WELCOME BACK! As we wait for 1220 S Delaware to be leased, we're leaning in with the refi and jumping back into the market to find our next deal. We've ordered the appraisal and are waiting on the results. To advocate for the ARV we estimated early on, we developed an appraisal packet highlighting all the great work we put into the rehab, and a number comparable listings sold recently in the area. We'll see if it made a dent, but it could only help as they crunch their numbers. Click here to check it out! We made the decision to forego the HELOC and to instead pursue conventional financing to cash-out as much equity in the property as possible. The kicker there was the draw of cash flow. Though the HELOC would allow us to pay the property down faster, cash-flow aligned better with our goals.

Have you considered Section 8 for any of your rentals? We're thinking about offering homes in our portfolio to Section 8 tenants, helping with the limited inventory of affordable housing that's challenging low-income renters in KC and across the country. As we continue to research, I'll share some initial pros and cons I've stumbled upon in this newsletter's Skinny.

If you're a regular, you've noticed the newsletter's become less periodic. Want more Kumu Nalu in your life? Connect with Alex on Instagram @kahalopes and LinkedIn to follow the journey and see your investment in action, BRRRRing projects out of state.

Stoked you're here,

Alex

PROJECT UPDATE

Click this LINK to see our listing!

Click the photos to see the rest!

PREVIOUSLY

THE SKINNY

THE AFFORDABLE HOUSING MARKET & SECTION 8 TENANTS

What's Section 8?

If you're from a low-income household and require assistance paying rent, you may qualify for Section 8 -- a federal program providing participants a voucher to tenants leasing private rentals.

The Situation:

* 6.8 million more affordable housing units are needed for extremely low income families.

* 580,000+ people across the country are experiencing homelessness on any given night

* 70% of all extremely low income families pay more than half their income on rent.

* 1 in 4 extremely low income families who need assistance receive it.

Shared by the National Low Income Housing Coalition, increasing access to affordable housing is the most cost-effective strategy for reducing childhood poverty and increasing economic mobility across the country. Increasing access bolsters economic growth, and without it, families have constrained opportunities to increased earnings, causing slower GDP growth.

Part of the Solution:

Reducing the shortage of deeply affordable rental housing and preventing the loss of existing affordable housing. There's MUCH more to it, with levers tackled at both the the state and federal level, between improving tax credit programs, removing barriers to homeownership and reforming project-based housing programs to draw higher-quality housing, but as a landlord, our focus is on that first mention. So what are the pros and cons as a landlord renting to Section 8 tenants?

PROS:

+ Guaranteed rents for the landlord.

+ Massive demand means low vacancy. Long long long waitlist to get a voucher and strict criteria and scrutiny for applicants (up to 2 years, after which they can apply for rentals)

+ Longevity of tenants (average of 7 years). The super long process incentivizes renters to stick around, reducing turnover.

+ Rent ABOVE market rate (20-30% more). Higher to incentivize landlords.

+ You're part of the solution -- Serving the community.

CONS:

- Required annual inspections. You have to get identified items taken care of. (Lots of upside to this as well)

- HUD will determine the unit's Fair Market Rent. You can't ask for more if rents in the area increase. Rent increases take a long time to get approved and is not guaranteed.

- Section 8 does NOT include security deposits.

- No payments received until after the tenants move in.

Have you or anyone you know explored Section 8 as a landlord? What did I miss? Would you do it for any property that you own? Would love to hear what you think!

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HOW ARE WE DOING? 

If we shared something that blew you away, struck a nerve, or didn't quite make sense, SEND A REPLY!

If you're not yet invested, are thinking about it, want to learn more about passive income opportunities tied to projects like the ones above, LET'S TALK!

We look forward to the conversation.

Nothing in the Site or Backdoor Insights newsletter constitutes professional and/or financial advice, nor does any information on the Site or Backdoor Insights Newsletter constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.