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section 8

Apr 2022

The Top 3 Subsidized Rental Programs on Long Island

2024-01-06T12:49:48-05:00April 5, 2022|rental property, section 8|

As an indication of my belief in the value of subsidized rentals, approximately 85% of my rental portfolio consists of tenants that are subsidized. There is a misconception that “Section 8” encompasses all subsidized housing, but Section 8 is a specific program with unique criteria for becoming a Section 8 landlord.

With that in mind, the Top 3 subsidized rental programs are (in no particular order):

  • Section 8 Section 8 is a voucher-based program which is held individually by each township. Islip has its own Section 8, Brookhaven has its own, and so on. I’ve previously written at length about why working with Section 8 tenants is great for investors. Local agencies frequently hold forums where you can learn more about how the program works.
  • CDC – Community Development Corp. This is a not-for-profit agency funded by the government. Their tenants can be placed anywhere in Nassau or Suffolk County. This is an excellent subsidy, and many of my tenants come from this program. The overwhelming majority of them are excellent tenants. You can find out more about this organization here.
  • Options for Community Living – This is another not-for-profit agency funded by the government, particularly receiving funds through Medicare and Medicaid. Typically, they rent whole houses and place individuals in each room. The tenants have caseworkers that oversee them, and the organization offers many different programs. They’re an excellent organization to work with, I’ve rented entire apartment buildings to them with great success. Find out more about them here.

These programs are the best on Long Island, but there are many other excellent organizations worthy of your consideration.

One additional note: There are negative stigmas that surround Section 8 and other forms of subsidized housing, but these are overstated and the benefits of working with housing subsidies greatly outweigh any potential problems you might encounter.

Apr 2022

Long Island Real Estate Investor Predicted COVID. Want to Know What’s Next?

2024-01-06T12:51:33-05:00April 5, 2022|real estate investing, real estate agents, section 8|

In February of 2018 the real estate market had been riding high for two years and business was booming. But I felt something coming. One way or another, I knew, we were approaching the end of an era. I felt an economic shift coming. Granted, real estate moves more slowly than the stock market, it doesn’t change overnight. But at the time I started conferring with my friends and associates in the real estate industry and offered them a prediction: At the end of Q4 2019, there’s going to be some kind of economic upheaval that’s going to impact the country.

I wasn’t able to explain why at the time, I just had a hunch. As someone who has been fully immersed in the real estate industry for years, I recognize the cyclical nature of the market and I’ve developed an ability to sense its ebbs and flows. I felt confident that my prediction would come to pass. And sure enough, Q1 2020 saw the breakout of COVID-19, and all the economic fallout it caused in the U.S. and beyond.

I don’t claim that I knew a pandemic was about to sweep over the world. But I had known the market had reached a high which was vulnerable to disruption. Every 5 to 10 years, an economic recession occurs, with generally the same resultant impacts. What differs most frequently is the catalyst which kicks the recession off. In this case, it just happened to be COVID-19.

So what happens next? In situations where there is a minor recession, typically the government intervenes to artificially stimulate the economy to get it going again. Unfortunately, this has a tendency to set the economy up for a larger downturn at a later date. In this recent case, the government provided cash funds and flooded the market with money. 40% of all the country’s currency has been printed in the last two years! In my opinion this is going to lead to inflation, which we’re already seeing, but it will snowball as all this money continues to be disbursed. To counter this inflation the government will have no choice but to raise interest rates in response to sell my house fast Long Island. This has the effect of limiting the buying power of the public with regard to mortgages. Compare this to the 70s and 80s, another time when inflation became an issue and the government raised interest rates to get it under control.

The real estate market has benefitted from low interest rates for many years. The cyclical nature of the market and past history suggests to me that 2022 and 2023 will be good years for real estate and the larger economy. But by the second half of 2024 things will start to slow down and the U.S. will see a major economic correction featuring a significant change in interest rates resulting from the government’s current efforts to prevent a major recession.

Apr 2022

Why Real Estate Investors Love Section 8 Tenants

2024-01-06T12:49:29-05:00April 5, 2022|real estate investing, property management, rental property, section 8|

Section 8 tenants have negative stigmas associated with them. Investors fear that Section 8 tenants will be destructive and lead to costly property repairs. Another concern is getting less than the market rate for rental units, reducing income, or that collecting rent will be problematic. However in the vast majority of cases the potential downsides of renting to Section 8 tenants are greatly outweighed by the benefits.

The past few years, many landlords have had significant impacts on their rental incomes due to the COVID-19 pandemic. But for landlords renting to Section 8 tenants, the government is paying the majority of the rent. The tenants themselves are typically responsible for an amount equivalent to 30% of their income, in most cases just a few hundred dollars. The portion paid by the government is sent directly to the property owner at the beginning of every month, ensuring timely payment of the majority of rents without spending time on collection.

Another benefit of renting to Section 8 tenants is the involvement of case workers. Most Section 8 tenants have a caseworker who advocates on behalf of both the tenants and the landlords. They act as a bridge between both parties and help to resolve problems in a proactive manner which can prevent the types of landlord/tenant conflict that can occur in private rentals.

Most Section 8 tenants who secure housing through these programs were on waitlists for many years (in some cases as long as 7 years) before they get their vouchers. This makes them highly motivated to maintain positive relations with their landlords and avoid any actions which could result in the loss of their housing voucher. Additionally, the average Section 8 tenant stays in a rental unit for 11.5 years, as compared to approximately 2 years for tenants in private rentals. So, while monthly rental income is reduced somewhat by working with Section 8 tenants, consider how much greater the loss of income is from vacancies.

Section 8 (and other government program) including lease back “sell my house fast Long Island” tenants are worthy of your consideration as a real estate investor. Get in touch with local agencies which frequently hold forums for landlords to explain the programs and specifics such as pricing and how to meet the requirements for becoming Section 8-approved.

Jan 2022

The Different “Section 8” Programs Available to Landlords

2024-01-06T12:37:49-05:00January 23, 2022|property management, section 8|

A common misconception is that “Section 8” refers to all subsidized housing programs, but Section 8 is the name of a specific program and there are many similar programs available. For the purposes of this article we’ll discuss housing programs available on Long Island because it’s the area I’m familiar with. To help you understand the differences between these programs I’ll describe them and discuss some of my experience with them.

Section 8 – Each township has its own Section 8 program. The Town of Hempstead, the Town of Islip, etc., all have their own programs. Section 8 is a voucher-based program, and the vouchers are issued to the tenants themselves. The tenant can take this voucher from rental to rental, and the voucher acts as a substitute for cash. The Section 8 program typically pays landlords directly via check or wire transfer a percentage of the rent that’s due. The tenant is required to pay an amount of the rent equal to up to 30% of their monthly income. The rent that can be charged is set nationwide by HUD (The U.S. Department of Housing and Development) on a county-by-county basis. Typically, Nassau and Suffolk County have the same FMR (Fair Market Rent) set by HUD. As the landlord, I recommend you take the FMR and subtract the cost of utilities with the assumption that the tenant will be paying for them separately from their rent. These utility deductions will be dependent on the nature of the building. I also recommend that you attend some of the monthly forums that each town’s Section 8 program holds which provide a lot of information for landlords who are interested in working with Section 8 programs.

DSS – DSS (Department of Social Services) programs can be used in a few ways. It can be used in conjunction with Section 8 if a tenant isn’t able to meet rent requirements, and in some cases DSS can pay a tenant’s entire rent. A disadvantage of working with DSS vs. Section 8 or other programs is that whereas you have a lease agreement with the program itself in the other cases, with DSS the lease is with the tenant themselves. There is no case worker to turn to in the event of any problems and in the worst case you’ll need to proceed with an eviction yourself. There’s little risk of a tenant losing their voucher (as compared to a program like Section 8) as DSS is generally intended to be a temporary benefit for the tenant, so tenants have less incentive to maintain good relationships with their landlords.

CDC – CDC (Community Development Corporation) is a not-for-profit organization funded by the government that operates similarly to Section 8. There are case workers who help both the tenants and landlords keep things running smoothly, and it is an excellent program to work with. This is my preferred program to work with and I have a large number of CDC tenants.

Temporary Housing Programs – There are a number of programs that provide temporary housing, for example if someone loses their home in a fire they may need housing for a few months while things are being sorted out. These are excellent programs to work with as a landlord; these organizations will pay high rent rates in exchange for the flexibility of short-term leases of furnished rental units. These are great programs, but the demand for them is less than others which is why they’re less well known.

Options for Community Living – Options for Community Living is another not-for-profit organization, similar to CDC, funded by Medicare/Medicaid. They are typically the leaseholder as opposed to the tenants themselves, and they will often pay full FMR and utilities. In many cases they will rent a house with multiple bedrooms and place tenants in each room. This is another excellent program and one I recommend working with.

Homeless Shelters – Finally, let’s talk about homeless shelters. Homeless shelters have the potential to be a very profitable investment, but you need to make sure you can secure the proper permits which isn’t easy. Consider also that compared with other types of real estate investments there is higher risk associated with homeless shelters because you cannot offer sell my house fast Long Island solutions.

. There are two ways to proceed:

  1. You can rent the property to an organization which runs the homeless shelter out of that property, or
  2.  You can own the property and also operate the homeless shelter yourself. This is not an easy task, but it can be very lucrative, with the government paying rental rates per bed in your shelter. Depending on the size of the rooms in your property it is possible to have a high number of beds, making a single building return a greater profit than it might otherwise.

These are just a few of the types of programs, Section 8 and otherwise, which are available for you to work with as a landlord on Long Island. I highly encourage you to investigate all the options available to you by speaking to both the people who run these programs and property owners who work with them, you may find something that’s a perfect fit for your business and your property.  Call us today to sell my house fast Long Island!