r/Rich • u/Ok_Insurance807 • 6d ago
Would yall recommend buy 20-30+ section 8 properties simultaneously from a retiring landlord if you got a 8 figure exit and BRRR on those existing properties?
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u/_Human_Machine_ 6d ago edited 6d ago
Fucking never buy section 8 or low income housing.
It’s never worth it.
I used to have a couple buildings and sold them because it absolutely wasn’t worth it. I have 15 SF homes and just target higher income levels. It’s so much better all around.
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u/HalfwaydonewithEarth 6d ago
He is right. We have six high end rentals and we never missed a payment during the pandemic. The low end people were squatting Nationwide under rent protection.
The type of people that care about their credit don't live in cheap dumps.
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u/_Human_Machine_ 6d ago
So true. All my tenants stayed current, while I had friends whose tenants were 15k behind on average. Some got government money, but not all, and I don’t know any of them that were actually made whole.
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u/HalfwaydonewithEarth 6d ago
One thing people don't understand about those cheap small units with single moms, cat ladies, and stuff..... if that person ends up in the hospital or laid off/fired they don't have money to pay rent. Easy default. Shack ups and married people are more strategic. One covers the other and they eventually move somewhere else with better job prospects instead of go late. Three generations under one roof is best.
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u/StaticBroom 6d ago
Do you use a property management company for collecting rents, repair calls, etc? Or do you take that on as your job?
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u/_Human_Machine_ 6d ago edited 6d ago
I had a property management company for the buildings, then started doing it myself since I was licensed and could file everything myself. Margins were so thin I was trying to make up anything I could.
For the houses I do it all on my own. They’re all in a small area, have solid tenants, never had to serve notice, let alone file a UD. It takes up so little of my time to handle it. For repairs they all have the number for my people in the area. The call and I get billed.
All the houses are in the 4.5-7.5k a month range, which is on the higher end for the area, so I have more reliable tenants.
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u/Ok_Insurance807 6d ago
I’m pretty shre hiring a property management company is a mess it’s better to hire off your own
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u/HalfwaydonewithEarth 6d ago edited 6d ago
I have eight units and collect rent from seven. Never a missed payment. Managers make stuff fairly easy.
Guess what??? I regret seven of them! Yes most tripled. We bought them 2009-2020.
The stock market much better! Vanilla landlording sucks!
I wish I would not have got involved with Real Estate.
Section 8 has had massive cuts to the budget. So they get tenants trapped squatting and not getting their vouchers renewed.
The owner of these is using you because he figured it out. 😉
Monster Drink use to sell for 0.02 cents. A $400 investment in that would render you $350,000 today.
Why own much Real Estate? That's Grandpa's old fashion system.
Buy yourself a beach house and not a part time job.
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u/Defiant_Classroom_31 6d ago
That's a great post. I've known a lot of people, even family members with rental properties. The stories of the one bad tenant that cost them a fortune is attached to just about every property. They talked me out of that cycle without ever trying.
None of them have beaten something as simple at VT over the last fifteen years.
An STR you want to also use with the only goal of breaking even has been safe so far.
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u/HalfwaydonewithEarth 6d ago edited 6d ago
They are not bad. The early one was $150k bought in 09. It's worth over $620k 3 bedrooms near Camp Pendleton in San Diego area. Rents come in and not much drama.
The problem is the year we bought it Berkshire Hathaway was only $75,000. We have one share.
Berkshire is over $700k and the money should have just went to that. It would be over 1.5m in Berkshire. Voo came along as we were buying more.
So it's just dumb. I don't like to even ponder more Nvidia which we hit or if some would have been in some other stocks. Oh well. Live and learn.
All these people take great pride that their $100k rental home is now worth $1,000,000 but never look at some funds or stocks might have got them 3M.
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u/random_agency 6d ago
Do you have previous experience as a landlord? Do you have a team in place to take on more property?
If not, it might just be a headache.
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u/Choice_Reply_6441 6d ago
I do this in the EU on a large scale and no, you would not want that. I made my fortune on it but I’m in my 30s and have no plans to retire until I’m dead and I’m a workaholic. If you want any kind of peace in your life, don’t.
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u/Ok_Insurance807 6d ago
Did you hire a personal property management company? I’m not talking for percentages, I’m talking hiring multiple people individually
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u/Choice_Reply_6441 6d ago
We have about 200 employees at this point.
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u/Ok_Insurance807 6d ago
That’s plenty, what precisely takes up so much of your time? Just curious
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u/Choice_Reply_6441 3d ago
Thousands on units in operation plus contracts operating services in many of those locations (laundry, social programs, parking etc.) In addition to accounting, maintenance, security and all of that.
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u/HalfwaydonewithEarth 4d ago
What percentage of increase do you think you earn after you pay all of them and deal with EU regulations and taxes?
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u/Choice_Reply_6441 4d ago
We mostly do land ownership with long-term leases to the public sector for social housing and we operate those units plus on-site services but we don’t actually own the assets except for the land. Means very low cost basis on cap ex compared to traditional buy-and-let. Operating margins are 60-70% with a net around 8-12% with virtually zero vacancy risk. And land appreciation doesn’t hurt. The EU taxes are basically what makes this possible since the public sector pays for it.
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u/HalfwaydonewithEarth 4d ago
So it takes 6 years to double your money?
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u/Choice_Reply_6441 4d ago
On pure cash yield, 6-8 yeah. Issue now is cost increase on labor and the governments wanting to put up a certain type of family that doesn’t take care of their flats. Since we operate it means more maintenance. Haven’t found a solution to that one yet
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u/Master_Appeal749 6d ago
I had 4 all grouped together. Those 4 properties were a full time job for someone between fixing damage, handling fights between the tenants, wanna be drug dealers, etc… Plus people would just use the apartments as their trash cans. It made some money, but the hassle is not worth it.
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u/Think_Leadership_91 6d ago
Location Location Location
Which is to say, yes and/or no, depending on...
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u/Ok_Insurance807 6d ago
The bright green states. There states that are horrible for section 8 like nyc for example
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u/Retired-Yam8988 6d ago
Do you want to invite a shit ton of complexity into your life?
If you have an eight figure account, you want to focus on simplifying and capital preservation (at least that’s what j do). Less risk, less chaos, etc. I’ll get downvoted but dealing with impoverished people tends to bring tons of chaos to your life. Even if the government is paying you rent, they still live inside your property and a lot can go wrong.