Complete Section 8 Investing Guide: From Market Selection to Tenant Management

This video is by far the longest and most thorough section 8 tutorial/guide that exists on YouTube. As you guys can

tell, it is several hours long and it is a part one to five combined video that I made because I don't like to gatekeep. I

am a section 8 investor. I'm a licensed realtor. My job is to provide as much value to you as humanly possible so that

way you guys can get into section 8 investing on your own. So, please subscribe and comment down below if this

has at all been helpful to you. And I do have a one-on-one mentorship. However, it's not like I'm giving you a

PowerPoint and then ghosting you. It is a truly a one- on-one mentorship where you're going to have my personal number.

We're going to be talking pretty much every single day. I'm going to be helping from beginning to end so that I

can help you avoid as many mistakes as possible. We're not going to hit any $10,000 roofing issues, etc. So if you

are interested in that, click the first link in the description, book a free call with my team. Otherwise, click the

second link in the description and join my free school community where I have custom modules. You can talk to over a

100red fellow investors and I do a twice a week live Q&A call where you can literally just ask me anything. I like

to provide as much free and open no gatekeeping resources as humanly possible. So if you're interested, click

the second link in the description. All right, and now enjoy the several hourong guide. See you guys at the end. Hello

everybody. I'm Joseph Tary, realtor in the state of Virginia, and welcome to part one of my brand new series, Section

8 Investoring Master Class, a step-by-step guide on how to buy cheap properties with as little to no money as

possible and get Section 8 tenants inside of there with the government paying you monthly for them. In this

series, I'm going to break down every single step needed. No gatekeeping whatsoever. I don't believe in that.

This series alone could save you thousands in mistakes. So, please don't just watch this part, watch the whole

series. So, part one is going to be all about picking location. So, it's an introduction into location selection.

And I want to do as little cuts and edits of this as possible. Uh because I want to show you guys the entire thing

from beginning to end. So, if this seems a little bit long or just not edited fully, it's because I made a previous

series where it was all cut up and, you know, edited and fancy and I felt that it was not as uh productive as I wanted

it to be. It was a little more showy than I wanted. So, this whole thing will be minimal edits, just some cuts. And if

you see me looking to this direction a few times, it's because my notes are all in here. you know, I'm not going to

memorize everything that I need to say. So, if you see me glancing, that's why. And I'm also going to be sharing my

screen the entire time. Okay. So, first off, how do you even pick a city? Well, there are multiple tiers of cities. So,

I'm going to go through that right now. So, there are A tier, B tier, and Ctier cities. A tier is you think of a big

city and these names pop up, right? There's Miami, New York, Los Angeles, you know, those those cities, right? And

in general, you should avoid these completely. In fact, most of the time you're going to avoid the entire states

that these are in simply because they're too expensive. Now, you can still do this strategy in those areas, but you'll

need a lot more money, which I imagine would not be too appealing for most of you. Uh like for example, um Washington

DC comes to mind, right? So, let's go ahead and go on Zillow and I'll show you an example of the type of properties we

have in these A tier areas. So, let me go on Zillow. We'll go ahead and just put in DC. So, let's clear all

of the filters. And we're going to go for DC is known for their multifamilies and their town

homes. So, we'll just do multif family. Maybe we can find an apartment complex, right? And I mean, you can see right on

this right side already, we have some crazy numbers going on. So, uh here here's just a good example. You know, I

it was just one of the first I saw. This is in Washington DC. It is 1,500 square feet. I imagine it's a duplex. Yes,

renovated duplex. I mean, it looks gorgeous. These are the type of homes you'll see in these A tier areas, right?

I mean, they're gorgeous homes. They're going to appreciate like crazy, but honestly, with interest rates nowadays,

and you know, you probably will only put 20% down. I imagine you'll break even on this, maybe make a little bit of money,

right? But most of your money is going to come from appreciation. So, oh, you can even see it right here. It looks

like this is almost like a flip. Um, it is a flip. Sorry. So, uh, let's go ahead and see the price

history. So, oh man, it's been listed a lot. So, 2014 it was sold for 500 and now in 11

years, 10 years, it is close to damn double that, right? 870. So, as you can tell, you know, it is it is going to be

a a heavy amount of appreciation going on here. Um, now let me show you what Btier

cities are. So, Btier cities are cities that um you might live in, you might have visited, um you you can vaguely

recall them, right? Um if you were given a minute or two, um but they're still a little expensive, right?

So this uh A tier city, we're looking at like a million dollars, right? 800K. So let's look at a Btier city. So like

Baltimore, for example. I'm saying that just because I live in Fredericksburg, Virginia. Baltimore is about an hour and

a half away. Okay. So let's just look at anything. Um

you know, you have homes that are like this 625K and this place looks great, but that's not really a good investment.

like looking at the investment pieces. We'll look we'll look for a second. Okay, this looks decent, right? 300K 4

bed townhouse. Um 1,500 ft². It looks beautifully renovated. Uh some some steps right there. But either way, this

looks gorgeous and it's 300K and this is kind of what you'd find in a B tier city, right? And that's not to say that

Btier is bad. If you want some medium appreciation, right, maybe not as much as DC, but you like appreciation, you

don't want like some crazy cheap home that you're scared is going to depreciate

um or or break down or whatever the case is, Btier cities are great. So, A tier, I mentioned them, Los Angeles, New York,

basically the the capitals of places, right? Um whereas B tier I like to imagine is anywhere from like 200K to

500. So Baltimore, Fredericksburg, Virginia, you know, if we're looking in Fredericksburg, I believe average home

price is about 430 here. However, you can find some cheaper homes. Um like this one for example, that was quick.

350. Uh this one right here, it's a split level home also 350. It's a four bed. Um, you know, uh, almost all of

Texas. So, I'm just naming places so that you guys can do some research into them. I'm not saying you should 100%

invest in these places. Uh, I'm actually licensed, so I can't fully just say that as a realtor. Um,

but I can as a consultant in my course. So, uh, some other examples are, oh man, I'm blinking. Yeah, most of Texas,

Baltimore, some place in upstate New York, uh, and a lot of the Midwest, if I'm being honest. So, yeah, uh,

Richmond, Virginia. Now, let's go ahead and look at, um, a C-tier city. So, these are cities that I'll say them and

you'll go, "Oh, yeah. I I I guess that place exists, right?" Um, maybe you don't want to live there. I'm sorry if

you do. Um, and I'm offending you. Um, maybe you don't want to live there. Maybe maybe you're only there for work.

Um but either way, they have jobs. They have a population. Um yeah, so some examples and maybe this is where all of

you start dialing in. Uh Birmingham, Alabama. Um some other places in Alabama,

most of Mississippi. They're they they rent for a lot less in that area, though. Keep that in mind. Uh

I'll teach you how to do rents later on in the video. Uh Detroit,

Michigan. Uh Cleveland, Ohio. Toledo, Ohio. Don't look at Akran. I know that a lot of gurus say Akran. That place is

flooded with investors. Right? If you're going there, expect to be paying like 200k. St. Louis, Missouri, and there are

some more places, but I just don't feel comfortable mentioning or recommending them. And the reason is because, you

know, there's somewhere like Memphis, Tennessee, um, where homes are under 100, but for a reason, right? It has the

highest murders in the entire world. Uh, there's other places, you know, like there are some in Virginia that are

under 100, right? But I imagine it's one in 20 square miles. So, it's not possible to buy it and then scale. You

also want to make sure you pick a place that you imagine staying for at least 5 to 10 years or or keeping your

investments there for 5 to 10 years at a minimum. And there's a few reasons for that. The first is that um if you end up

using a DSCR loan, um these types of loans typically have a 54321 prepayment penalty, which basically means that you

can Google it. Um but first year, uh if you sell the house within 12 months of buying, you have a 5% penalty on your

loan price. and then 4 321 for each consecutive year after. So, in order to sell it, you know, penalty-ree, and

granted, these aren't big penalties. You want to keep it for 5 years. Um, or you can just pay the penalty or, you know, I

could do some digging and try to find a lender that won't do a 54321, but most do. Um, or else they wouldn't go so low

in home prices. Uh so yeah, you want to make sure that you keep the homes in there for at least five years on

average. And it's just good for scaling. You know, you don't want to be bouncing place to place. It makes makes managing

a lot harder. So uh the next thing I wanted to talk about is um HUD rental rate basics. So FMRS

uh and I'll read some definitions on this side. Uh, the HUD's fair market rent is the baseline for what section 8

will pay depending on bedroom count. Um, so I always recommend you find a place that has a two bed or a three bed that

is going for at least $1,200. Um, just because, you know, that's not a hard and fast rule, but I've just

noticed if you can get that 1,200 marker, that's typically an okay sign that it's worth it to keep looking in

the area. So, yeah. And oh, let me show you how to do that. So, we'll go ahead and look at um somewhere like Cleveland.

Again, I'm not saying just invest in Cleveland, right? I'm saying do your own research. And this is just one of the

areas. Um oh man, I'm sorry. I'm going to keep jumping from topic to topic a lot, but it's just coming up as I

remember them. Um how do you find a lot of these cities? Like maybe you can't think of cities or maybe you're just bad

at geography. Maybe you're not from the US. You can definitely still do this as an investor and I'll talk about how.

Hint hint, you need 35% down payment um if you're a non-citizen. So, it's still possible as a non-citizen, just a little

bit more down payment. But let's assume you are one of those people. Okay. So, how do you find these cities that I uh

mentioned previously? If you aren't familiar with US geography, well, you can use this website called Investor

Lift. You can make a new account. Um it's free, at least to make the account, it's free. and we're going to go ahead

and just explore this website. So, it'll bring up a map of the US and you can put in the price that you're looking at. So,

let's say you're looking at up to 200,000 and it can give you kind of a hot spot

locator. So, as we see, we see like 500 here, 114 here, 246 here, 291 down here. So we can zoom in and zoom in again and

we can kind of see what the hot spots are in red and orange. So I do see down here a red spot 155 that is Houston.

Houston, Texas. So then you can go back on Zillow and you can type in Houston. Whoops.

Houston, Texas. And now you can browse the homes. Right. I see a be Oh my god, look at this place.

That's a castle. My lord. Anyways, sorry. Uh here's a three bed for 215. You know, this is

kind of what we were we were saying for uh Texas. You know, here's another three bed nice

place for 196. So, this is good for finding cities, but if I'm being honest, do not look at properties on here,

right? because even it just feels scammy. I've never fully used this, right? So, maybe I'm talking out of my

ass here. Um, but I've just it doesn't feel right to use this. Like, it's sketchy. That's a good way to put it.

So, first off, you have to request the address to even like do anything with it, which that by itself is weird

because they're just scraping your data for sure. That's what they're doing it for. Um

or you know it'll say 117, right? I'm sure this house is on Zillow somewhere, but win it now for 127.

Clearly they're pocketing the 10K, right? Um at least I'm assuming. Sorry, this is all assumption. And the only way

to like connect with them is by using their lender and their realtors and whoever. I don't like that. It seems

sketchy. So, uh, I use it to find cities, but once I know the city, I just go on Zillow.

Where was I? Yes, FMRS. So, we'll go ahead and look at Texas once again. We'll look at this house right here. Uh,

4202 Oats Street, Houston, Texas. So, let's say that you found a city and now you want to figure out what FMRs

um can go for, right? So, we'll scroll all the way down and we'll find the county that it's in. Texas Harris County

and it is 7702. You're going to go on Google and you're going to just type in

uh HUD FMR and then the year. And typically, the first thing is what you need. You're going to it's a.gov

website. Scroll down, click click here, and then you're going to go to Texas. I already forgot which area that was.

Harris County. Uh, okay. Zip code 77020

right there. So, a three bed is$,450. And that is not as good as I was hoping, but

I kind of figured it was just a random example. But that is how you find the HUD rates. And you might be wondering,

oh, but Joseph, is this So you're telling me if I list it on Zillow, this is how much the government will pay me.

No. No. A lot of people get that wrong and maybe

I didn't explain it well enough originally. This number is simply the maximum the government will give you um

for this property, right? That is all it means. It is not how much you can rent it for. It is not uh a uh a guarantee,

right? It is simply the government saying, "Hey, we'll give you up to this amount." That is all it's saying. So, if

you discover, right, let's go on um we can even see what does Zillow estimate. So, it estimates you can

actually rent it for$,743. If you list it as 1743, the government will only give up to 1450. And that is

if you're paying utilities. This 1450 number includes a utility voucher. Um, which I can also show you that as well.

the way it works and there's actually a calculation uh I believe on the previous page but that 1450 payment um it'll

actually be like 1,300 is the government rent portion and the other 150 is a water voucher,

electricity voucher, gas voucher um that make up it. Right? So, I don't know exactly where this um Houston one is

just because I picked it as a random example, but off the top of my head, I know

um the Cleveland Housing Authority. I know where that one is. So, if we go to cmha.net

right here, and I I'm just doing this to show you as an example, the rent section.

Where is it? Right here. utility allowance chart. So this is a very good example

um to what I'm talking about. So a three bed right right here. So this website might say

you know a three bed gives 1468 right you can see for example uh if you are paying for the trash

you'll get um or I'm sorry if you don't pay the trash and you put on the tenant you know $9 will be subtracted because

they're assuming once again this 1450 or 1468 figure on this website is in is if you're paying the utilities All right.

So, another example is uh right here if you have natural gas and you're making the tenant pay it. Um that is $62 gone,

etc. Now, you're probably asking, "Okay, Joseph, so now that we've realized that that number on this website is only what

they can give you, right? What should I actually list the home for?" I could list even though this says, let's say,

2,000 right here, I could list it for 3K, 4K, 5K, any number I want really. Um, however, the government will only

pay up to two and and the tenant has to pay the rest, right? So, you kind of just treat it as any other rental. Find

what the surrounding homes are renting for and just go based off that. Right? So, let's say let's just look at

Cleveland just because that's what I'm most familiar with. We're going to look at this this first home. I I barely

looked. Um, a little rough. Kind of looks uh uh whatever. We'll use it as an example. So

perfect currently rented to section 8 tenant who has been there for four years. All utilities are paid by the

tenant. um it is 950 a month that they are getting and that way the again tenant is paying all utilities and in

fact I think that's probably a little bit low uh as to what it should be but that is just an example right for all I

know all the homes on this street are also renting for about $1,000 for section 8 so even though the website I

was just showing you said like $1450 50. That is only the maximum. That is not what you actually can rent it for. Um

the reverse is true as well. So we'll go ahead and look at something like the affordable.com.

This is kind of like Zillow but for only section 8. So we'll look at this exact zip code 44108

Cleveland. All right. So, three bed, 1,400 ft² single family. So, we'll only look at

three beds and we'll only look at single family residences and we'll see what they're

renting for. Uh, so we're seeing uh this is a good example. 44108, 3D uh about the same square footage, and it

is going for,300. And it says it's a waiting list, meaning it already got applicants. Let's see. Paid by tenant.

Oh, they're saying, okay, all of these have to be paid by the tenant. However, the owner pays the water, sewer, trash,

so it seems to be about 50/50 for the um utilities. Yeah, I can't tell exactly where or when it was listed for, but I'm

sure if you call the agent, you'd be able to just directly ask to see what the average uh list times are for this

type of home. But it seemed like, okay, 1,300 was fair with about 50/50 split on utilities um for that type of square

footage. So again, it is not what you see on the government website. That is just how much they're willing to pay at

a maximum. So you see if you see people listing it for 1,100, you know, 1,200, guess what? If you put it for 14 because

you think that's what the government website will give you, you're not getting a single applicant.

And you might think, oh, why not? They're section 8. Well, guess what? They still typically pay a portion of

the rent. Maybe it's not the whole amount, right? But maybe it's still 10% 20%. And with somebody only making $800

a month, 10 or 20%, that is a big difference. To you and me, it might be 50 bucks. To them, it might be a week's

worth of their salary. Okay. So, now that I kind of told you how to find the locations and how to um figure out what

you could actually rent it for reasonably using affordable.com, now it's time for uh the next step,

which is you want to actually look into the cities themselves, right? You want to do some background research on them.

So, uh we can go ahead and look at this site that I like using, city-data.com. And you can go really specific with this

website. So we were in the zip code 44108. And we can look at all of the details.

So 52% renters. It looks like in 2000 the population was 36K. In 2010 it dipped

down quite a bit, 25K. And it's estimated now we're at about 20K. So this seems like a declining area. Um

what else can we see? It is predominantly uh black as well as the second is white. So 88% black area.

The estimated uh house value is 68K with the average being 220. So, if we're being honest, this is a fairly um poor

area. You know, I'm I'm just being blunt here. Um that's that's what I'm seeing. So, it's up to you if you'd like to

invest in an area like this. Um if I'm being honest, all I ever really The population is a bit concerning, but

what I look at most is I I like to keep things simple, right? Can I get a good deal on a house? That's number one. And

number two, can I rent the house at the price that I want to make my numbers work? And number three, can I do it for

probably at least 5 years? That's all I really care about if I'm being honest. Because

if I can do that, then I can reliably rent it for at least like 5 years. Um, and if I don't like it after the 5year

marker, I can do a 1031 exchange, which is when you almost trade the house for a different one, um, in order to avoid

paying capital gains tax. So, I mean, I like to keep things simple,

right? I I don't like to overthink these things because it'll cause analysis paralysis. I mean, uh, you know, maybe

you don't want to choose the zip code specifically. Um, but you know, that's kind of that's kind of my point here

that as long as it works for you, that's really what matters. So, if we choose

somewhere else, like let's say 44103, there's a 76k house here. How is 44103 doing? Let's check.

All right. 44103 73% black. Uh, second place is white.

again uh home price and is pretty low 63k average. And where is the population? That's what

I was looking for. Oh, sorry. Right here. So, this is actually doing kind of the same if we're being honest. So, the

populations are dipping in this area. So, that's something you want to keep an eye out.

We'll go ahead and look at maybe this one. 44111. And this is a better one. It, if I'm

being honest, it's stayed pretty consistent. It's only gone down a pretty minuscule amount. Uh, in fact, it's

almost the exact same from 2010. So, I'd argue this hasn't gone down at all. Um, granted, this was a more expensive area.

So, uh, that's kind of the point that we're seeing here, right? It's Oh, it's mostly white, huh? Go figure, right?

Uh, okay. Average home price here is 143. So, I'm going too much into this, right? But my point is this website is

great for looking at the details of all these areas, right? And again, all I really care about, again, in my in my

opinion, I'm looking this as an investor, right? All I care about is can I rent this at

the price I want for at least, you know, 5 years, maybe 10, right? And you have to keep in mind that once you find a

good section 8 tenant, they very rarely leave. I mean, you saw the listing earlier, that tenant was there for four

or 5 years that they typically stay for long stretches of time once they find a place that suits their needs and isn't

run by a slum lord. Before you start investing in these areas, you also want to make sure of the actual housing

authority rules and uh regulations. So, you can pretty easily find this. So, let's say Fredericksburg, Virginia,

right? I can just Google rental laws and boom. What's this first link? Tada! A full 41page document of all the laws and

regulations for landlords. And I believe where does it say? Uh

yeah. So it just gives every rule possible basically. And the reason that I'm so um the reason I'm even saying

this is because some places will require special certifications or certificates, whatever the case is. For example,

Cleveland being one of them. you need a lead paint certification. And I actually didn't know this until I um we got a

house in Cleveland, uh an investment, and we ended up getting it and realizing it needed a lead paint certification

only after we finished the rehab. That took like 2 months. And guess what? The city said lead lead paint certifications

take 60 to 90 days. So, we messed up there, right? We wouldn't have messed up if we just called the housing authority

beforehand. um or even just Googled the landlord laws. So, here is another place we can see tenant and landlord

resources. Okay, that site's not loading for some odd reason. That's that's pretty weird. Uh whatever whatever that

is. Uh but that's my point where you want to do your research and even just call the housing authority and say,

"Hey, I'm thinking of investing in the area. Uh could you pretty please tell me if there's any weird laws or anything?

I'm not from the area um that I need to be aware of. And they they could help you out there. Uh you can also call them

and ask about the wait list. So you can say, "Hey, how long is the wait list? Do you guys have a huge influx of

landlords? Like do you have too many landlords in this area already?" Or, "Do you have not enough tenants?" Um you

could say, "How long is the tenant wait list? Is there even a wait list open?" Um and if they're saying, "Oh yeah, you

if you're a tenant and you apply, we'll get you a voucher in 2 weeks." then that is a very bad sign. That clearly means

there's too many landlords. Um, and the opposite could be true. They could say, "Oh, if you're a tenant, you can't even

apply. We have so many people on the wait list. We desperately need landlords in order to get them more housing." That

could also be true. And that is a good sign, right? Supply and demand. So now we want to make sure of inventory

levels. And this is something that I see so many people guilty of that they mess up and it infuriates me because look, if

I'm being honest, a lot of it's common sense like at the end of the day. So let's take

uh what's a good example? What's a good example? Houston, Texas. I'm just going back to my previous examples. Let's say

that you only have the budget for a house that is $100,000, right? Which is fine. That is a lot of people's budgets.

We'll put a maximum of 100K and you want it to be at least a three bed. Let's say at least a two bed,

right? And you want it to be a house. Multifamilies are good. However, I don't recommend it for section 8. And the

reason is because I don't typically like having section 8 tenants share a wall. If I'm being honest, I've it's just kind

of a headache. Uh, plus multifamilies rent for less. So, a lot of the time it's the same returns for more um

headache. Uh, you know, each unit will rent for 600 instead of just renting a full house

for 12. So, I like multifamilies, but I recommend regular tenants for those. Um, or

um, a lot of the times if you have a low income or you want a house hack, they're fantastic for that. I wish I had a

multif family here in Fredericksburg to buy, but they don't exist really here. Um, because what a lot of people do is

they use something like a 5% down payment loan to get a multif family house. Um, and then they'll live in one

unit and rent out the rest. And I think that's fantastic and it is what I recommend to a lot of my clients as well

if you are low on cash. Anyways, we're looking at houses only up to 100K. And would you look at that? Only 28 results.

Now, you might think, "Hooray, 28 results. I can buy up to 28 homes in that area." No, you can't. 28 homes,

especially this scattered, right, is going to a cause a huge headache for your realtor because they're going to

have to run from one area to another all across the city. Um, but second, these homes are b being

bought by all cash buyers or corporations who again are basically all cash buyers. Like you can even see, look

at this home. 14,000 views. 14,000 and it was like posted 17 hours ago or something like that. Um, like

that's crazy. So clearly you are not getting this house. Like, I'm sorry, you're not.

Like, we'll even look at the newest homes. So, this one's 75K and 9 hours ago and 175 views already

and probably six saves because it'll be six showings and it's 9 hours ago. Like, you are not getting these homes. I'm

sorry. Like, I know that's a buzzkill and I know I'm being a negative Nancy, but you will you are wasting your own

time and the realtor's time if you're trying to go for homes in this low of an inventory area. Now, you might think,

okay, so what what do you think is the criteria to find these like what do you think the home prices are in this area?

Well, I like to look at least 80 results. 80 that you could close your eyes and pick any of them, right? So, if

you're set on Houston, right, uh let's up the price to 150. Oh, now we have 172 results. So, guess what? That passes the

80 I was talking about. So that means if you're wanting to buy in Houston, Texas, chances are you're going to be hitting

up to 150K, right? Um like for example, this would be a good section A house right here. It's 130, right? So expect

to be buying between 100 and 150 if you're going for Houston. Uh another example, let's do Fredericksburg where I

live. Um we'll start off at 100. Guess what? Nothing.

Up it to 150. One result. That's not enough. 200. Two results. That's not enough. 250. Three

results. That's not enough. Uh, how about 300? Five results. That's not enough.

350. Okay, we're getting somewhere. 18 results. Again, that seems like a lot, but it isn't. You're going to be beaten

out here. So, we'll consider 350 the baseline. Now, let's see. 400 37 results. So, even that doesn't have that

many homes. Let's increase it once again. 450. There we go. Now, we're looking at

64. Now, granted, Fredericksburg is a much smaller area. I believe you have a population of uh like 20 to 30,000

people. So, incomparable to something like Houston. So I would say in smaller areas you're looking at 50 50 results.

So we are seeing you know 50 results that would probably be somewhere between 350 and 450k. That would be your

purchase price here. All right. And kind of a funny trick that I like to do. It's called uh I didn't come up with it. It's

called the Starbucks rule. You want to see how close the home is to a Starbucks because Starbucks likes to invest in

higher appreciation areas. Um like they like that's where they like to put their stores. Let's say you're interested in

this home. I I showed it earlier. 3 350K 6000 Oak Grove Drive. Let's go ahead and pull up Google Maps. And the closest

Starbucks is 6 minutes away. That's a good sign. So, if it's under 10, that's that's usually an okay sign. Again, this

is not some random hard and fast rule. It's basically made up. I just am noticing a common trend is all. And

what's probably a better indication of a strong rental is the distance it is from places like factories, hospitals,

companies, etc. All right. So, I also wanted to give a piece of advice, which is um higher inventory means less

bidding wars, and that is always a good thing, right? It's going to make the process so much easier. Now, if you want

to get into these bidding wars, you can. Um, but I don't recommend doing them until you have leverage, right? If

you're doing a 3% down payment, 5%, 20%, you're going to lose almost every time. So, and I always recommend a home

inspection. you shouldn't ever um wave your right to one. So, you can do bidding wars if you, you know, already

have some properties under your belt or okay losing the bidding wars and preferably are all cash that then you

can do the dog fighting. And if you're also worried about investing in really poor neighborhoods, um not poor by

income, but just bad choice neighborhoods or like Dtier neighborhoods that you probably

shouldn't even be stepping foot in, ask the realtor that I refer you to because I will be referring you to a realtor um

throughout this process. Um especially if you join the uh section 8 mastery program I have, you'll have access to

all of my connections. But if you end up um getting with the realtor, they know the local area. Like directly ask them,

"Hey, is this an okay area to even be buying in?" And they will just directly flat out tell you. Like yes, their job

is to sell you a home, right? But I interview my agents and they have repertoire with me. They're not going to

give a bad recommendation because then I'm going to stop using them. So rest assured, you can generally trust them.

And once again, cheap does not always mean good, right? That's what the home inspection is for. That's what your

realtor's for, to give you guidance, as well as me if you end up joining my mastery program. Um, cheap does not

always mean good. Just cuz a home is listed for $60,000 does not mean it's the deal of a lifetime, right? You want

to you want to make sure why it's a it's a it's a cheap price, right? Maybe has water damage, fire damage, maybe it's in

a really bad area. You should go on Google Maps and um you know, we'll do this home as an example. Uh go on Google

Maps and just look at the street view. And there's the home. So, let's look at this area. How is it? I like to say,

would you meet someone on Facebook Marketplace at 9:00 p.m. here? Or maybe you don't want to meet someone on

Facebook. Would you go on a jog or a walk at 9:00 p.m. in this area? And if I'm being honest, I mean, there's a main

road right here, which is like slightly annoying, but this area seems fine. I mean, it's a single family area. You

know, the cars are relatively clean, right? They're maybe not like brand new, but they're clean, which is nice. Um,

streets are cracked, but, you know, not major potholes, no overgrown weeds on every lo on every step, right? Um, so I

I would approve. I mean, come on, that looks pretty. So, once again, um, and I'm going to read off my list here. Um,

A tier cities, high budget, high appreciation. Uh, Los Angeles, Austin, New York, DC, uh, lower cash flow and

sometimes break even depending on interest rates, higher home prices, stable home prices, um, and highest

appreciation possible. Um, Btier cities, medium budget, right, like Baltimore, medium appreciation.

So, Baltimore, Chicago, New Orleans, Richmond, most of Texas. So, medium cash flow. Um, maybe you'll match the stock

market. Uh, medium home prices, usually stable home prices, unless there's some type of economical recession, and just

average appreciation, right? We're talking 5%, whatever the case is. And then there's Ctier cities, which I

imagine most of you will go for. low budget and low to sometimes no appreciation. So, Cleveland, Detroit,

St. Louis, Birmingham, Jackson, Toledo, like I mentioned earlier, high cash flow, low home prices,

uh variable home prices, right? So, it might dip, it might go up. That's kind of just part of the risk.

Um, and I usually say I don't bet on appreciation. you know, I'll look at an average of maybe three, which I believe

is below average. Um, but I'm not a betting man. I'm not a gambling man. A lot of the time I'll just say as long as

the home price stays the same, I'll be happy, right? Maybe if it raises a tiny bit just to cover realtor fees when

selling, but honestly, if as long as it stays the same, that's what I care about.

And again, this is a cash flow strategy that I'm talking about. It's not an appreciation strategy. If you want an

appreciation strategy, that's great. but look at Btier cities or C or or A tier cities. All right. Now, the next thing

we're going to talk about forming an LLC. Disclaimer, I'm not a CPA. I'm not a tax professional. I'm not an attorney.

Um I am just a dude who has done this before and is going to show you what I do. So, that is just all I'm advising

you on. So, um Oh, yeah. Why do you even need an LLC? That's what a question I get a lot. Um the reason is because

it protects your assets, right? So, and that's that's a big reason why as well as tax benefits and all that, but um I

imagine the main reason most of you will want it is just because of um asset protection. So, let's say I don't have

an LLC and I just buy a home in my personal name and I get a tenant in there. If the tenant slips on the

sidewalk and breaks their leg and sues me in court, they can sue me and, you know, claim my uh car. They can claim

this house that I own, my personal home. They can go after my bank accounts. They can go after my stocks, right? But if

the home is owned under under an LLC, then they can only go under the LLC's assets, which typically is just the home

itself. Meaning, my car can't be touched. This personal home can't be touched. Usually only the rental itself

can be can be touched. So, but you need to set it up properly as well as um make sure you aren't doing

any um anything that can pierce the veil of your LLC. So, there's a lot of different reasons

you should get an LLC. Property repairs, um, you can write them off. Uh, mortgage interest can be written off. Um, uh, and

also, um, you can use them for DSTR loans, which I will cover in a little bit. So, how do you set up an LLC? It's

pretty easy. So, I'll do it for Virginia just because I'm used to it. So, I like to just Google the state

Virginia LLC registration. And I actually have a separate YouTube video on this. So, click the first link. It's

a.gov website. Perfect. Start a new business. Form a new Virginia LLC. 100 buckaroos.

So, fill online or file online. You're going to create an account. Um, I'm just going to log in with mine. All right.

So, now that I'm on the website, I can go to uh online services, new businesses.

I am filing a limited liability company. Do you have a name reserved? No. And we're just going to make one up. How

about we do Oh, and you ready here? I'll give you a little tidbit right here. Um, this is something that I I stupidly

didn't realize a few years ago when I was making my first one of these. We'll do Katari rentals.

Yay. So, if you check the availability, it'll say, you'll see not allowed or name unavailable. Now,

you might think, why would that be possible? Does someone have this exact name? No, it's because I didn't put the

word LLC at the end, and I didn't realize this a few years ago, and I I spent like 20 minutes on it. There we

go. Name available. We'll click next. Uh you can typically I like making a new separate Gmail for everything related to

your business for this rental. So put in catary rentals. Yaylcgmail.com.

This is fake. Okay, perfect. And this will be just under general perpetual

and registered agent. So if you are filing for the same state as yourself, you typically uh I'm sorry, if you're

filing an LLC in the same state that you are in, uh which by the way, sorry, I should have said this earlier, you

should file an LLC in the state you want to buy in, right? So, if I want to buy in Ohio,

um, I should make an Ohio LLC, um, as a foreign entity. If I want to buy in Virginia, I should make a

Virginia LLC. So, if I want live in Virginia, I have a Virginia accountant and I want to buy a house in Virginia. I

typically can put myself as a registered agent or you can ask your CPA to put them put them down as a registered

agent. However, um the reason you cannot do this for out

of state, so let's say I want to make an Ohio one, I can't put myself because the registered agent has to have a legal

address in the same state and that is a problem because you don't live there. So, how do you go over this? Well, if

your accountant is in that state, fantastic. You can try to put them down or you can just Google uh the states

registered agents and the first like 10 results are just

going to be um places that do it for like 50 bucks a year and you can just list their address. All right, so we'll

just put myself down because I can. All right, now that we've gone to the next step, you're going to put your principal

office address. basically the address you want to use uh for this. And I believe this one does not have to be in

Virginia if I remember correctly. Uh but if I am wrong on that, I apologize. And it might be best to get a PO box in the

area you want to buy in. So I'm putting just a fake address right now. Okay. Management structure manager managed.

Uh, I always skip the supporting documentation. And then you simply sign it right here,

review it, add it to your cart, and then pay. And that's about all you have to do. Then in your email, you're going to

get a few documents. You're going to get the articles of organization as well as a receipt. And you're also going to want

to need an EIN at this point. So now you can just Google EIN. I I think it's like EIN sign up. Maybe. There we go. Okay,

good enough. Get an EIN. So, the IRS has an online website you can fill out. Uh, I believe it's only

available, which is weird that it's only available during business hours. You would think this is an online bot. Don't

know why it can't be active during business uh during any hour, but it is almost 11 p.m., so it's not working.

However, if this website is working, then it basically just asks you like, "Please insert your LLC information such

as principal office address, owner of LLC, etc., as well as I think your social." Um, and then it will simply get

you an EIN emailed to you. So, hooray, fantastic. Um, and that's about all you would need. And if for some reason it

still doesn't let you, it gives you some type of error. What you'll have to do is you'll have to submit an SS4 form and

you'll have to submit it. I believe there is a uh you can't email it. You have to actually fax it in typically or

mail um this form in. It takes multiple weeks. It's very annoying. Yeah, you go to this website for uh instructions.

I've had to do this one time and it took weeks. It's very annoying. the the online bot is so much nicer if it's

working. All right, everybody. Let's take a break right here. I've been recording for an hour, 6 minutes. Um, I

wanted to talk about the section 8 mastery course that I just opened. So, it is a mentorship program and the

reason I made it, even though I have been in the past kind of opposed to making like courses. Um, the reason is

because I saw all of these gurus with their Ferraris and such um, basically spouting like incorrect info and selling

dreams, right? Marketing tactics in order to get people to sign up for their for their 7K course, right? Where they

were giving inaccurate figures or giving strategies um, that simply don't really work for

beginner investors um, or people with low capital. So, I wanted to make a actual mastery program

and a mentorship program that worked for a beginner, right? That wasn't scammy. I'm not selling you a a dream with 40%

ROI. No, I'm not doing that. You you'll even see in our sales calls that we're we we say very realistic stuff. Um, so I

wanted to say here is what you'll get and um, please listen in because it you'll

see the reason why um, it's not really just a course. So we'll help you find the best markets uh, pass the HUD

inspection scaling from, you know, one property to 10. Um, and here's the important part. You can DM me at any

time, right? And also join a community of fellow investors. So that's pretty cool. you can directly just DM me and

talk to me and I'll help you with your issues. Um, there's also weekly group coaching sessions. So, every week we all

hop in a call and I lead it. It's I'll answer Q&A. I'll, you know, find deals live, etc. Um, and you can book

one-on-one coaching sessions if those group ones aren't enough for you, like for free as long as you're in the

program. So, I think that's pretty cool. I don't think many other gurus are doing like direct one-on-one time because

they they don't they'd rather just give you a PowerPoint and then leave you to dry. But I don't do I'm not doing that.

Um and I think that the price is easily justified because you get these one-on-one coaching sessions, group

sessions, and if I can help you save or if I can help you even avoid one mistake, then you'll

made up make up the cost immediately. For example, if I help you avoid a roofing mistake, boom, 10K saved right

there. So, I view it as an investment and a way that I can personally help you um go through this process. So, if

you're interested, click the link in the description. And you're going to want to do this fast because I only have a

limited number of slots because again, I am helping everyone one-on-one. I only have so much time that I can give. So,

now we're going to talk about financing. Um, and I'll talk about some vocab that I'm going to use. So, gross monthly rent

means the total monthly rent you expect the property to generate. No expenses or anything, just 1,400, something like

that, right? Um, I'm also going to talk about NOI, which is uh rent minus operating expenses. So, it's minus taxes

minus insurance, maintenance, management fees, etc. cash flow, which is the income left

after mortgage payments. And this is the part that I think the gurus try to scam you. They'll say, "Oh my god, my

property is generating 700 in cash flow." That doesn't mean 700 net. That means

um the 1,400 gross minus just like the mortgage payment and nothing else. And I think that's kind of scammy and

misleading. um realistically we're going to get you like $350, $400 um after net, which

again is still a great return, but it's not seven. Um so those are the those are what we're going to talk about. Oh, and

um if I just refer to just net, it's the same thing as net operating income. Okay, so how do I do my calculations? I

do it two ways. So I like to keep things simple. I think analysis paralysis is very real and affects a lot of people.

So, I just literally Google rental property calculator and boom, I click the first one and this

is what I use if I'm being honest. I know, I know you guys might be like, "Oh my god, why is it so simple?" It's

because I I I like it that way. I don't want some weird complications going on. So, um, if you want something more

complex, then I use this app called dealcheck.io. Again, it's not beginner friendly. I think it honestly gives too

much details that confuse a lot of people, but if you know what you're doing, um, then this could be a great

resource. I have an affiliate link. It's going to be down below. It's right here. Dealcheck.io question mark fp_refals

joseph81. And it'll be linked below. Uh you can just like type in the uh address and it'll automatically pull in a bunch

of info from public records. Uh that is such a blurry image. There you go. That's a that's a good

example of kind of how it looks like the UI. Okay, so now we're going to talk about

um the 1% 1.5 and 2% rules and what they are and why I follow them. So 2% rule simply means you can rent it for 2% of

the purchase price. So if you buy a home for 100K, you want to aim for 2,000 in monthly rent. However, you can only

typically hit this with a burrish strategy. Buy, renovate, um rent, refinance, repeat.

Uh it's very hard to hit with just like a turnkey property. The 1.5% rule, I think, is um probably the benchmark most

of you will use for turnkey properties or close to it where you're not doing some crazy rehabbing. Again, it's the

same thing, just you can rent it for 1.5% of the purchase price. So, if you buy a home for 100, you can rent it for

1,500. Or the 1% rule, which I think is more for like Btier and A tier cities where

you're also going to get some appreciation. Um, so yeah, and I I have in my notes,

uh, show comps. I already showed you how to do comps. You go on affordable housing in order to figure out what you

could realistically rent for. Uh, I showed you utility allowances. Sorry, I'm just going down this list

here. Okay. Yes. So, strategies for the utilities, you have three options. Number one, pay utilities yourself. You

most likely will get the most amount of money possible from the government. Um, however,

uh, there is a downside, which means the tenant could end up spiking usage, right? They fill up their, uh, uh, pool

with a hose, then suddenly your water bill is $800. Um,

downside to this, that's the downside. Upside is that there won't be leans against the property. Um, so if they if

the tenant doesn't pay their water bill um for enough time, the water company or government can actually put a lean

against your property. And that means um basically when you go to sell the property, they get paid first. The

unpaid bills get paid first before you get a scent. And that sucks because guess what? They weren't originally your

bills. They're the tenants bills. But suddenly now you're paying for them, right?

Um, option two is have tenants pay. You'll get less from the government. That's kind of the the main thing with

this one. You'll get less from the government and the problem is leans can happen, right? If the tenants pay and

decide not to pay the water bill, then guess what? A lean can happen. Whereas, if you pay utilities yourself, you won't

get leans because you're paying the utilities. Or you could do a hybrid approach, which I which I like, but you

have to ask the housing authority if it's possible. Some areas will let you, some won't, where you basically say,

"Hey, can you give me the uh voucher for, for example, the water voucher, $50 water voucher, can you give it to me

directly, not to the tenants, and then can I write into the lease that I will only cover up to the voucher limit?" So,

I can write in there in the lease, landlord will only cover um the $50 allotted water voucher that HUD

provides, something like that. And anything above will be paid by the tenant. So, you have to check with the

local realtor as well as the housing authority if you can do that. But if you can, that's the best bet because guess

what? If they no longer, let's say it's a $60 bill and you can only cover 50, that $10 you have to collect from the

tenant. If they owe you that money and never pay, now you have grounds for eviction.

So, you can evict them in that case. Um, whereas, if they don't give that $10 to the water company, then guess what? The

water company's just going to put a lean on your house and you're going to have to pay it. Sorry about that. My phone

died. I didn't even notice. All right. So, now I'm going to go over um some key variables as to what is going to hit

your cash flow the most. Mortgage payment uh which is based on your down payment and interest rate, taxes and

insurance. Uh maintenance and reserves, and then property management. So, maintenance and

reserves, I like to put in like 10% monthly um of the gross rent. and property management is typically 8 to

12% of the gross rent. So now I'm going to do an actual case study on this. I'm actually going to literally do an

example live to show you guys um that I actually do this and and know what I'm talking about. So we'll go ahead and

look at just because I like picking different areas. We're look at Detroit. So let's going to we're going to look at

100K. Oh, I want to mention something that I forgot. Sorry, I keep bouncing around.

There are not that many homes under 100K across the entire US. I think there's about 1,500 give or take. Out of those

15, how much need rehab? How much are like how much uh we're in fires and aren't really fixable? Probably a lot.

So, my point is there's probably going to be more than 1500 people that view this video, hopefully. Uh, so what does

that kind of mean? Well, that means uh some of you will have to dogfight, right? And you're not going to be able

to be um you know, pretending that or not pretending, you're not going to be able to do these like, oh, let me

lowball them, right? Uh no, that's not a thing with homes under 100. Like unless unless it's a home nobody wants, in

which case you probably shouldn't go for it either. Like for example, this 80k home right here in Detroit, chances are

you're going to have to pay full price and even compete with some people for this home because guess what? 80 homes

under 100 just aren't that common. They aren't. I'm sorry. They're not. They just aren't that common. And I wish they

were more common, but they're not. So, you can't realistically say that you're going to um like I'll offer 65, I'll

offer 75. No, you're going to offer 80 and you're not going to waste my realtor's time. You're not going to

waste your own time. You got to set your expectations correct, right? If this home was clearly overpriced and the

realtor is saying so, right? Like, let's say this was 250 and it's probably only actually worth 200, then yeah, you could

offer like 200 um and go with the realtor's recommendation. But if the realtor is like, "Yeah,

you got to do full price." Then guess what? You're doing full price. Okay. So, I want to point that out. I got I got a

lot of people who I refer to, my realtors, and my realtors are like, "Yeah, so I'm showing them 90k homes and

they're offering 8580 and we've put in 10 offers and I know they're not getting accepted any because

they're lowballing. Like, we're in a full price market. So, don't send me like don't send me this lead again. Um,

so I'm begging. Just be aware of what you're getting into. All right. So, anyways, I'm sorry I went on a tangent

there. So, let's look at I'm on the newest of this. So, at least two beds and we'll look at only single families.

So, we're going to go ahead and do some calculations live. We'll say I'm just trying to find one that I like.

How's this one? Oh, okay. This one looks good, right? Maybe needs some light rehab. I'm not

going to lie. You know, it looks like the cabinets need a little work done. The floors look okay. They do look a

little scratched up. I would I definitely make sure the realtor takes a good look at the flooring. But let's

just try this one out, right? Uh and it also doesn't have a garage, which is nice. I don't like garages because

almost always the tenant just fills it with garbage and it becomes like a horror situation.

So, let's go ahead and see what zip code is this. What area?

Michigan, Wayne County. Okay. So, we'll go on the HUD website, Michigan,

Wayne County. This is a What was this? Three bed. Two bed.

And zip code is 448 or 48205. I've been recording in a while. I'm losing my voice. A two bed will go for

$1250, right? Yes, that is a two bed. So 1250 and

we'll go ahead and keep that in mind. So purchase price 75, 20% down payment, we'll say an 8%

interest rate. Closing cost is around 7 on average. We'll say you put 10K into rehab. So now it's worth 85,000.

Perfect. And scroll down. We can see the monthly

payment section. And we're looking for taxes. So it'll say 1,170 a year. By the way, these are estimates. If you want

the actual 100% correct value, you can go on the public records page for this county. I'm not doing that because I'm

fine with estimates. So it is saying taxes is 11 170. Um insurance I'll say 800.

Uh just because again just based on like averages that is what I typically see. Uh maintenance we're going to go with uh

10% of the rent. So we'll actually leave this blank because we don't know what we can rent it at. Um as well as other

costs for now. So monthly rent. Now let's figure this out. We know the government will pay a maximum of 1250,

but let's see what we can actually reasonably rent it at. So, we'll go to this zip code on affordable housing. By

the way, here's actually a nice thing that I forgot to mention. If you go to the owners tab and market rent

estimator, you can just type in the address and honestly, it's fairly accurate.

There we go. Moring a Detroit. Yes. too bad. I like to pick the lowest value out of these.

Okay, so it's looking like about a thousand. Um, that seems fine. So, we'll go search for homes. 48205.

Yes. Okay. 48205. And now we're going to go ahead and see what two beds go for.

Property type is a single family. 1,000 1,000. Okay. Okay. So, it's looking like a,000 bucks.

And let's see. Everything's paid by tenant on this one. What about this other one I

just saw, which actually has a wait list, meaning it uh already has already has

applications. Oh, did I miss it? Did I just scroll past it? All paid by tenant. Okay. So,

1,000 bucks and there's no payment um by the landlord. Okay. So, maintenance, we'll say 100

bucks a month. That's 10%. All right. Let's calculate. Oh, I'm sorry. And let's say you hire management

at 10% as well, which is average. Vacancy rate, we'll put five. And it's because that is on average what I'm

seeing. Um, you know, it might take like a month or two to rent, but then that tenant might stay three to five years.

So, it averages to be five. Oh, wait. Whoops. Did I miss one? Oh, whoops. Zero.

Okay. So, this seems like a pretty normal return. Um, and I like to see it. So, yes, this number definitely seems

low, but you I don't like looking this at this number because it's honestly kind of misleading. And again, it's why

I don't like the cash flow. Um, I like the ROI and we're getting a 15.71 return for ROI, which is fantastic. The stock

market averages 9, so we're beating it by a pretty wide margin here. That is a solid rental. Yes. Again, it says 242

for the um cash flow after, you know, everything. But again, it's

it's just not that um what's it called? Oh, yeah. You're only putting in 32K, which sounds like a lot, but again, for

rentals, that's not that bad, right? Because uh if you want to buy like a 400k house,

right? 20% down will be $80,000. So 32K in order to get about $250 a month. That's fantastic in my opinion.

And again, this I'm sure that if I did some more digging, I looked for 20 seconds through the Zillow link. I'm

sure I could find some other homes that, you know, rent for like,300, for example. I mean, I even saw when we were

looking at Cleveland. So, let's say I could rent it for, you know, the 1250 I saw.

Um then yeah, we're looking at like 450 then. So again, for for me looking for 15 20 seconds, I think I did, you know,

I found a pretty good property. Uh 15% ROI, so I'm happy with that. Okay. And now time for pretty much the last

section, which is the actual loans itself. And I've been yapping a long time. I am tired. So I'm sorry if my

voice doesn't have it in me anymore. Let me go ahead and I actually have like a cheat sheet for this that I'm going to

provide. I'm going to put it on screen just so that I can kind of show you and you can visually see what I'm talking

about. For most loans, there's a minimum purchase price of 75K. That's just how it is. Uh, anything lower is typically

bought with cash, like I mentioned, or you're doing a burst strategy, which means you're doing private money at

first. I have private money lenders, by the way. Um, but if you're going DSCR, yeah,

typically it's 75K. Um, or conventional. Even most conventional is 75K. So, here is kind of the weird checklist

I have. I'm very like type A. Um, if you have over 700 credit, at least 27K in cash, a good debt to income ratio, have

a steady income according to your 2 years tax returns, then you're going to probably go for a conventional 20% down

payment loan. Keep in mind for this one, you cannot use an LLC. Typically, a lot of the time, if you want to go

conventional or FHA, they'll ask for 2 years uh of tax returns for the LLC, which you typically don't have because

you just made it. So, if you're going conventional, just keep in mind you usually can't use an LLC to close. You

usually have to wait for something called a title seasoning period to end, which they'll just tell you how long

that is. So, it could be, you know, 6 months, a year, never. You just have to ask the lender. All right. So, second,

um, if you have 660 credit, 27K in cash, again, uh, at least 6 months of cash reserves, you don't want your income

checked, you want to use an LLC, and you're okay with a little bit higher interest rate, usually 1.5% higher than

what's on the market. Then we're looking at DSCR loans. 80% of you will end up doing DSCR loans. I have a guy who does

DSCR loans in almost every state. Just FYI, I'm saying because it helps me, it helps my network. It helps you because

you're using a trusted person. If you need a DSCR loan, right? Just join my mastery program. You'll get

access to the guy. All right? You're you're not going to have to go digging around for anybody. So, just saying. Um,

and this next point is for non US citizens. You can still invest. It'll require 35% down payment though and

typically a 100k purchase price. So, um they're not going to check income. You can use a new LLC. Once again, um the

main difference is simply the 35% down and uh 100k purchase price. Next, if you have pretty much no cash, but at least a