ashleys and Tony!
I'm from Detroit so this is great. I know there's money to be made there so people really give it a less credit than it's due
It's good that BP does not shy away from all areas of landlording. More knowledge about everything that is "out there" in the investing world is good. Kudos to BP for that.
With this episode, they should have been brutally honest about the advantages and disadvantages of section-8 investing. This would be more helpful than this particular landlord's way of operating. There are so many things that are important to say about subsidized housing; I will try to hit the highlights or should I say lowlights??
I have been a landlord in Baltimore and Columbia MD since 2005 and have rented to section-8 and market renters for 17 years so I speak from experience.
1. It is nice to have the rent deposits (usually) come in on time every month but you should know that if your annual section-8 inspection fails twice then the PHA (Public Housing Authority) will stop paying you. They may even decide to not pay you for the rent owed even after the reason it failed has been corrected. This happened to me more than once. It is completely up to the discretion of the particular inspector whether they use reasonable standards to fail properties; for major problems or just minor problems. I had one property fail inspection because the tenant failed to be present. I lost two month's rent even though this was out of my control. Even after months of contacting the bureaucrats at the PHA they never sent me the rent owed. Section-8 inspectors failing properties for trivial reasons is very common in Baltimore resulting in lost revenue.
2. The rent paid by the PHA is adjusted according to how much the tenant makes. The difference is supposed to be paid by the tenant. Often the tenants just don't pay their rent. Eviction is a lengthy and expensive process that usually is not financially worth it to pursue. Often small landlords don't have the cash or time available to evict a tenant who is not paying $100 per month when the PHA is still sending the $1,100 subsidy.
3. In Baltimore, the city, by law, places a lien on your property if your tenant fails to pay the water bill. The city intentionally forces landlords to pay for the water bills of their tenants. Naturally, the tenants discover this and most tenants will not pay their water bills because their are no consequences to them. A $200 water bill every month can reduce your cash flow to zero or negative.
4. A typical section-8 tenant is a single mother with kids. This is not a stable family environment because there is no responsible male in the house (in fact it is illegal for a section-8 woman to house a boyfriend). Normally, section-8 tenants do not treat your property well (there are some rare exceptions). When they move out you will have a major renovation to conduct to simply make the property livable again. This is expensive and the rents don't justify the expense.
5. The HUD publishes (suggested) annual rent amounts for section-8 housing that are supposedly a measure of market rents in all areas throughout the USA. It is the PHA in each metro area that administers the sec-8 program and they are not obligated to comply with HUD rents. In Baltimore, the rental amounts that the PHA offers to landlords is significantly and consistently under-market. Especially when you consider that landlords must comply with all the extra regulations and hassles, the rents should be higher. Over the long term this is one of the biggest disadvantages of the section-8 strategy; your properties are no longer tied to rent appreciation in the market because the PHA intentionally suppresses your "allowed rent". Normally your section-8 properties will be in an area consisting of mostly renters; so you cannot expect very much appreciation in the market value of you properties either.
6. If you have section-8 properties in a city that has a PHA which treats its landlords fairly and pays them on time, provided they are complying with their end of the deal (the HAP contract), then you may be able to cheaply build a portfolio that , with lots of aggravation, can make you some money. Section-8 does not work well for cities that are CERTAIN that all landlords are the enemy (Baltimore I am looking at you) or inexperienced landlords or people who don't know their area well.
I do not think that newbies should be told that section-8 investing is a viable strategy. I don't have experience in cities outside of Maryland. Maybe it works better in other parts of the country. But there are better RE investing approaches.
100% agree. This episode was given with Rose colored glasses and honestly from people with limited experience
What strategies would you all suggest a beginner investor start with?
@@forwardvibrations2347 Really depends on your goals. I say all new investors need a mentor
I love the bit where you talk about Cost Segregation! Love your podcast!
This is something I've been thinking about getting into which states are best choices more common for house section 8
Ashley Hamilton at it again! The @DetroitInvestor is awesome!!!
What CPA with good REI knowledge do you recommend? Particularly in the Seattle area
Far from guaranteed. Been in this business for 24 years
Humor us.
Please elaborate.
@@wesleyturverey Happy to. Well first off Section 8 is not uniform State to State. Some states are handled differently. Then there are Federal Section 8 programs and State Section 8 programs which are also handled differently. So much depends on the program guidelines in your area. So I can talk of experience from MA and CT. So why/ how these are not guaranteed is these programs first off can run out of funding, if the tenant does not do what they are required the program will not pay you ( even though it was the tenant's fault ), If their inspectors drop the ball you can again not be paid. Don't get me wrong there can be benefits here, but often the picture is painted with rose colored glasses. - Matt T.
🔑
🙌
Is it me or does Tony really seem not interested in this episode?
Reading his face he does not seem excited and he shouldn't be. Probably he realizes that RE investing with this strategy will not make you wealthy .
Probably seemed that way because they did a ton of episodes that day and was worn out
Wish she would tell of any "dangerous" or threatening situations she has had in Detroit.
Let me save y’all the trouble, DONT FUCK W SECTION 8, they have zero respect for the property or themselves because most people stay on that program FOREVER. Also much harder to evict!! NOPE NOPE NOPE!!!
Yep
👍
and you can never get ride of them , grandma moves in, the teenage gang banger son outs holes in the wall and breaks windows ,17 daughter excpceting baby #2 ,bunk beds in the dining room , a rv in the driveway ,10 cars and dogs etc.... this is why I don't rent to sec 8, why are you getting subsidized housing ??
@@youtubecarspottersguide1 all true
did your property management company do your screening?
I won't rent to section 8 ....period...
Is it me or does almost every single guest have a book or a course to sell you or a mastermind why can’t you just be happy with what you’re doing and not wanna capitalize and grow and grow and grow and fucking grow
Of course they all have something to sell😂. This is business and most folks really are not rolling in dough as much they want you to believe. The courses, books, speaking engagements, etc is how they make money.
So she has 80k tax returns or near that to purchase them cash? Please be honest.
She did not say she received $80K in tax returns! She said she used her tax returns to get started. Later she bought properties in cash.
listen to her last episode on BP. She's more detailed. She used hard money lenders.
@John Guagliardo cool thanks. This show consistently leaves leaves out to much info.
@@JGuagliardo22to get started she actually just used her tax returns. Detroit had houses for 6..7k back then. She started using hard money lenders later on