How Section 8 Guaranteed Income Mitigates a Layoff

Every day a new layoff is announced, and we project this to continue for the near term. Especially if the Fed raises its key interest rate again to combat inflation (which I don't care what the news says, when I purchase groceries, it's more expensive than in previous trips). 

So how are you doing? How are you thinking about protecting yourself or your family in the event of job loss this year? 

For some, the plan is to keep working their job and save cash. For others, maybe the plan is to duck their head in the sand and pray that the job cuts don't happen to them. And for others, maybe the plan is to borrow from a retirement account or liquidate some stocks to access cash if needed. 

Those are all ok ideas, but I want to throw the idea of Section 8 into the arena as a viable option. 

But first, some of the gaps with the other plans. 

Duck Your Head and Pray

This is the absolute worst plan. Bad things happen to great people. When times are bad, and they are bad right now, having a plan is better than doing nothing. I highly advise immediately thinking about what happens to your life if you were to go without income for 3 months.

Spending Cash 

In order to spend cash you need a cash surplus. To get a cash surplus you are disciplined and should have at least 3 months of living covered. In the event of layoff, you will be 3 months away from selling off other assets to cover your income gap. Prior to selling off any stocks or assets you might consider getting a HELOC on your home to tap into equity you have built. In this scenario, you are 3 months away from real trouble which is taking on high interest loans to pay the bills.

Selling Stocks and Dipping Into Retirement Accounts

If you're at retirement age, this is a great move. If you are younger, you will face early withdrawal penalties and you will also have tax obligations on your capital gains. This will deliver some short term relief but you will face the IRS at the end of the year. The IRS always gets their money. Depending on how much money and how long you need it, I think this is a slightly better option than getting a HELOC. 

Getting A Cash Flowing Property

Here's why this is the best bet. Instantly with a cash-flowing property, you will have income within the first month. This provides flexibility and also opens the option of getting hourly employment to immediately offset income. By getting an hourly income and having a cash flowing property, you will quickly find that you will be earning at a higher rate than the median individual income in the United States. 

Here's how that math works. First, we will make a few assumptions: 

1. You own your primary residence

2. You have enough to put 26% towards a new purchase

3. You have access to local hourly wage jobs such as working at a grocery store, or convenience store that pay $18/hour (this is what they are regularly advertising here in Raleigh, NC).

Every state has a county that delivers cash flowing properties. It might be a little bit further from where you live, but I promise they are there. If you have a paid account, you can use the Section 8 Secrets Analyzer to find that county and home. Watch the video to see how it works.

The Section 8 Secrets model pushes for 10% Cash Flow in Year 1. Let's assume you can find a property in your state for $100,000. We have found that properties at this price point often cash flow over 15% but we will start at 10%. 

If you find that property, you will need $25,000 to purchase the property. The $25,000 will generate monthly revenue greater than $500/month. After you pay your house bills, the cash flow (monthly profits) will be between $210-$416/month of income. 

• 10% return: $210/mon
• 15% return: $313/mon
• 20% return: $416/mon

In the above model, we are accounting for cash flow, but in reality, your bank account will be larger because your rent payments from Section 8 for property taxes will not be due for a few months (6-12 months depending on where you live). So you can use your tax money today and hope that you have income later to pay your taxes, or you can save the tax money immediately to pay property taxes. 

Because you are buying a second home, the 25% downpayment will not require escrow. This means, you don't have to pay your taxes along with your mortgage payment each month.

So now you are working hourly and we will assume you can pick up 40 hours of hourly work. This seems easily possible with the current labor market and demand for employees. 

40hrs/week * $18/hour = $720 per week

• If you were unable to secure full time work for 3 months, you would generate $8,640 in hourly income and $630 in rental cash flow for a total of $9,270. 
• If you were unable to get full time work for 6 months, you would generate $18,540 for 6 months. 
• And lastly, if you went a full year without full time work you would generate $37,080 for 12 months of work.  

NOTE: In the above 3 scenarios I put working at 12 weeks per quarter, but there are actually 13 weeks in a quarter. This means I afforded myself 4 weeks of no work (aka unpaid vacation because why not. I like to go surfing).

Now you might think these numbers suck, but the alternative is you making ZERO or depleting your savings, or worse yet, taking on high interest loans.

Here's why that extra income (while maybe small) is so juicy. Even at $18/hr, the extra $210-300/month is almost 10% of your total hourly income. You just gave yourself a pay raise. 

• The rent is guaranteed and will deposit every month like clockwork
• Because you are paying a loan, the interest you have paid after the year will more than cover your profits. This means you will owe LESS taxes. 
• You will have built equity and appreciation into your 1st home, and now your 2nd home. 
• Your rents will increase automatically. This means you will generate even more income the next year. 

Now, each situation is different, but the more you can invest today, the more you will return your money tomorrow. 

That's the beauty of guaranteed income. It allows you to have an income source that won't take much of your time. 

Those numbers in the above scenario look even better at 15% or 20% Cash on Cash return. If you could find a 15% Cash on Cash property that costs $100k and an $18/hour job, you would make over $50,000/year. 

Don't wait to get laid off or lose your job. Start building guaranteed income today.

Last thing, do you happen to live in or near the Southern Border of Virginia. I found a property that does 20.1% Cash on Cash return with a 5.99% interest loan. It literally took me seconds to find using the S8S tools.