Section 8 intro

Summary

The video script offers an in-depth guide to investing in Section 8 properties, a government program that subsidizes rent for low-income tenants. It explains the process of finding and purchasing properties that meet the criteria of Section 8 investors, who are looking for affordable housing options. The script walks viewers through using BuyBox Cartel to connect with Section 8 buyers, setting up property search filters on Zillow, and determining the necessary rehab costs. It emphasizes the importance of properties being in good condition, as Section 8 tenants are incentivized to maintain them. The guide also covers how to calculate the offer price to the seller based on the buyer's offer, ensuring a profitable assignment fee for the investor. Finally, it outlines steps for saving the deal in a pipeline for future reference and making an offer to the seller to secure the property under contract.

Takeaways

• 🏠 **Section 8 Basics**: Section 8, officially known as the Housing Choice Voucher Program, is a government initiative to provide affordable housing to low-income individuals.
• 💰 **Financial Support**: Section 8 typically covers about 95% of the rent, offering a stable income for investors regardless of economic conditions.
• 🔍 **Tenant Incentives**: Section 8 tenants are motivated to maintain their homes well to avoid losing their vouchers, which could lead to homelessness.
• 💼 **Investment Criteria**: Investors often use a DSCR loan, requiring a 20% down payment and not purchasing homes below $75,000 to mitigate bank risk.
• 📅 **Inspection Timeline**: Section 8 investors need a minimum 10-day inspection period with a 40-day close, which is important for negotiation timing.
• 🔑 **Finding Properties**: Utilize platforms like BuyBox Cartel to access a network of Section 8 buyers and their specific property criteria.
• 📈 **Market Value**: Within a given BuyBox, all cities are considered equal in terms of property value and the likelihood of selling.
• 🏡 **Property Criteria**: Focus on matching the property criteria from the BuyBox, such as the number of bedrooms, bathrooms, and square footage, using Zillow filters.
• 📝 **Data Verification**: Ensure the accuracy of property details like bedroom and bathroom count, property size, lot size, and year built as these are crucial for Section 8 eligibility.
• 💡 **Rehab and Rent**: Section 8 investors are not looking for extensive rehabs; the property should be close to rent-ready with a maximum rehab budget of $4,000.
• 🤝 **Negotiation Strategy**: Understand the difference between the buyer's offer price and what you should offer the seller, factoring in your desired assignment fee.

Q & A

What is the official name for what is commonly referred to as 'Section 8'?

The official name for 'Section 8' is the Housing Choice Voucher Program.

Why is it called Section 8?

It is called Section 8 because it is found in Section 8 of the Housing Act of 1937.

What is the main purpose of the Section 8 program?

The main purpose of the Section 8 program is to provide affordable housing to low-income individuals who cannot afford average fair market rent.

What percentage of the rent does Section 8 typically cover for qualified tenants?

Section 8 typically covers about 95% of the rent for qualified tenants.

What is a DSCR loan and how does it relate to Section 8 property investments?

A DSCR loan is a type of loan used by Section 8 property investors, requiring them to put down at least 20% of the purchase price, with the bank covering the other 80%.

What is the minimum purchase price for a property that can be financed with a DSCR loan in the context of Section 8 investing?

The minimum purchase price for a property that can be financed with a DSCR loan is $75,000.

What is the minimum number of days an investor needs for inspection period when buying a Section 8 property?

Section 8 investors need a minimum of a 10-day inspection period.

How does one find Section 8 property deals?

One can find Section 8 property deals by visiting buyboxcartel.com, joining the Discord, and using the buy boxes to find properties that match the criteria of Section 8 buyers.

What is the maximum amount a Section 8 investor is typically willing to spend on rehabbing a property?

The maximum amount a Section 8 investor is typically willing to spend on rehabbing a property is $4,000.

What is the primary metric used by Section 8 buyers to gauge their return on investment?

The primary metric used by Section 8 buyers to gauge their return on investment is the gross yield.

How can one find the rent rates offered by HUD for Section 8 properties?

One can find the rent rates offered by HUD for Section 8 properties by visiting HUD's official website, HUDuser.gov, and looking up the rental rates based on the property's location and number of bedrooms.

What is the minimum price range for a Section 8 property that an investor should consider?

The minimum price range for a Section 8 property that an investor should consider is $50,000, to avoid properties in extremely poor condition.