Meet the Slumlord Earning $1,000,000 / Month
Summary
TLDRIn this video script, Tom Cruz humorously discusses his journey from middle-class life to real estate success, leveraging Section 8 housing and creative financing strategies. He showcases his Miami estate, luxury cars, and yacht, while sharing insights on property acquisition and managing a portfolio. Despite facing accusations of exploiting low-income tenants, Tom defends his business model and highlights the importance of proper tenant screening and property management.
Takeaways
- 😎 Tom Cruise, a real estate investor, uses Section 8 housing to amass wealth, owning a Miami mansion, luxury cars, and a yacht.
- 🏠 Section 8 is a government program for low-income individuals that pays a significant portion of rent, often above market rates, to landlords.
- 🚗 Cruise's initial investment in real estate began with an FHA loan for a condo, which he later rented out when he faced restrictions from the HOA.
- 💰 He expanded his portfolio using seller financing, allowing for rapid growth with minimal down payments and flexible terms.
- 🔑 Cruise discovered the potential of Section 8 housing by accident, finding that it provided a consistent and high cash flow due to government subsidies.
- 🤝 Cruise leveraged third-party investors to scale his business, moving from middle-class to a level of success that includes a $20 million mansion and a $5 million yacht.
- 💼 Cruise has developed a platform called Section 8 Pro to help others find profitable Section 8 properties, integrating crime data and financial estimates.
- 🚧 Despite the potential for high returns, Section 8 investing comes with challenges such as tenant issues and property maintenance.
- 👮♂️ Cruise has faced legal issues, including code enforcement violations and tenant-related problems, which he attributes to early mistakes and growing pains.
- 👨🏫 Cruise offers mentorship and training to others interested in Section 8 investing, having helped over 500 students to date.
- 🚀 The video suggests that Cruise's success and the potential of Section 8 investing could be replicated by others with the right knowledge and tools.
Q & A
What is the name of the person featured in the video script?
-The person's name is Tom Cruz, who goes by Tom.
How did Tom Cruz finance his first condo purchase after college?
-Tom Cruz financed his first condo purchase with a 3.5% down FHA loan.
What led Tom to start renting out properties?
-Tom started renting out properties after an HOA restriction on his dog led to him not being able to live in the condo he owned, and he realized the potential cash flow from renting.
What is seller financing and how did Tom use it to grow his portfolio?
-Seller financing is an arrangement where the property seller provides financing directly to the buyer, often with more flexible terms and lower down payment requirements. Tom used this method to acquire properties faster, putting down as little as $5,000 to $10,000 at a time.
How did Tom discover the potential of Section 8 properties?
-Tom discovered the potential of Section 8 properties when he bought a property for $55,000 that was rented for $1,350 and later found out that the tenants were on Section 8, which paid 100% of their rent.
What is the Section 8 program and how does it benefit landlords?
-The Section 8 program is a government initiative that provides rental assistance to low-income families, ensuring they pay no more than 30% of their income for rent. Landlords benefit as the government can cover up to 100% of the rent, often at rates above market value.
What is the name of the platform Tom and his team built to acquire new properties?
-The platform is called Section 8 Pro.
How does Section 8 Pro help in finding profitable properties for rent?
-Section 8 Pro allows users to input their desired investment amount and minimum cash flow requirements, then it searches for properties that meet these criteria in profitable counties, taking into account property management fees, taxes, insurance, and other costs.
What are some of the challenges Tom faced with his Section 8 properties?
-Tom faced challenges such as tenants engaging in illegal activities, property code violations, and dealing with negative public perception due to his wealth and the conditions of some of his properties.
How does Tom address the criticism of being an unethical landlord?
-Tom defends his business model by stating that his properties are in up-and-coming areas and that he complies with annual inspections to ensure the properties are in good shape. He also mentions that he has mentored many students, helping them achieve success in real estate.
What is the estimated monthly cost to maintain Tom's 100-foot yacht?
-The estimated monthly cost to maintain the yacht is between $90,000 to $100,000, which includes payments, insurance, crew wages, dockage, and maintenance.
Outlines
🏠 Real Estate Investing and Tom Cruz's Lavish Lifestyle
The video script introduces a satirical scenario of exploiting government housing programs for personal gain, as personified by a character named Tom Cruz. It humorously describes how one could amass wealth through real estate investments, particularly by acquiring affordable housing and benefiting from federal tax dollars. The narrative then shifts to a genuine interview with a successful real estate investor, also named Tom Cruz, who shares his journey from a middle-class background to owning luxury cars and a mansion. Tom discusses his first real estate purchase using an FHA loan and his transition into using creative financing and seller financing to rapidly expand his property portfolio. The summary highlights Tom's initial foray into real estate, his strategic use of financing methods, and his eventual success in the field.
💰 Scaling Real Estate Investments with Section 8 Rentals
This paragraph delves into the specifics of Tom Cruz's real estate investment strategy, focusing on Section 8 housing. It explains how Tom discovered the potential of Section 8 properties, which are government-subsidized rentals for low-income tenants. The script outlines the benefits of these properties, including higher-than-market rents and guaranteed payments from the government. Tom shares his experience with his first Section 8 property and how it led him to shift his investment focus entirely to Section 8. The narrative also touches on the use of other people's money to scale investments, the importance of networking, and the lifestyle that Tom enjoys as a result of his successful real estate endeavors. The summary encapsulates the transition to Section 8 investing, the process of scaling investments, and the luxurious outcomes of such a strategy.
🛥️ The High Life and the Business of Section 8 Investments
The script continues with a detailed account of Tom Cruz's extravagant lifestyle, including his Miami estate, luxury cars, and a 100-foot yacht. It provides an in-depth look at the costs associated with maintaining such a lifestyle, from monthly payments to insurance and maintenance. Tom also discusses the operational aspects of his real estate business, including property management, the use of a custom platform for acquiring Section 8 properties, and the importance of location and property selection. The paragraph addresses potential issues in the Section 8 business model, such as dealing with bad tenants and government regulations, and Tom's response to accusations of being an unethical landlord. The summary provides a comprehensive overview of the financial and managerial aspects of Tom's real estate business, his approach to finding profitable Section 8 properties, and the ethical considerations of his investment strategy.
Mindmap
Keywords
💡Mansion
💡Rolls-Royces
💡Yacht
💡Federal Government
💡Real Estate Investing
💡Section 8
💡Seller Financing
💡Cash Flow
💡EBT
💡Tenants
💡Investor Meetups
💡Code Enforcement Violations
💡Slum Lords
Highlights
Tom Cruise, a real estate investor, has amassed wealth through a controversial method known as Section 8 housing, which is funded by federal tax dollars.
Section 8 is a government program designed for low-income Americans to provide free housing, which some investors exploit for profit.
Tom Cruise humorously discusses his luxurious lifestyle funded by the housing crisis, including an $18 million Miami mansion and a 100-foot yacht.
The video provides a tour of Tom's collection of luxury cars, including a Lamborghini Huracan Evo spider and several Rolls-Royces.
Tom's first investment was a condo purchased with an FHA loan, which he later rented out when he faced restrictions from the HOA.
Creative financing and seller financing allowed Tom to expand his real estate portfolio rapidly with minimal down payments.
Tom discovered the potential of Section 8 housing after purchasing a property that cash flowed heavily due to government-subsidized rent.
Section 8 properties often have rents well above market value, making them an attractive investment for landlords.
Tom leveraged other people's money to scale his real estate business, moving from a middle-class life to extreme wealth.
The yacht owned by Tom, including its maintenance and crew, costs approximately $100,000 per month to maintain.
Tom's business model has faced criticism for exploiting low-income tenants and contributing to the housing crisis.
Despite the controversy, Tom has mentored over 500 students, helping them replicate his real estate investment strategies.
Tom's company has developed a platform called Section 8 Pro to help investors find profitable Section 8 properties.
The platform considers factors like property price, cash flow, crime rates, and government regulations to identify suitable investments.
Tom addresses the challenges of tenant issues and government regulations, emphasizing the importance of proper property management.
Tom's success story includes the development of a yacht with a Rolls-Royce engine, capable of 45 knots, and a captain and crew to maintain it.
The video concludes with Tom's commitment to share more about Section 8 investing if there's enough viewer interest, as indicated by likes.
Transcripts
imagine an $18 million Miami mansion a
fleet of rolls-royces and a 100t yacht
all paid for by the federal government
and I've Loved kids jumping on my lap
well Tom Cruz has found a way to do this
through a method of real estate
investing known as section A this is
exactly how I buy up all the affordable
housing in any given area and continue
to contribute to the housing crisis a
program created for Americans below the
poverty line to get free housing paid
for by federal tax dollars AKA you
watching this if you're an American
taxpayer if I didn't enjoy exploiting
low in come people in the middle class
and the American taxpayer then who's
going to pay for my 100 foot yacht Tom
Cruz is a bit of a jokester but in this
video I was lucky enough to fly up to
Miami and spend a morning at his estate
ladies and gentlemen we are now here
with the homie Tom Cruz how's it going
man and I'm curious bro is that your
real name it is my real name it's
actually Thomas Cruz but yeah go by Tom
hell yeah well before we get into your
journey with real estate investing I
wanted to take a tour of some of the
cars cuz I heard you got some pretty
crazy whips yeah we just took delivery
of uh three rolls-royces we have a
fourth one coming in a couple weeks
another colon in so let's go ahead and
check them out awesome let's do it
bro this is the new uh all electric
Rolls Royce Spectre Lamborghini Huracan
Evo spider we also have another
Rolls-Royce Dawn over here that's
actually my first Rolls-Royce and then
over here we have one of 25 in the world
this is the Rolls-Royce Ghost it's a
very special ghost this is part of their
private collection they have to invite
you to buy one of these and if you come
inside most rolls-royces have the
regular star headliner ceiling right but
with the
eclipses it mimics exact 7 minutes and
43 seconds of a solar eclipse and you
can see that directly there in the
ceiling and then of course we also have
the 2024 phom I waited 18 months for
that car I write a couple of them off
they're all over 6,000 lb so it makes
for pretty good deductions but overall I
just love the brand I had Lamborghinis
Ferraris Aston Martin they're all fun
and great and all but cruising around
Miami you got to be in a roles and what
are your thoughts on like using material
things to motivate you do you think
that's a good thing to use for
motivation when I got my first Supercar
that was the main motivation for doing
everything so for me buying the the
Lamborghini the bright green lime green
Lamborghini hit completely different you
have to have a y right for me my why was
Financial independence with the ability
to have complete control of my time the
material goods were all like secondary
it's nice to have the Lamborghini it's
nice to have all these fun toys and it
does keep things motivating and fun but
I think having the why and kind of what
exactly you're doing it for is a big
reason why I got here cuz I never lost
sight of that but how did Tom go from a
normal middle class life to reaching
this Echelon of success so now that
we're here inside I've heard a little
bit about your story you said you bought
your first condo out of college with
3.5% down FHA loan do you think that's
still one of the best ways to get into
real estate I do I think any way that
you can get in regardless of how you do
it as far as low down payment through an
FHA loan or if you do it with creative
financing and you seller financing
getting into real estate is getting into
real estate this condo that I purchased
in Wilmington North Carolina at the time
I was going to live in it lived in it
for probably about 6 months decided I
wanted to get a dog happened to be a
doberman Piner the HOA did not allow
that as as a restricted breed so they
said you either get rid of the dog you
have to get out of the condo so I
couldn't saw at the time I wasn't in a
good Equity position at the time because
I only put limited amount of money down
so I ended up renting it for $500 over
my mortgage saw that a cash flow and
that was kind of my AA moment to start
renting out more properties so after I
did that I said okay well how do I get
the second property I couldn't use the
FHA loan again for the second one so I
started using creative financing meaning
I looked for properties that had been on
the market for a while that the seller
would be open to me financing it
directly with them and then I was I
think I put $5,000 down on that second
property creative financing or seller
financing allows an investor to grow
their portfolio a lot faster than if
they worked with the Traditional Bank as
with creative financing the seller acces
your bank collecting your payment
monthly with often more flexible payment
terms lower down payment requirements
and most importantly these types of real
estate deals don't require credit or
have as much of a limit for how much
property debt you can take on from that
point on I took all the cash flow from
my rentals I had wholesaling income that
I was making maybe one or two deals per
month on and then that's how I started
scaling so Tom used this income along
with seller financing to his advantage
saving up $5 to $110,000 at a time to
expand his real estate portfolio rapidly
via this method purchasing 13 properties
with very little money down within his
first year and a half in business seller
financing works great on properties that
have been sitting on the market for a
while with sellers that have difficulty
getting full price offers you go to them
and offer full price for the home in
exchange for a seller finance deal with
more flexible payment terms but it was
that 14th property where Tom leared
about a business model to use together
with seller financing that changed ched
his life forever I was putting you know
four 5 6 7 $10,000 down on a lot of
these properties and these are all like
middle of the road houses right they
were kind of like starter homes and and
all all over wilington North Carolina I
was like let me see what happens if I
just go buy a property for 50 Grand or
55 grand so I went downtown which was a
little bit outside of the range that I
was normally buying in and the property
was rented for $1,350 for 55 grand I
couldn't figure out how they were doing
it so I bought it the day after I closed
on the property they said hey look we
got to get you switched over to Section
8 payments and I was like what do you
mean Section 8 payments Tomy just
stumbled across Ross a real estate deal
in a bad area of Wilmington North
Carolina that cash flowed heavily due to
having a tenant so poor that they
qualified for the Section 8 program
where the government can cover up to
100% of your rent along with that EBT
lifestyle you're
broke Section 8 rents are often well
above market value to encourage
landlords to join the program make it
worth it for them to comply with annual
inspections and of course because the
government just loves overspending
taxpayer money fun coupons as an example
this this house in Milwaukee Wisconsin
is listed for
$99,900 featuring a little bit over
1,000 ft three bedrooms and one bathroom
this property definitely isn't the
nicest it literally has a broken front
door but with a small amount of work
this house would definitely pass a
Section 8 inspection which by the way in
Milwaukee County a three-bedroom
property gets rent paid of
$1,392 a month and with a mortgage
payment of
$745 monthly this house would cash flow
heavily later in this video I'm going to
be looking for my first property to rent
out on Section 88 but while we wait
let's hear how Tom turned this concept
of investing into millions the first
month the payment hit that first day of
the month I didn't have to chase them
the tenants were elderly and disabled so
Section 8 was paying 100% of their rent
which made things a whole lot easier
because sometimes the tenant might have
a partial payment $30 $40 $50 that they
have to pay in this situation it was a
great experience great tenants and I got
paid instantly and then I was like we're
moving everything to section 88 as my
other leases were starting to expire I
would reoccupy them with section tenants
and as far as how I started scaling that
all came as a result of using other
people's money at that point I already
had multiple properties I had already
gotten a couple other sectionate rental
properties at that time I went to cars
and& coffee so I've met a lot of guys at
cars and& coffee that were interested in
real estate I would go to local real
estate investor meetups and talk to
other people in the local chapter that
were buying properties I would meet with
wholesalers with agents with mortgage
brokers basically anybody that was in
the space I would be meeting with taking
them to launch and and figuring out you
know good potential Partners neither of
my parents were in real estate both of
them very middle class you know all
growing up so they weren't going to fund
my deals I had to go outside and find
third party investors that would want to
come in and do that and it was this
decision to bring in outside investors
that took time from partying on a
pontoon to a 100t yacht bro it's like
The Wolf of Wall Street Naomi yacht yeah
yeah you got to put the the helicopter
pad on the top I need to get a
helicopter pad that'll be the next one
you have to get about 150 ft to start
seeing helicopter pads oh really yeah so
the overall dock space is about 85 ft
which is about the property line width
and when I brought her here being at 100
ft she obviously was going to be
encroaching so the owner of this lot was
not too pumped that I was overstepping
on his on his property so as you can see
my swim platform goes over by I don't
know 6 or 7 ft and they are charging
$10,000 per mom to rent out his water
rights here no way yeah he started at
15,000 I came back at 10,000 we agreed
so I pay $10,000 per month $120,000 a
year for a few extra feet of
encroachment there do you have like your
own captain or are you the one driving
no no I have a captain I have an
engineer and then I also have a um
full-time deck hand he actually lives on
the boat we got two jet skis um that are
in the garage I have a third jet ski
over over there that will sometimes just
drag behind us and then in here you guys
can show the interior cabin we do have
starlink on board so your phone might
connect to starlink she'll sleep about
10 people comfortably we have crew
quarters downstairs the engines are in
there the ACT engines are Rolls-Royce
shout out to MTU 2 2700 horsepower MTU
engines Propel this boat about 45 knots
46 knots which is about 50 mph at top
speed which is not bad seeing as she
weighs A4 million PBS up here is where
the captain will generally be uh driving
from and how much does it cost to fill
this vat up if you got to zero at 2,600
gallons about $111,000 to just to fill
it up just to fill it up and that
happens once a month so a yacht is not a
cheap thing to have it's not a cheap
Venture my monthly payment on her even
like I said with 50% down is right
around $20,000 per month insurance is
8,000 per month crew is 25,000 per month
10,000 for the additional dockage
maintenance and random things that break
on a yacht all the time you can figure
another $15 to $20,000 per month for so
down here you've got some bedrooms yeah
so we got four bedrooms so this is a
full beam master so you can really take
this anywhere this cost $100,000 a month
pretty much like between 9 and $100,000
a month is what I use to keep her a
float yeah what I think is like hella
unique about you is not only do you make
a lot of money but you also seem to have
like a lot of hobbies so with Section 8
like how many hours a week would you say
you're working I would say between like
property Acquisitions handling my
property managers anywhere from 4 to 6
hours per week every Friday I have a
2-hour meeting with my property
management team on Zoom I have nine
full-time property managers across four
different states so we get on a zoom
call we'll talk figure out exactly
what's going on if there's any major
issues there's any insurance claims if
there's any police action anything that
I need to be involved with and then
during the week it's mostly Acquisitions
I'm looking for properties negotiating
properties I'm talking to agents dealing
with all that but how does the process
work for finding Section 8 properties to
rent out one of the biggest things that
most new people that are getting into
Section 8 have a question about is where
do I buy the best properties how do I
choose the best properties how do I know
if it's going to work for Section 8 so
me and my team built out a platform that
we use ourselves now to acquiring new
properties called Section 8 Pro and I'll
show you guys exactly how it works so
first we need to find the most
profitable counties in the country so we
pull all the data from section 8 we
estimate monthly cash flow based on the
average price of a property there
combine that with current interest rates
from there we got to go look for the
properties no other software does what
we're about to do so if you want to put
$75,000 the max you want to pay for a
property and you want to make a minimum
of $600 per month in cash flow you can
click on search and we're going to show
you the best properties in the best
conditions and the best locations that's
also going to cash flow the most so this
one right here for example or in Texas
or Minnesota you can click this one here
in Ohio $900 per month in cash flow we
already Tak to a consider iteration the
property management fees taxes which we
pull automatically from the listing
Insurance your down payment so some of
these properties like I said with seller
financing let's say you put $3,000 down
on this property and you're still paying
an 8% interest rate your monthly cash
flow is still $540 per month in the
positive that's only with 3K down
probably the most viable feature is our
crime integration so if you put up any
address in the country here and then we
tell you exactly how much crime is
happening there and it's updates I think
on a daily level and now that we know
how to find Section 8 properties I got
even more curious what kind of issues
can present in this business model from
Bad tenants to government regulations
mail for
Sam to sectionate investors being called
slum Lords did you ever have issues with
tenants trashing houses people let's say
doing illegal stuff in your buildings of
course I mean everyone's going to have
that once you're getting started
especially if you have no idea what
you're doing when I got started it was
all trial and error I had no local
mentors it was all just like figuring it
out as I went so yeah I had tenants that
I shouldn't have let into the property
they brought other people that might
have had records that were living with
them which then caused you know drug
activity
there's like six or seven of them they
brought some of their drug addict
friends over so it's up to you if you'd
like to let her come back at a later
time that's not going to happen police
calls I've had SWAT knocked down a
couple doors in my portfolio early on so
yeah that that's part of the game and
that's why it's so important to learn
from somebody I don't care if it's me or
local Mentor because you can avoid all
of that headache if you screen tenants
properly if you choose the right
locations if you choose the right
properties and a big key to that is also
not buying properties in bad areas too
is that something you try to avoid yeah
I don't really Buy in war zones I mean
you're going to have these C and D
d-class neighborhoods where they're
going to be older the houses might be
smaller and some of them might be in
pretty bad condition but still the
overall crime rate in that area is not
super high because even though section A
tenants have guaranteed rental income
from the government they still want to
live in a safe and like decent place but
that brings me to my next question are
sectionate investors really just slum
Lords in Disguise have I ever evicted a
single mother out of one of my
properties oh yes guys there's nobody
protected in my portfolio the elderly
the disabled the single mom Tom gets the
occasional hate message or negative
article accusing his business model of
being unethical even with the recent
publication in Rolling Stone magazine
asking him to respond to his properties
being cited with more than 100 code
enforcement violations by the city
especially earlier on in my career I
didn't always have enough property
managers so some issues took longer to
take care of I think we had like 150
code enforcement violations across like
I said about 400 properties over a
2-year period so yeah we had a bunch of
issues most of them were pretty minor
like overgrown grass and why do you
think people are always like that do you
think it's about like the headline like
oh Rich real estate investor doesn't EX
position of me being rich with a $20
million house a $5 million yacht and 3
million in cars and they're like oh you
have tenants living like this no at the
end of the day it's an $80,000 property
in an area that's still upand cominging
the property might be 75 to 90 years old
it's going to have some inherent issues
just because of the age and of course
there's inspections the county comes
every single year to make sure the
property is in good shape so none of the
issues that they ever find are anything
significant and to add to that he's
mentored over 500 students making a lot
of them Rich how many students do you
think you've had at this point that
you've helped it's over 00 students it's
a lot of students I mean I've been doing
it for about 2 years a year and a half
one of my most successful students his
name is Jackson he's 26 years old he's
bought over 200 units mostly with seller
financing cuz he didn't have a bunch of
money to get started started buying
properties and then started buying
portfolios using seller financing so as
I begin looking for my first section 8
property I'm probably going to purchase
Tom's training and software but it is a
big commitment so 5,000 likes on this
video will show me there's enough demand
for that content to make more videos
about it so drop a like if you guys want
to see more and I will see you all next
week peace out
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