49) Playing the Long Game & Section 8 Pros and Cons

Real Estate Investing with House Money

House Money Weekly

In this week’s House Money Weekly segment, there will be a twist because the blog post that the hosts will discuss is written by the guest host, Eric Hughes. They discuss guest blog 1, Playing the Long Game with Rental Properties. Eric's blog is very analytical and detailed, which is completely different from Alan’s HMM blog. Eric even edited Alan’s book "House Fire". Key Idea #1 is that your returns increase over time which is one of the nice things about rental property investing. Cash flow increases over time. Key Idea #2 is that short term is hard to predict while long term is easy to predict. This key idea ties into statistics and math. In real estate, you can have a really good year with your property while in the next year have a really bad year where you lose a lot of money. Eric also explained that the more properties you have and the longer you hold them, the more predictable your results will be. Alan calls this the "mutual fund approach" to real estate. Key Idea #3 is that time in market beats timing the market which is to get in now and just wait and let the market do its thing. Key Idea #4 is to keep it simple. Real estate is a place of different investments, ideas, strategies and methods. For an average person, it can be difficult because there's so many different ways and ideas in the real estate world and the simplest possible way is to just buy a house, hold it for a long time and manage it professionally. Eric’s advice is the simple boring way is the best way. Key Idea #5 is to be ready to ride out the storm. If you own rental properties and you own them for a long enough time, everything you can imagine that's bad will eventually happen and you must be ready for that. Key Idea #6 is for a smoother ride, scale up. Basically, not all of your properties will underperform at the same time. And the last key idea is it's a marathon not a sprint. This sums up the whole idea that for rental properties, the benefits are long term and to get there, you have to get through the short-term variability and just have that long-term mindset.

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Mortgage Minute: Jasmine answers the question: What is APR?

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Real Estate Is Easy Interview

Lauren interviews Amanda Orson. She is the CEO of Galleon which is a startup aggregating MLS off market real estate into one marketplace. This summer they will come up with an AI powered digital transaction platform. Lauren asks about real estate headlines. There’s a big legal decision called Sitzer which found that there are monopolistic practices. The settlement agreement comes with rule changes on how they transact residential real estate. Everything that they have known since 1913 about how residential real estate is transacted in the United States is about to change which is a good thing. Amanda thinks that moving to something that is more technologically forward and more centered on the individual needs is great because not every buyer and seller needs all kinds of services that the traditional residential real estate transaction model has offered. Amanda shares the rule changes that the National Association Realtors agreed to go into effect mid-July. Lauren asks who benefits from the changes and Amanda thinks that it's the real estate investor. Lauren also asks if there's no buyers agent, how do you go look at the house? Amanda thinks that because there will be fewer real estate agents, there will be less revenue that is going into buyer’s agency and that will mean that buyers agents is going to certainly come down and there will be reduce the number of people that actually do that as their full time job that will eventually lead to the result of people leaving the industry. Amanda thinks that now is a good time to get into real estate investing. What about becoming a real estate agent? Amanda thinks you should become an agent if you can differentiate themselves and specialize. Lastly, Amanda makes real estate easy by leveraging the tools that they have available. Alan agree that using software feels like a cheat code. Eric mentions some of his favorite software.

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https://galleon.io/

Guest Host's Segment

Because of the twist with the House Money Weekly Segment, Alan will be the one discussing for the Guest Host Segment. Alan discusses the Section 8 Investment Renting. Alan shares his experience renting to tenants on Section 8 (government vouchers). Lauren asks Eric how many of his rentals are Section 8 and there's 1 out of his 25 rentals. Eric bought the property with a Section 8 tenant in place six years ago and Lauren thinks it’s awesome that the investment has been easily collecting rent that whole time. Eric doesn’t have more because you lose some control, like around rent increases. Also, Section 8 tenants are such a small percentage of renters. Eric also shares the steps on how to increase the Section 8 rent. Eric thinks that Section 8 is great but most of the market is not Section 8. For Lauren, the one time she wished that had Section 8 was during Covid when there was the moratorium on evictions and one of her tenants stopped paying, which wouldn’t happen if the government was paying the rent. Alan explained that Section 8 doesn't necessarily pay 100% of the rent, in Atlanta with the Atlanta Housing Authority voucher it's typically 30% to 100% of the rent. It really depends on the tenant and what their income is. Alan adds that you can get additions to the Section 8 rental rate by making certain upgrades to the units. Eric goes into detail about what Fair Market Rent (FMR) is

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