My business plan for buying low end houses?
My cousin is a home builder/ Carpenter and him and I have a plan to buy low end homes in Michigan, Detroit suburbs.
We can come us with almost 100k in capital without the bank to start our business. He would work full time and draw a small living salary while I would still work my other job and help out when I can.
We would start off with about 5 houses. These houses are around $3-6K each. We would have to put in 1-4K to refurbish them.
The goal would be to have houses that could be used for SEC 8 rentals. Sec 8 would give you a government check for 70% of the rent while the renters would have to provide the other 30%.
If the renter damages house or does not pay you can report them to the government and get them removed from the grant. This would prevent bad renter.
Eventually we would use equity from the homes to buy more. If the market ever picked up we could always sell the homes as well.
Do you think this is a good idea? Any advice would be appreciated.
100%, Believe me, being a slum lord does not thrill me either.
It would be a start though. Once we get enough equity we would look into bigger ventures such as commercial reality.
I think it is a safest way to start your own business with 100k. Just tired of making other men rich as an employee and not getting fairly paid for it.
- loanmasteroneLv 71 decade agoFavorite Answer
Your plan that is a very good one and one that should work. There is always the family going into business together problem, but if the two of you can get over that hump you should not have a problem.
There is more to the business of just getting low priced houses, rehabbing them and renting them out to low income individuals.
You should be well versed on the various selling options available to you. I would recommend that you go to your nearest book store and by several books on buying and selling, renting properties.
There are several lease options that are available that you might be interested in as well a land contracts. These are options available in addition to renting. You might be able to get back a little capital using a few of these options.
I don't like the term slum lord that has a racial connotation. If you go into a business with an attitude of this nature then most likely you will not be successful because of the disdain you will have for your clients, poor people that rely on government help.
I have a few houses and apartments that would be considered in a low rent neighborhood. I also use section 8 tenants as renters.
You should screen your clients very thoroughly so as to keep out as many undesirables as possible. One method I use is once I accept an application to rent, I make an unannounced trip to their current place of residence to find out how they are living now. I make up some excuse about the paper work as to my reason for coming there. I then make an excuse to get inside like I need to go to the bathroom, I need to sit down as I am tired or need an additional authorization form signed.
If there is unwarranted damage in the property the chances of them renting from me are slim. Large holes in the wall, wall paper pealing from the wall, normal wear and tear or a little crayon writing on the wall of those with kids would be ok.
My method is not fool proof and a few people get by me, but they soon show their colors and are immediately evicted by me. My clients are also responsible for their family and guest that visit them.
I do this with all my clients and not just the ones that are section 8.
I keep all my property no matter where it is located in the best possible condition possible. If there is graffiti, I erase it the same day I get a call, I maintain the landscape in immaculate condition.
The reason I do this is because my tenants are people and in some instances can not move above where they are economically. I provide them with the best possible place to live so they come home to a nice well kept house or apartment unit and have a peaceful nights sleep.
For some reason cleanliness run away the gangs and drug users.
I have a waiting list of people trying to get into my places. The most common thing and reason I hear is that your units and houses are well kept and you do not allow drug addicts or other undesirables to reside in your units.
You should consider joining the Apartment House Association in your local area. They have many forms you will need as well as how to evict a person. They even have a way for you to obtain credit reports for your potential clients. They could have a staff attorney that might answer a few legal questions that might come up. Also they have monthly meetings bringing you current of new rules of that are happening locally.
I hope this has been of some use to you, good luck.
- ?Lv 71 decade ago
So you want to become a slum lord. Good plan.
It costs money to get those places approved for Section 8, by the way, so count on spending more than 1-4K to refurbish. Section 8 does not protect you from bad renters. They could gut the inside of your newly refurbished house and you'll never get that stuff back.
- 5 years ago
You're a liar. First of all, it hasn't failed, it hasn't even come up for a vote yet. When it does, it will pass, and the President we elected, largely because of this, will sign it into law, and all Americans will benefit from it, including you, whether you like it or not! Second of all, it's not "socialized." Ask a true Socialist: He'd consider this plan, and every Democrat, a sellout. Third of all, no one will lose their insurance. People who like the insurance they have will keep it; those who don't like it, or who have none, will take the public option. If you're going to tell a lie, at least make it one that hasn't already been blown to smithereens. Fourth of all, "the umpire" is already corrupt. It's time for "the Commissioner" to come in and enforce the rules, because "the umpire" is in the pocket of "the other team." Fifth of all, no one but you right-wing liars is talking about "higher taxes than Europe." We're not even raising taxes to the height that they were under your beloved Reagan. That's right: Like Clinton, Obama is giving us lower taxes than Reagan gave us. Sixth of all, "Who makes medical decisions" now is bureaucrats, controlled by insurance companies, who don't give a damn whether you live or die, only that they get paid. With this plan, the patient makes the decision, and the government bureaucrat MUST abide. Seventh of all, you're repeating the lie that Obama is a Muslim? He is a better Christian than you'll ever be. Eighth and last of all, you call people "Communists" when you don't know the difference between Communism and Liberalism. If Obama were a Communist, you'd be in a gulag already. And while I wouldn't shed any tears if you were, I am happy to point out that the fact that you are not in a gulag makes you a liar. Next!
- TimLv 71 decade ago
Check into section 8 rules better. It is not always quite so easy and many landlords will not accept section 8.
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- kemperkLv 71 decade ago
excluding the time involved when dealing with the FED, your
idea is great.Source(s): RE broker