In these uncertain times, many real estate investors may feel a sense of paralysis and doom where their real estate portfolio is concerned. I understand. I have been here before. In fact, I’ve been through four economic downturns in my real estate career, and I am here to tell you first and foremost: for better or worse, we will get through these challenges. (Hopefully for better rather than for worse.)
It is understandable to have a period of abject panic and for your mind to race a bit at everything that is going on. But when you’re done with that (please be done with that), I would urge you to put your game face on and consider some new strategies and ways to pivot with the changes coming in the markets.
One strategy I employ that has proven to be fairly recession-resistant is my “Tier 1” model for Section 8 housing.
What do I mean by that?
I mean rolling out the red carpet for the crème de la crème of Section 8 voucher holders. Believe it or not, in times of crisis and uncertainty, voucher holders are actually one of the most reliable, stable tenants to have, so I am here to tell you that you should take very good care of them.
Finding Holy Grail Tenants
Any seasoned buy and hold investor/landlord will tell you without a doubt that the biggest profit killer is turnover and vacancy. In my market, every lost tenant can cost me upwards of $5,000-$8,000 in cleaning, repairs, vacancy, time, and lost income. (FYI, I’m in a high-priced market where single-family rents range from $3,500-$5,000 per month.)
I want to avoid that at all costs by finding long-term tenants who would never dream of leaving. That is the only way, in the long run, that I generate positive cash flow and stay in business. I regularly and consistently get 10 to 15-year tenants.
In fact, I have one tenant who has been with me for 23 years—on a 15-year mortgage. Do that math!
Tenants like these are the Holy Grail, and I am here to help you find them.
First of all, please put aside your preconceived notions about Section 8 tenants. Sure, there are some difficult ones out there (just like there are difficult market renters). However, please know that many voucher holders are just like you and me. They want to raise their kids in a safe area. They want to live in a nice home. They know a slumlord when they see one.
They deserve to be treated with dignity and respect. They are human beings and can be amazing if you know how to screen tenants properly and nurture your relationship with them. They bring a lot of advantages and stability with them that you can capitalize on if you do it right.
Keep reading the article “Investment Success in Good & Bad Times: A Recession-Proof Investing Plan That’s Never Failed Me” by Joseph Asamoah here:
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