Section 8 intro
Summary
TLDRThe 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.
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