I bought this house in the hood for $139,000. But I only needed to put $25,000 down. And I put $0 into fixing it up, but the government's going to pay me at least $2,300 a month to rent it out. And section 8's going to pay 70% of that after the mortgage, utilities, and all other expenses. I'll make roughly $1,000 a month from this one property. And this isn't my only one. I own 40 more houses just like this one. So, how the hell did I get here? How do I find these houses? How do I know which neighborhoods to buy in? How do I finance them? What do I fix? How does section 8 actually work? How do I find and screen tenants? And most importantly, how do I know whether this house is actually a good deal? Today, I'm breaking down the entire process a toz for you. We're going to walk through my actual properties, look at real numbers, and I'll tell you exactly what I look for before actually putting money down into one of these. By the end of this video, to understand how the business works and what it actually takes to get into section 8 real estate, let's hit the hood. We're in the beautiful Cleveland, Ohio. Take a look over here. Gorgeous. I know. It's it's it's it's absolutely stunning out here. We bought this 2 days ago. Let's kind of go over it. It's a pretty solid house. Turnkey. I don't have to do anything to it. Aluminum siding, new windows, new paint. Roof is relatively all right. You know, it'll last another 10, 20 years. Step inside. But yeah, overhead lighting, new floor, uh, new paint. So, kind of the point of buying these houses just completely new like this is a less work for me and I don't have to go through the headaches of contractors and all that. And you know, if I were to buy a house to rehab, it cost the same amount anyways, you know, to just spend money uh on a nicer house. >> How long did it take you before you could start buying like completely renovated? >> Uh it took me about a year and a half. The first year and a half I was buying like shittier houses, spending, you know, 5, three grand on like cosmetic repairs, you know, putting new windows in myself, doing the floor, but like after that, you know, save myself the hassle, the time. It's much easier, you know, right? So tenants love this. Think about it. Like when you're buying these houses, you really do need to think about even if it's section 8, like would you consider living in this house? For me, I'd live in this house. This house is nice. This house is actually a little bit bigger than my actual house in California. When you think that a tenant actually sees that like, okay, well, they took good care of this house and renovating it. So, it's quick quick tenant turnover. Let's go to the basement. The fun part. I can get really ind depth on different kinds of plumbing, water heater, furnace, but just so you know, this is all new. Electrical panel, brand new. I do teach my students how to determine the difference. So, you might not know, but I do, and so do my students. Dry basement. Uh, in Cleveland, it gets real cold, rainy here, so it does get wet. But these nicer basements, drywalk basements, uh, stay dry. For me, most important means most expensive. One of these walls cost 15 to 20 grand. So, if one of these walls are bowed and it kind of looks like a pregnant lady, you know, that will cost a lot of money. >> Have you ever learned that the hard way? Have you ever had to replace walls? >> Luckily, my first realtor told me about the walls. So, I've I've never had a bad wall. I've actually never had a repair over $1,000 cuz just from the beginning, like house quality, a lot of people, they don't consider that. They look at this. This all looks nice, right? To me, this doesn't matter. And people mainly look at this downstairs and on the roof. That's where you spend real money. So, that's why it's always important. I tell people, I tell my students as well or people just trying to get into real estate. Property quality, that's step one. You that up, you might as well not get into it. >> So, what do you see in this roof that makes it look good? >> So, I kind of just look at the shingles. I don't see a lot of them like peeling up. Anything that's like showing like kind of peeling up or just gone, uh, you know, I'd kind of stay away from something like that. But all the shingles are intact. All of them are not peeling up. No dips in the roof. You know, it's very easy to determine a roof. Uh, you just need to look at enough of them. Luckily, I've looked at like almost 2,000 roofs in my life. So, but yeah. No, it's this a solid house. I mean, otherwise, I wouldn't have bought it. All right, so this is obviously one of my better houses, but let me show you what a piece of looks like. How do you decide like where to buy? >> So, I use a couple websites to kind of give me like live crime in the area. Obviously, like if there's shootings, if there's like aggravated assault, it's pretty clear that you probably shouldn't buy there. And I give my students like, you know, all these resources, different websites to take a look at. I stay away from those areas. And I look at like spillover markets, you know, markets in around downtown, ones around metropolitans where like the rent to demand's high, but property value is still relatively lower. So that's where I get like higher cash flow. Cleveland's a great example of a spillover market. It's probably one of the best examples of a spillover market just because like downtown, like metropolitan Cleveland is a growing downtown and the area around it is still catching up. >> And you don't even have to be in the city though to manage it. >> Oh, no, no, no. I mean, most of the year I spend in California buying and managing these properties. So, there's a colonial is what they call it. I go right into the basement cuz personally, I don't care about anything else until I go down here. It smells dry. Looks dry. That's a plus. This is a little iffy. Oh, the throne. Do you want to sit down there? Oh. >> Oh, it looks pretty clean. It looks clean and it works. Look where we're at. So, that's considered a half bath, believe it or not. >> This is kitchen. >> Did you used to take like way more time looking at houses before you like knew what to look for? >> Yeah. So, when I was originally looking at houses, I was buying shittier houses. So, I was going through them with uh very in-depth detail. And also, like I didn't know as much like this, walking through it. I'm probably like going through a checklist in my head pretty preemptively. I'm not verbalizing it. But yeah, I mean like I'm looking at the ceiling. I'm not seeing there's any cracks, but I am seeing that there are patches. So that means that there was like a roof problem. Like obviously I'm not saying that every time. My students know I mean I give them a whole checklist so they understand like what I'm thinking. So there was carpet over this at some point. They probably filled it in but usually there's staples on the outside but there was 100% carpet over this. It's so screwed. They're asking a little too much for this house. like 160 something. This house is probably worth like high 120s, like mid130s max. Exterior looks nice, but the interior they didn't do much to it. This is the vinyl siding. It's like the same like material of the the window. That's vinyl. This is the best. Like this is the most durable. It doesn't crack the way that brick does. It doesn't peel the way that wood and aluminum does. Nice house. Too expensive. >> For somebody that's just starting out, how do you buy your first house? Okay. You spend all of your cash on that. It's like how then do you turn that into your second? >> Yeah. So, I mean, there's a ton of ways to do it. Obviously, like let's like forget saving up money and talking about leverage. Remember, like when you buy a vacant house, putting a tenant in there and making it cash flowing, that's already adding value to the property. You bought the house for 70 grand. Putting a tenant in there and like making, let's say it's right now $1,500. An appraiser can now appraise it at 90 grand, 80 grand, and that's 10, 20K in equity just from filling it out. You didn't even put money into the property itself because now it's a cash flowing asset instead of sitting one. So, I know a lot of investors and even students that do that. They want to like hypers scale or like, you know, get another property and leverage that property as soon as possible. They put in a tenant in there and call an appraiser the next day. They're like, I want to get a reappraisal on this. Now it's cash flowing. I bought it maybe a couple months ago and it was not cash flowing and it came in at this number, but now this property is making me money. It better be valued higher. And they take that value, that appraisal, send it to a bank and be like, I want to pull out, you know, 70% of the difference. And they take that and put it to another down payment. It's pretty simple. I mean, like, you don't even need to do it. burr, which is buy, rehab, refinance, rent, and repeat. You don't even need to do the rehab part on some of these properties cuz you're buying them so cheap. You could just rent it out and refinance and repeat. You can skip one of the yards. People do that all the time. Says we go in through the front door now. I don't know if that's even possible. Oh, you know what you're going to have to do here, huh? Get in there. Watch your step. There's glass. >> This is a great example of a bad one. >> Oh my. >> This is a great example of a bad house. As you can see, it's not really intact. What would you even do with this property? >> These houses are likely city condemned. So, first of all, like the house, right, let's say if it was in good condition, would be worth $70,000. If a buyer were to come and even want to buy this property, let's say at like 2 grand, the city won't even allow it. Like, it needs to be torn down. Damaged houses are sometimes so damaged to a point where they won't even let you build on the foundation because they believe it's a hazard to be resold. It won't sell unless someone has connections with the city or has enough money. But in these markets, it's not even worth to build houses. It costs more to build houses than to buy them. The most interesting part, in my opinion, the house. Now, I told you that these older houses were old but gold. And the reason why I'm saying that I told you the foundation is likely good. It is like get the camera >> and you could see that this this wall is straight. A lot of these newer houses that were built not necessarily with like cinder block could bow. >> You get a workout in >> probably still work. Wow. That's nice. >> Does that increase the value of the house? >> I believe that this is probably the only thing valuable in the house. >> So like I just got the rent offer for the property that we're looking at yesterday, right? The nice remodeled one. I have a pet rent on top of this. So, the rent offer came in at $21.44. So, that's why I always say like around $2,300 a month. So, like I am going to get $2,300 around $2,300 like right under right over it. The payment on that house is $1132. Let's say the rent comes out to $2,300 solid. Actually, you know what? We'll even like be more conservative. Let's say the rent comes out to $2,200. I already know it's going to be more than that. We'll be conservative. My payment's $1132 and let's say there's another $100 of water in Sewer Bell. So, 2200US 1132 minus 100. That's 968. it. I'll just say 900 times 12. So that's my monthly net income times 12. That's my yearly net income. Remember, I put $25,000 down on this property. I make my money back in 2.3 years. 43% cash on cash return without counting appreciation of the property itself, which is going to go up at least 3 to 5% a year. Not considering the tax depreciation I have on the property. So every year I'm paying less in taxes. I also go over that on like the class. Not considering write offs on expenses. Like to not invest in this is like pretty I'm not even going to say it. It doesn't make sense to not do the investment. If it's done right, dude, it could be the same passiveness of a stock and the returns are just like significantly more and safer in my opinion. I get it. I'll see you in 30 minutes. >> All right. All right. We're going to go hang out with Rick, which was my first tenant here in Cleveland. He's a boy. I hang out with him all the time. Like I'll go over to the place like he'll give me a couple beers and we'll just like sit and chat for hours. So why are we here? cuz our amazing tenant Rick for payment of his time wants a one liter bottle of Don Julio, bro. We've acquired the Don Julio. And as I'm calling Rick, ask him does he want light or dark Don Julio? Cashier goes, "Is that all?" And he yells, "It ain't all. It ain't all." And he wanted a six-pack cronis, too. He's a funny tenant, though. He's He's actually a great like a a genuinely a great person. He just loves alcohol. But at least he's not smoking. We should put in this floor for him. You really wanted checker floor and we did it. This is more his house than it is mine. Rick, how long have you been here for? >> I'm 14. >> Yeah, 14 years. So, this next month. >> So, is this your house or my house? >> This my house. >> There you go. What you been up to? >> Just living. >> Living. >> Got that. Get it painted in here. >> I know. We going to get it. We going to get it done. >> First tenant, but I'm the last one get done. >> No, we just we just we just did the floor. We just did the floor. >> Did that four months ago? >> He wants He just wants the inside of the house painted. which we're going to get done after we get that painted. >> Outside should have been painted already, right? >> They're going to paint it one. >> Yeah. Next spring now, right? See, I told you going to be just like the rest. >> Whoa, whoa, whoa, whoa. How many landlords have you had since you've been in this house? >> I think four. >> And you've Have you talked to any of them? They're just companies. >> They just Yeah, like companies. They just making money. >> I take care of the place. >> You take care of you. You don't take care of anything major. >> Yeah. See, no. Even even minor. >> You ain't painting my house yet. >> That's a big cosmetic thing. We going to get it done when the weather's right. When there's no rain. >> The weather been right. >> No, the weather for two years. >> It was raining. >> Yeah. Two. >> Here. Here. Here. >> I hope you start keeping your word. >> I do keep my word. >> Walk me through all the financing side of things and how uh beginners can get started. Different types of financing. It's pretty large. Like remember these lenders and brokers like want you to buy a house because that's how they get paid. So, they're going to figure out what financing works for your situation. For me, for example, I don't have a W2 job and I never I never have I've never worked a traditional job. So, I don't have any current proof of income nor any previous like payubs or stuff like that. So, I don't qualify for conventional financing. Like that's just not an option for me. But like people that come up to me or like other students, they're like, I currently work a job and maybe I'm renting out a certain place now or like I I've never owned a property and never bought a property, but I do have a job. or even people that don't have a job, but like the people that do have a job, like not only do they qualify for conventional financing, but they qualify for 15% DSCR, which is even better than the financing that I get. But people would never know that. So like it really just depends if like someone's serious about purchasing their first house. At the end of the day, like you're not going to get it without figuring out the financing aspect of it. So, it's just like learn financing, talk with a lender, get connected with a good one because especially with these smaller investments, there's only a handful of lenders in the entire nation that actually do these smaller loan amounts and like 90% of them will charge you an arm and a leg. So, it's like find the good one. I provide my students with a great one, the one that I personally use. Figure out what you qualify for so you could have a goal of like what to buy, how much you can afford, how much that you need to save because, you know, without financing the house isn't going to happen. Yeah. Doesn't it doesn't even make any sense to to start thinking, start looking at houses. >> I'm here at the property. Which tree are they giving you a problem on? There's two big ones. >> They just said any branch that looks like it could fall on the house, they don't want to insure until it's trimmed. >> Yeah. The garage. They said there was a branch that's like on the garage. >> The branch that's on the garage is like not even a branch. >> He sent me pictures of like everything that wouldn't pass inspection basically. >> Okay. So, I'm having them just do the minimum. >> It was rough. It's right off the main road. Um, the bedrooms are really small. >> It's It's only a street over from my last house, and I felt like that neighborhood was actually decent. >> The last house you got was renovated completely. That was a very nice house. You have a You have a temporary support in the basement. I don't know if it's like failing. >> Basement. Oh, you think they're going to Well, you think that one check? >> No, no, no. It has nothing to do with the inspection. Your inspection won't look at the basement. Really? I'm Have you haven't seen this property in person, have you? >> No. >> No. So, I'm just like verbalizing if I was out there. >> Yeah. You have a good good furnace. Let me take pictures for my lawn guy to see if he can trim these. No. By the way, I've like bought houses with trees over them. This is the first time I'm hearing this The first house I got him, he wanted to save some money. So, he bought it like in an area that's not like ideal, but it was renovated completely. So, it was amazing. Like, like we found a tenant within like a couple weeks. That's why he was so eager to buy a second one. He didn't ask me about the area and now he knows. Like that's what happens when you try to figure it out on your own. As an example, when you do it on your own and you don't ask for the help or you like try to figure it out without like having a stable structure like a system, you know, like the guy, I helped him get the first house. He kind of fell off the system, right? He didn't look at the area. Like we're right next to an intersection. Like that's not too nice. The street itself isn't amazing. I mean, it's not awful on these kind of deals. Like for sure it makes sense why he got kind of duped. It looks nice in the pictures, but like have me take a look at it first. He could have just texted me and be like, "Hey, could you take a look at the deal with me?" And I would have been like, "Uh, just know that it's like not ideal." Or maybe you can negotiate the price buyer. I think he like bought this for full price. So, we'll see. On to the next. This house was on the market. It wasn't good and then it got off the market and they remodeled it and then a wholesaler presented it to me. They were supposed to fill it up. You'll see. It's like a story. Apparently, they remodeled it since. We'll see if they did a good job, but I'm assuming not. So, the reason why I like picked this house up is because it looks like it's renovated, you know, new paint, I think, like new floor in here. Like, this house looks like it could deceive an out ofstate investor. Like, they did all the typical stuff. I mean, this is cheap, but like on pictures, like this looks brand new, especially the flooring. But, I'm going to go over some of the things that are not good. Like, windows awful. Like, those are expensive. Painting the straight on the wood floor is not nice. I mean, it's it's hard to rent out. These windows are shot. Section 8. Make sure that these can open and stay open. And I'm assuming I mean this is literally broken. So I'm not even going to touch that. Like a lot of people rush into their first deal, you know, thinking that they found something renovated online. Oh, great. This is a great example. That's black mold that could kill someone. Hopefully we don't die today. Moisture obviously coming in. You could see all over the walls. The water tank looks new, but it's installed incorrectly. Furnace is old. Bound to blow up any minute now. Like these are all things that people don't look at. The wall is not bad. The wall on this side's kind of bowing. Like these aren't the things that they show online. So, like as an out ofstate investor, when you come down here after looking at the pictures upstairs, you're completely lost if you don't have someone guiding you. To put a new furnace in, it's $5,000. To get rid of mold remediation, an entire house could be upwards of $10,000. Like, you're not expecting that. When you buy a renovated property, no one's considering that. They just look at, all right, like this house looks renovated. The lights are nice, the floor is nice, the paint's brand new. A tenant's going to take it. Absolutely not. That is not the case at all. Like you can tell night and day between this house and the one I bought. Right. Right. So like those are the kind of deals that I like tell my students to buy that I buy. When you get a good quality house, it's easy to get a good quality tenant. It's it's a snowball effect. >> Explain to me how rent works. How do you know what what's good, what's bad? >> Okay. So like a common misconception with rent is the number you see on the website, that's the cap. A lot of people say you don't actually get that number. That's not true. you can actually get close to that number, if not the exact number, based on a specific calculation. There's about three factors that go into it. Zip code is one, affordability is one, which I calculated in my screening process, and utility allocation. So, these are three things that I teach to all my students and the people that want to get into section 8. That's the only way that I'm actually able to get these high rents that you see in my videos. What do you specifically look for in terms of like the rent amount? >> So, I use an equation that I kind of developed. It's called rent ratio. Determines whether a market is actually worth investing. with the rent ratio. I have a pretty conservative basis that I go based on when buying these properties just so I have enough cushion cash flow-wise. You know, god forbid anything go wrong. And it's kind of the same thing I tell my students like, hey, don't run your cash flow very low. Don't go down to 200, $300, $400, you know, because who knows, like an unexpected repair could kill your rents for the entire year. So, that's why you see in my videos I get, you know, higher than 700, $800, 900 and up rents just because, like I said, it is rentals. You never know what might happen. And obviously, you can do your pre-screening of the property, which I teach, which is why I don't get a lot of repairs, but you got to be ready for it. So, that's why I like having that big option. If you watch this video all the way through, I'm assuming that you're serious about getting your first or next section 8 property. Luckily, my team have developed an entire program to help you with every step of the way, holding your hand through every single process from finding to financing to renting out your property and even helping you manage it. If you're interested, click the link down below and fill out an application and schedule a call with my team.