Jason Hartman starts the show by discussing an article about the concept of crony capitalism and fascism. In the interview section, he welcomes Richard Cupelli, founder of GoSection8.com. Richard breaks down how section 8 housing works for the landlord and the tenant. They also discuss the pros and cons of government-assisted tenants and differentiates between government assistance and rent insurance.
Announcer 0:02
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:53
Welcome to Episode 1591. And you know what I am happy about. We’re really not going to talk about politics today. I am so sick of politics. Are you just so sick of politics? Yes. Let’s talk about income property. Hip hip hooray, yes, income property. But that comes with a little caveat, a little disclaimer. I do have one political comment. And then let’s just not talk about politics for a few days, at least because, yeah, you got to be sick of it as I am. Right. Right. Right. Please don’t me you are. Okay. So you can only take so much right. Anyway, here is my only political thing. The Washington Examiner poll is out with an article today that says and it is so fitting it is so fitting, you know, the concept of crony capitalism is really so similar to the concept of fascism. And guess what? The newly appointed well appointed, assuming he wins the election, Joe Biden Coronavirus task force member will be profiting off of the Joe Biden espoused lockdowns. Yes, yes. Yes. So Biden has appointed to his potential administration, this guy who directly profits from the whole government response under his administration, not Trump’s administration to be Coronavirus, and he’s on the task force. So what do you think he’s gonna say? He’s gonna say, do all the things that make me money? Because I’m an evil profiteer and think he’s gonna say, thank God, I am not getting drained with the swamp. Because it’s a new era. It’s a new era of four years of crony capitalism. And guess what? Guess what, if I give hunter Biden a consulting gig for $2 million a year, where he does basically nothing at all, I’ll get my way in the administration and I’ll get favoritism and goodies handed out to me things that will benefit me and my businesses that will not benefit the taxpayer and the general public. That’s what this man says. It’s not me speaking. It’s him. I’m talking for him. That’s what he’s thinking. Hashtag scum bag. Well, scumbags. Right. It’s it’s just, this is just evil. You know, this is just the evil stuff, folks. It’s evil everywhere. And I gotta hand it to the EU sometimes. I mean, mostly Europe. So epic disaster. Right. But, you know, the vibe of Europe of the EU, is that they just care more about their citizens than the US does. What do I mean by that? The US is just like, sold out to the gods of money. Right. And, and whatever makes money, you know, the US is going to do now I must admit, I posted last week on my Facebook page. And by the way, I’m much more into me we and parlor. That’s the future. Facebook is the past, and I am extricating myself to a large extent from Facebook because I am fed up, fed up I tell you fed up with these rotten evil big tech social media companies just screwing us all Yes, I am. I’m not totally done. I’m not saying that. But I am, I am moving my attention. And my contributions to these platforms are becoming minimized. And I suggest you do the same thing. Because they are they need to they need to learn their lesson. And you see all these people that have moved to me we, which is another social network, it’s kind of a funny name me wheat, and to parlor. And by the way, that’s not the way it’s pronounced. It’s a French word. And I think it means freedom or something like that, anyway, where they aren’t censoring people, so they’re all leaving. But speaking of big, disgusting tech companies, the EU, thankfully, is now prosecuting amazon.com with new antitrust probes, and charges, and Yay, good job. Good job. He you. Good job. Good job. And that’s what needs to happen, folks, these companies are out of control. They’re way too big. They’re abusing everybody. And don’t forget about Netflix, by the way. Netflix, alphabet, aka Google, Amazon, Facebook, Twitter, these companies all shame on all of them. They’ve abused them. Don’t forget about Apple, Apple. I mean, you know, Tim Cook, the moralistic Tim Cook, CEO of Apple, who’s running sweatshops and abusing people in all these foreign countries, and then dodging taxes with all of Apple’s tax schemes, which by the ones, by the way, are the same ones Amazon is using and I’m sure all the rest of them are using to the double Irish twist all these ways to not put money back into the United States, yet they’re exploiting the US market sell their their wares and their products yet they’re they’re disgusting citizens. They’re awful corporate citizens. They’re just taking the money. And they’re not giving back. Now I know they’re giving back in terms of some employment at their incredibly low paying jobs. $15 an hour. Finally, Jeff Bezos increased his wages, just so he could put all the other retailers out of business. And he’s lobbying for a $15 an hour minimum wage that he knows will be very hard on all the mom and pop retailers, but he can pay it, because this is just the way these scumbags operate. So thank you to the EU for prosecuting Amazon. And it’s really unbelievable. Okay, let’s shut up about all this stuff. I’m done with it for now. And today, by the way, our guests will be talking about section eight housing. And if Biden is our new president, we are going to see a massive expansion of this that I actually predicted under Trump doesn’t matter. Whichever way the wind blows, we’re gonna see massive expansion of these government programs. And that’s part of my pandemic investing. presentation. So beyond that, I just have to tell you one thing, we’ll get back to this, we’ll talk a lot more about it. But one of our clients, Marc, Marc Anthony, posted a fantastic article in our content group about, and I’m just going to quote here from this article, it says, quote, the United States is facing the most severe housing crisis in history, unquote, says Emily benford, in eviction expert and visiting professor of law at Wake Forest University. If you’re scared that you won’t be able to come up with your rent, you are not alone, as many as one in five renters. So that’s 20% say they fallen behind on this this rent, right. And this is according to the Center on Budget policies and priorities. Well, I think they need a branding expert, that group, it could use a better name, right. Anyway, it just goes on to talk about how there is just such a severe housing shortage. And guess what, folks, you, you, my dear listeners, and investors are the solution to the crisis. Because you are buying up these income properties. You’re doing it for your own purposes. Yet, the nature of wonderful capitalism is that by pursuing your own goals, you’re going to help a lot of other people at the same time. So bless your capitalist hearts. Okay, lest your capitalist hearts, thank you for doing your part. Thank you for doing your part. And you’re going to help solve this housing shortage and you’re going to become very wealthy in the process. So we’ll talk more about this. It’s an Going thing, and there’s a lot to it, obviously. So future episodes look for more on that. But without further ado, let’s get to our guests. Oh, wait a sec, Jason, you can’t get to the guest yet, because you have a webinar to announce. So we’ve got a new webinar for you. And it will be available. Come join us on Thursday. And on Sunday, Thursday and Sunday. We’ll do it again on Sunday. And we’re also doing it on Thursday, go to Jason hartman.com, slash sweet home. And there was an Alabama market webinar on there. But we have totally updated this new slides, new properties, new information, new neighborhoods, so you’re really going to want to see this. And guess what, it’s all new construction. So join us on Thursday. And if you can’t make it on Thursday, join us on Sunday for this webinar. Again, the link to register Jason hartman.com. Slash sweet home. Okay, Jason hartman.com slash sweet home. And we will see you Thursday or Sunday for that webinar. Okay, no, it’s time to get to our guests. As we talk about section eight rentals.
Here we go. It’s my pleasure to welcome Richard Capelli. He is the founder of go section eight and a lot of you over the years have asked about whether or not you should do section eight rentals. That means government assistance rentals or government assisted tenants I guess I should say, I’ve done both I’ve told you about my mother’s experience with them. As I was growing up as a kid, I used to say that my mom who had several section eight rentals that she would complain all the way to the bank. And she always complained about them, but she always took the money. And every year they used to send her a postcard saying Would you like a rent increase? I can’t imagine any landlord said no to that. But she always checked the box said yes, send it back. Now things have evolved over the years, of course. But this is a busy site we’re going to talk about so let’s go ahead and dive into the the section eight topic. Richard, welcome. How are you?
Richard Cupelli 12:22
Thank you, Jason, pleasure to be here.
Jason Hartman 12:24
It’s good to know that we’re neighbors we live pretty close to each other here in the no income tax state of Florida. So what is go section eight? And what does it do?
Richard Cupelli 12:34
Ghosts actually come from a landlord and families perspective is a listing service, a lot like Zillow or Craigslist, or rent.com. But specifically for affordable housing. It’s not just for section eight. It’s for all affordable housing. But primarily it’s a platform where Section A families can actually landlords Connect, so listing service on the front end. We’re also a rent comparability service. We work with the largest agencies in the United States, New York, Chicago, la Miami, del Rey Palm Beach, most of the housing authorities in the country use sectioning on the go section on the back end to help run their program. But there’s things that help them manage their waiting list. And there’s another function that we built called grantwatch, which determines reasonable rents for the program. That’s important to owners knowing that we’ve do this because it helps them determine what rents they can get with the section veteran.
Jason Hartman 13:31
Excellent. And so when you are a landlord and you have a property, when it comes up for lease, you don’t need to use or do anything special necessarily, in order to attract a section eight tenant, right? You can just list it. Anywhere you listed now on postlets, Zillow, Craigslist, whatever, and a section eight tenant might come to you and want to rent it or your property manager, they might come to your property manager either, right? So what is the difference or the distinction like why use though section eight, it’s our
Richard Cupelli 14:05
Network, we have a relationship with most housing authorities. So housing authority that has a specific jurisdiction, for example, in Palm Beach serves maybe the county or it could be the city, it depends on the agency. When you post a listing and go section eight, we send it to the agency depending on their jurisdiction, and the agency has the ability not only to post it on their website, which they do use on our portals, but they also distribute the listing and print in their lobbies. So it’s a direct connection to the agency. The other benefit of posting a listing on go section eight, is you have to be aware that once you do find a tenant and this is where all the tenants are right, they go here first. So you’re you’re likely to find one on go section and you can post for free after you find a section 10 and then you have to you have to get an inspection make sure that the rent that you’re asking is reasonable. We built a method to streamline that, so the rent reasonableness functionality in go section eight, you’re much more likely to get your rent approved, if you use go section eight because there is the ability for you to add comparable data and defend your rent through the back end system that we created, which is used by the agencies.
Jason Hartman 15:20
Okay, so those are some reasons. Now let’s back up with maybe the question I should have asked you at the beginning. But I was kind of telling the anecdote about my mother, a real estate investor. Many landlords really prefer not to be involved with the section eight program. Is that a good decision on their part or a bad decision? What are the pros and cons of just renting to non assistance tenants or to assisted tenants?
Richard Cupelli 15:44
So why is section eight? So when I hear people talk about Section A? And usually, if there is a stigma in that conversation, where there’s a perception that there’s something wrong with the program? Typically, it’s because they don’t know it? It’s fear based, it’s not experience based the program itself. If I wanted to tell you what the just the pain points are, yes, there is some paperwork, it can take a little bit of time to get your your property approved and inspected. Sometimes days, it’s not that big of a deal. But once you go through the system, and you complete complete the approval process, which is really essentially, Jason, all you’re really doing is you’re signing a lease with a tenant, you’re saying I’m willing to take a voucher holder, then then you have an agenda. To them these called an rfta. That is signed by the agency. So there’s three parts to this agreement that are RTA is what says the agency will be paying a portion of the rent. The lease is the lease. It’s no different between a section eight tenant and anyone else. Now, when you do have a section a tenant, there are some huge benefits which you don’t get in the private sector. And fundamentally, especially now with Coronavirus, this is the reason why super super high value a section a tenant when they lose their job can get a modification in their rent that allows the agency to pick up their portion of the rent, and the landlord still remains whole. So not only are you getting the guaranteed rental income, whether it’s a check or direct deposit, typically direct deposit, you’re also getting a guarantee or a safeguard and assurance that the rent income, whatever you’re charging will continue to occur regardless of environmental shifts. So a person can lose their job and you’re still going to get your rent.
Jason Hartman 17:33
So we just did a we just did a webinar on rent insurance, which is basically an insurance program for landlords or tenants. If the tenant loses their job, it’ll be it’ll pay your rent. So with a with a section eight tenant, you don’t have to have that or you don’t necessarily have to have that, like does it depend on each office and each jurisdiction
Richard Cupelli 17:54
now it’s a so it is a federal program run by each office. The rules are the rules on a national level, if a tenant loses their job, it’s enough that the case manager is notified, they have to request a rent adjustment. And more rent adjustments came in since April than in the history of the program, our where the government is making massive increases to rents to cover the families portion because they lost their job. So rent stability, we call that rent stability is a giant reason. The program also does pay market rent, it pays market rent, now we can get into how that works. And that could take a little time. But you can get market rent for this section A program. It’s not based on a fair market rent, it’s not a published number. The program doesn’t pay x per bedroom, regardless of the perception. That’s how it works. It’s not how it works. But it does play market pay market rent. Okay. Now, the The other benefit is the long term duration of a tenant typically, like in my experience, I’ve had voucher holders for 10 years or more. I did a little webinar for a Real Estate Group century 21. And I got a little message on zoom saying this was last week that they had a tenant for 17 years. So there’s less turnover in the voucher program. And we all know I mean, as real estate investors and landlords turnover is the bane it’s it just kills you know, it’s financially it’s just a, it’s just a pain. And it’s so expensive. So that that’s another giant positive program. Plus you get to do good, you really do get to help those in need. So if you’re getting market rent, you’re doing good if there’s rent stability, and you’re sure that you’re going to get paid, why not section eight? So that’s the question that we need to answer is why not so the paperwork can be can be scary to somebody that doesn’t know anything about it, right? Like, what is this process? Like? How do I learn about it? It really is not that hard. It really is not that hard. There’s one addendum, there’s proof that you’re the landlord, you have to prove you own the property, providing a deed and some documentation and then there’s the addendum to the lease. Then there’s the inspection Jason Yeah, well,
Jason Hartman 20:01
that’s the perfect timing. Because as we were talking about off here, before we started, some of the complaints you hear from investors is these inspections, and, you know, bureaucracy and they say, you know, the government, nobody has an incentive to do anything right, you know, just other than their own personal will, you know, nobody’s on commission and other words, right. So government employees tend to be less motivated. But, you know, what about those concerns? What about, you know, some landlords think, oh, gosh, they’re just trying to make my life a hassle. These inspections are ridiculous, you know, they’re, they’re too strict, these kinds of issues is what you hear.
Richard Cupelli 20:39
It’s a safety inspection, first and foremost, to make sure that the property is safe and habitable. It’s not, it was never intended to be a burden to the owner to safety inspection. Now, if we were to walk into a property and inspected with the inspector and smoke detectors are missing, they’ll write you up. But you really should have smoke alarms in your property. If the pressure relief valve on the water heater is bad, it could explode the write you up. But you really don’t want a water heater to explode in your property. So they are going to look at some things to make sure that the property is safe and habitable. Now, in my mind, that’s a positive and not a negative. Right. I’ve heard horror stories about houses burning down and then words being liable,
Jason Hartman 21:21
when I don’t think anyone listening is going to deny that you shift smoke detectors in your house. Okay. But, you know, there, there are other things, you know that I can’t think of an example right now I’ll give
Richard Cupelli 21:33
you one, they can get picky. Like sometimes windows screens, that’s a nuisance for our landlord, I would be really bummed out about, like having a change of screen because of a tear. But that is no longer even a big deal. They don’t even do that anymore, in most cases. So the inspections were they used to be even more burdensome, they tried to simplify them because they want more owners in the program. So yes, it could have been also you don’t necessarily have to do an inspection every year anymore. In some cases, it’s every two years, you can just self certify that everything is done. So they’re making it easier.
Jason Hartman 22:04
Okay, so So you’re saying that they are trying to be more landlord friendly than Hmm,
Richard Cupelli 22:09
the program wouldn’t exist without landlords, right? So yes, they are trying to, and they’re trying that’s really why I’m talking to you, right? To bring more owners into the program means there’s more opportunity for the families, and the savvy out owners out there, Jason, they really know how beneficial This is monetarily financially. It’s a great program, people make a lot of money with it, those savvy investors really do utilize go section eight, and section eight program and profit from it.
Jason Hartman 22:38
How long have you guys been around
Richard Cupelli 22:41
17 years?
Jason Hartman 22:42
17 years? And how do you make your money is that you charge for advertising? Are there probably a couple revenue streams? I’m just curious, you know, a few. So
Richard Cupelli 22:50
we do work with government agencies on rent compatibility software on our waiting the software is something we do charge agencies for. So there’s a direct relationship to be the government we do we do? Well, they’re a property owner does go on, and they can list for free, but they can upgrade. So it’s a freemium model, if you’re familiar with that, and the owner, when they upgrade, they can have access to quickmatch, which is a service that we created, that allows you to find such a tenants that are actively searching and matches them to your property. And you can contact them, as opposed to having to wait for them to contact you. And we have a giant database of voucher holders that are actively searching and available. And we match up the properties really well to the family based on needs and their behavior online.
Jason Hartman 23:41
Okay, so good stuff.
Richard Cupelli 23:42
That’s a good service for owners.
Jason Hartman 23:44
Good stuff, what types of properties? Is this addressing? You know, I’ve had section eight tenants in some rather nice properties I’ve owned over the years. You know, what, what types of properties are most of the Section A properties? Are they kind of like C class properties? Or, you know, and I’d be curious to know, How high do the rents go inside the program.
Richard Cupelli 24:06
So it’s all it crosses all types, it’s basically market rent. But there’s a point where the property becomes unaffordable. There’s a point where a family can no longer afford a property and it stops there. So you’ve heard of fair market rents. rents are published by HUD and they’re released in October, the fair market rent in Palm Beach County, I don’t remember off the top of my head, what it is for three bedroom, let’s just say it’s like 1800 dollars, that represents within a certain range, the agency has an ability to set the payment standard, their financial burden, anywhere between 90 and 110% of that FMR. That payment standard represents the maximum financial burden to the agency. Now the family can pay a little bit more, right. They can pay a little bit more based on their income, but typically the family’s income is low in order to get in the program. You’re not going to go much higher than the fair market rent in the first year. So let’s say that if the payment standards are around 1800 dollars, Jason, and the market rents are around 1800. dollars, you’re fine, up to say around $2,000 or so. But you can’t rent a three or $4,000, two or three bedroom in the program, there’s a limitation based on how much the family can afford to pay their share. And they’re typically that’s typically around 30% of their
Jason Hartman 25:25
income. And in terms of the overall program nationwide, I think our listeners would be curious to know, how much of it, you know, how much is paid by the government? You know, it varies. How does that scale work? Right? You know, who gets all of the rent paid? Who gets part of the rent paid? How does that work, how
Richard Cupelli 25:44
much money the family makes. So if if there is no income, a family with no income, there’s a minimum rent of $50. Right now, typically, it’s 50 bucks, that’s the minimum, some families that do very well, they’ll pay 30% of it, it could be 567 $800. Now, suddenly, Lords think it’s better to have the own the agency pay all the rent, having no income tenant, something, it’s better to have a tenant that has a larger income, and pays more and more of the rents in my experience, usually a family that is has a little bit, they’re paying a little portion of the rent, and they have kind of like, like some equity in the property by paying a portion of it. They’re usually really great tenants. My experience. So it’s usually about a third is the rule of thumb. It’s about 30%.
Jason Hartman 26:33
Okay, cool. So 30% paid by the tenant.
Richard Cupelli 26:36
That’s about a rule of thumb. Yeah.
Jason Hartman 26:38
Okay. Okay. Good. Um, and is your program totally nationwide? Is it in every county?
Richard Cupelli 26:44
It’s national? Yeah. Yeah, we work with a lot of housing agencies, nearly 700 of them use the rent compare ability software, most families with vouchers used go section eight, Comm.
Jason Hartman 26:57
Excellent. And what else do you want to tell people? Just to wrap it up for us,
Richard Cupelli 27:02
I would encourage an owner who’s considering renting a property out especially a property that would be used C Class B class, I’m just saying something that would be in the more affordable sector to try a section eight tenant. Not only are they going to be financially more secure, they’re going to get their market rent, but they’re also helping people and it’s just a great way to make money.
Jason Hartman 27:23
Excellent. Richard, thank you so much for joining us. Obviously, the website. We’ve said it many times it’s go section eight.
Richard Cupelli 27:29
Thank you, Jason.
Jason Hartman 27:30
Thank you. Alright, thanks. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out this shows specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.