How to use section 8 as a landlord. 7 figure strategy

When we learned this strategy, Cody and my portfolio went to an entirely new level. We solved vacancy, we figured out our renovations. This was the keystone to figuring out how to make millions in real estate starting with no money. Welcome back to the channel. I'm Christian Osgood. I'm sharing today the strategy that changed our portfolio. When we started, we did so many things wrong. We talk about the stupid tax all the time. Stupid tax is essentially the price you pay while you're learning for the things you don't know you don't know. Well, we got eaten alive by vacancy when we started. We bought a whole bunch of units before we had the management experience on how to fill them. We tried a bunch of different strategies, but we didn't raise enough capital on the front end. We ended up doing renovations too slow, leasing too slow. There's a lot of problems. Here's how we fixed them. I got on a call with the most experienced person I knew at the time. His name's Matt Hawkins. He actually has a channel, Lumberjack Landlord, smartest guy I know in real estate to this day. He is a mentor for me. Check out his channel. This guy can manage things like crazy. He told me, dude, you're doing entry-level housing. Are you working with Section 8? I'm like, I mean, we inherited one or two of them, but no. He's like, okay, I'm going to tell you how to play the game and I'm going to tell you guys everything he told me. By the way, there's 4 steps to this. So write them down. The first one everyone can do. You need to get the name of the contact for your local housing authority. Ours happened to be a gal named Yesenia, but I called into local housing authority. I told them, hey, I'm an owner. I have this many units. I want to work with you guys. We're really passionate about solving homelessness. How do I work with you more? So you get her name, you write down the name. You've now finished step 1. Now you're going to go into the housing authority. You get this book and this is available online as well. But I like having the hard copy. I keep notes on the inside cover. But this is the handbook for all owners and property managers.. And it has all sorts of fun things in here, like the renovation standards that you need to renovate your units to. When Cody and I were trying to figure out how to do renovation, what the standard needed to be, there's actual checklist here for Section 8. If you're using entry-level housing as part of your strategy and you're passionate about fighting homelessness profitably, helping others, but in a way where you have enough money to continue to invest in the property and keep your community nice. And safe and also find your own financial freedom. If that's something that's interesting to you, we did that starting with this book. Every single renovation we do is based on the checklist in this— apparently I'm holding it upside down— in this book. It's been fantastic for us and it leads to all the other questions. So this is how we set our standard. We got their name. Then I go to the inside cover and I wrote a couple of things in here. And these are the things that are going to be really helpful for you. One, the housing authority maximums. When they place Section 8 tenants, they actually base their data on how the market performed the last 2 years, and that is where they find the market average, which is amazing. You have an actual crystal ball based on how the market performed 2 years ago on what housing authority is going to do to adjust their rents today. So I actually know what rent increases are going to look like very, very accurately. I have a cool advantage of having worked for the CoStar Group who happen to be the largest data provider of commercial real estate. I worked for them for years and I had every housing authority in my book of business in the state of Washington. I've worked with them on their data. I've supplied them with data. I've looked through their standards. This is a thing that I know a lot about the things that I know. I know what I know on this one. Having future insights on where your rents are going very specifically is very, very valuable. For example, in 2020 to 2022, we saw huge spikes in rent because of hyperinflation. Well, now at '23 and '24, we saw those spikes reflected in the rents. I knew they were coming. I wrote them down in the book. 2023, studio apartments were going for $785. So in my market, $785 is what a housing authority rep will place a tenant at, at your place. In 2024, $876, almost a $100 increase. We have about 100 studios. If you are a landlord who has 100 studios and rent has now just increased $100 per studio, you have made a ton of money. Your income has gone up significantly and your portfolio is now worth a lot more because you have a higher net operating income. So the second thing that we're asking, we get their name. And once we get this book, we ask what the housing authority maximums are for 0 through 4-bed units and we write them down. In our book, or if you got the online copy, just put it in some notebook or save it on an online file. You want to save these. We set our entire portfolio standards to these, and now market rate tenants can rent at this rent. Section 8 can place, or any other housing assistance program can put someone into our buildings. It is affordable. It works with basically every program, and we qualify for everyone who could place a tenant for you. Vacancy solved. Now, how do you actually work with these and how do you pitch this to capital partners if it's going to be part of your, part of your structure? Well, there's a couple of huge advantages. Is it even going to work in your market? Because not everywhere has a huge need for Section 8. The voucher program. I'm going to give you the like 30,000-foot view of the voucher program. You're low income. You need some rental assistance. You're going to go to the local housing authority and you're going to ask for some help. You're going to apply for the voucher program. And if you qualify, it means your personal income is low enough compared to the median in your area. You may receive either 100% coverage on a voucher, or there may be a section that the tenant is responsible for based on their income. This is really common with fixed income, by the way. If inflation's eaten your savings away and you're on a fixed income as a retiree, we work with a lot of people like this. They need some help and they have a fixed portion of their fixed income is allocated to rent. That's what they're responsible for. Housing authority takes the rest. But the questions you're going to ask are how many vouchers are currently out and unclaimed, which means how many vouchers are available where people have not yet been placed in the house. This is telling you what the market's at right now for you. If you happen to have a 12-plex or a 30-unit building that is currently available and being leased up, if you can open up spaces for them, you might be able to lease the whole building right now. Absolute game changer. The other thing you ask is last year, how many vouchers expired? We were in a market where there was actually a lot of people who weren't placed. It means they got a voucher, they weren't able to find suitable housing in time, their voucher expired, and they got booted from the program and had to reapply. If that means you have a real homelessness or a really bad tenant placement problem in your county, there's not enough landlords on the program. If you serve this niche and there is a need, you can just fill these. When you go to invest in capital partners, you find a deal, you're looking for capital, either debt or equity, when I'm reaching out for private capital, this all goes into the presentation. Hey, we found this opportunity. It's entry-level housing. My housing rep, Yesenia, is already working on us with placement. She's going to make sure that we stay in compliance with everything and that we're good to go. Here's what we're seeing for market rents, and this is what the property will look like when we achieve that rent. And I'll actually show them on our spreadsheet from multifamilystrategy.com. We'll actually go in and fill it out and say, when we hit the housing guaranteed rent, this is what the numbers will look like. And we got these numbers from our rep. Currently, there are this many people who need placement. And last year, they had X amount of vouchers actually expire because they couldn't find a placement for these. There is a need for this in our community. We're still going to have market rate tenants able to apply. So we could just fill this up with just general people from the town. But for the people who need assistance, we can get this thing filled faster with government-backed checks with this strategy. It's fantastic to pitch, but this set up our portfolio to where our pricing is set for us every single year. Our standards are set, and when we renovate units, we know how much income we can be anticipating, which tells us what the budget is for renovation every single year. Absolute game changer for us. Now, not everyone does entry level. So if you're looking at Class A real estate, if you're looking at hospitality, self-storage, this may not be a factor. But if you are looking at entry level housing, this is something you need to know. Network with your local housing authority. Network with other support groups for people who need rental assistance in your communities. There's a lot of groups with churches. We have both Mormon, Catholic, non-denominational. They all assist people in the market that I'm at, and we work with every single one of the groups. Hope you found this helpful. 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