Is Section 8 Housing Worth It?
There are a lot of misconceptions about the Section 8 Program (especially online). The biggest benefit to investing in section 8 rental properties is that you are being paid directly by the federal government every month with a direct deposit into your checking account. Another benefit is that it is very easy to find a Section 8 tenants since there are so few rentals available and there is a waiting list to join the Section 8 program. One of the downsides is that your maintenance and repairs will be much higher and your tenants can trash your rental if you are not on top of it. I recommend Section 8 rentals as a very good entry point for new real estate investors. I started out as a landlord with Section 8 rentals in lower income neighborhoods. I recommend Section 8 because it is easier to get into and easier to find properties because there is less competition and many investors are not interested in purchasing in those areas. If you find larger 4 bedroom houses in lower income neighborhoods the rental income from Section 8 can be very high relative to the purchase price. This means you can get crazy positive cash flow and for a new investor (or any investor) cash flow is very, very, important. So I highly recommend you look into investing in section 8 rentals. The perfect slam dunk combination is purchasing a Section 8 Rental with a hard money loan and implementing the buy, repair, rent, refinance strategy. After you have repaired, cleaned up and rented out the property you can refinance into a conventional mortgage. The returns can be really high. My student Dale purchased a Section 8 Rental for $94,000 and I loaned him $80,000. He spent $12,000 repairing the house it recently appraised for $194,000 ($100,000 higher than his purchase price). He rented it to a Section 8 tenant and Section 8 pays him $1,850 per month. That's crazy positive cash flow. If you want to learn how to do this make sure you come to my Buying Rentals and Building Wealth Boot Camp.
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