Tom Cruz is a 33-year-old real estate investor from Wilmington, North Carolina. He started real estate in 2012 by doing wholesaling. Completely funded by his partner’s downpayment, Tom built his portfolio with single-family Section 8 properties. Years ago, he and his business partner bought 100 units for $6.2 million. Tom stabilized the portfolio and two years later, they sold it for $10.2 million.
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Tom used the Section 8 program to grow a successful business and he has a pretty incredible story! In this #TechandTacticsTuesday episode, Tom will talk about the Section 8 model and his partnership structure. Listen now to learn all about it!
Key Points From This Episode:
- Tom started building his portfolio with single-family Section 8 properties.
- Section 8 is a federal program that helps economically disadvantaged people at the poverty line or below to get free rent.
- Contrary to people’s misconceptions about Section 8, this model is predictable and income is guaranteed.
- Section 8 tenants avoid getting evicted because eviction would mean losing their voucher and getting their social security banned.
- The only way to force appreciation in Section 8 property is by increasing rent.
- Every year, Section 8 tenants go through recertification. They go to the housing authority to reconfirm their income. Then, the landlords have a 30-day window to increase their rent.
- The only way to force appreciation for Section 8 properties is through rent increase.
- Rent increase is the key to keeping up with inflation every year.
- How does Tom prepare for a downturn in Section 8 projects?
- Tom has never had any funding issue with Section 8.
- What are Tom’s predictions for the next 6-12 months in the real estate market?
“The easiest and fastest way to improve and increase the value of the property is not by remodeling it, not by spending millions of dollars on 100 units with tenants living in it. There’s gonna be wear and tear. It’s a never-ending leaky bucket, you can never get ahead of it. The only way you can really force appreciation in that time span to make 4 million dollars is the rent, and that’s what we did.” [0:10:55]
“The only way you can really force appreciation in that time span to make 4 million dollars is the rents, and that’s what we did.” [0:11:07]
“Increasing the rent is key in being able to keep up with inflation every year.” [0:11:44]
“It’s just a matter of finding areas that have a high density of these types of properties and being able to come up with processes and property management, obviously, that are consistent with what you’re trying to do in order to make that happen. [0:14:59]
Links Mentioned in Today’s Episode:
About Tom Cruz
Tom Cruz is a 33-year-old real estate investor out of Wilmington, NC. After graduating from UNCW, Tom started wholesaling real estate and then graduated to buying single/small multifamily properties. Tom got his start with the Section 8 program by accident after purchasing a unit with a tenant that was Section 8. Since then, he has bought and sold 500+ units and currently solely owns 390 properties. Tom is now offering the world’s first comprehensive step by step Section 8 course and coaching program. His reach is over 1M, and he would be happy to let his network know to listen in!
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