Investing in HOAs for Section 8 Rentals: Mike Caggiano’s Proven Strategy for High Cash Flow

Why This Episode Matters

Most real estate investors avoid condos and HOAs, often calling them risky, restrictive, or unprofitable. But seasoned investor Mike Caggiano flips that conventional wisdom on its head. With 18 years of experience and a portfolio built largely through condos and townhomes in HOA communities, Mike shares why HOAs can actually be the safest, most profitable, and most predictable way to build wealth with affordable housing.

This conversation on the Affordable Housing & Real Estate Investing Podcast with Kent Fai He is a masterclass for anyone looking to generate strong cash flow, minimize maintenance headaches, and confidently work with Section 8 tenants.

Why Invest in Condos and HOAs Instead of Single-Family Rentals?

Many investors dismiss HOAs. Mike calls it a myth, similar to the stigma around Section 8 rentals. His experience shows the opposite.

When done right, HOA properties provide:

• Lower maintenance risk: Big-ticket repairs like roofs, siding, windows, and septic systems are covered by HOA dues.
  
  

• Predictable expenses: Instead of budgeting 20% of rents for repairs, Mike’s real costs average only 3%.
  
  

• Community enforcement: Rules like quiet hours, pet restrictions, and smoking bans create safer, more consistent tenant experiences.
  
  

As Mike put it:

“On a single family house, you’re going to need a roof one year, siding another, windows another. With HOAs, that’s all covered in your dues. My maintenance is just 3% of my rents collected.”

What Does a Good HOA Look Like for Investors?

Not all HOAs are created equal. Mike outlined a due diligence process every investor should follow:

• Review the P&L: Make sure the association has a positive balance or clear plans for projects.
  
  

• Check for delinquencies: Healthy HOAs show owners are paying dues consistently.
  
  

• Look at reserves and special assessments: Surpluses usually signal planned improvements, like roofing or landscaping.
  
  

• Confirm bylaws: Ensure rentals are allowed and ratios of owners to renters are not restrictive.
  
  

• Watch for litigation: Any lawsuits should be disclosed in financials.
  
  

Mike explains:

“I like to see that people are paying their dues on a regular basis. I also check for outstanding legal balances and ask the HOA directly about them. A good community will be transparent.”

Why Greensboro, NC Became a Target Market

Mike shared how he pinpointed Greensboro, North Carolina, as a prime market after years of investing in Maine and Raleigh:

• Demographics: Job growth, affordable cost of living, and multiple universities.
  
  

• Infrastructure: Strong highways, international airport, and Department of Defense presence.
  
  

• Institutional buying: In 2021, 31% of single-family homes sold were purchased by institutional buyers, signaling long-term confidence.
  
  

• Appreciation + cash flow: Mike initially targeted Greensboro for appreciation but ended up landing deals with 20% cash-on-cash returns.
  
  

Financing Condos in Today’s Market: DSCR vs. Commercial Loans

After maxing out 10 conventional loans, Mike had to look at alternatives:

• DSCR Loans: Easier approvals but costly (about $5,800 in fixed fees on a $90,000 deal).
  
  

• Commercial Loans with Local Credit Unions: Mike secured financing with only $300 in closing costs, though the interest rate was 8.4%.
  
  

Ultimately, he paid off one unit to increase cash flow, proving the importance of flexibility and knowing all your financing options.

How to Find Section 8 Tenants for HOA Units

Mike’s tenant placement strategy is both simple and effective:

• Advertise on AffordableHousing.com
  
  

• Leverage local housing organizations like Salvation Army, women’s resource centers, and county housing agencies.
  
  

• Build relationships with caseworkers: They often provide incentives, such as $750 bonus checks for securing housing.
  
  

• Use systems: Mike uses a Google Form screening process he’s refined for over a decade.
  
  

His results? Filling units in under 10 days, sometimes the same day he closes.

Key Insights from Mike’s Strategy

• HOA rentals slash maintenance costs from the typical 20% down to just 3%.
  
  

• Strong HOAs mean predictable expenses and safer tenant environments.
  
  

• Choosing markets with job growth, infrastructure, and institutional confidence is critical.
  
  

• Financing flexibility (conventional, DSCR, commercial) gives investors more paths to scale.
  
  

• Proactive tenant placement ensures zero vacancy and leverages housing agency incentives.
  
  

Best Quotes from Mike Caggiano

• “HOA rules make me the good guy. I just point to the bylaws and say, sorry, it’s not me, it’s the rule.”
  
  

• “My total monthly expense is $678. I collect $1,250 a month. That’s a deal.”
  
  

• “People say I’ve gone all in, but I don’t see a gamble at all. My worst-case scenario is I just rent privately.”
  
  

• “Every state has housing organizations that need landlords. They’re thrilled when you call, because they need people like us.”
  
  

FAQ: Common Questions About HOA and Section 8 Investing

1. Are HOAs risky for real estate investors?
Not if you perform due diligence. Review financials, bylaws, and litigation history. A strong HOA reduces risk by covering big-ticket repairs.

2. Why choose condos over single-family homes?
Condos in good HOAs have drastically lower maintenance costs, provide community oversight, and often allow investors to scale multiple units in one complex.

3. Can Section 8 pay above the published rent standard?
Yes. If your unit has superior renovations or amenities, housing authorities often approve higher rents than the baseline payment standard.

4. How do I avoid vacancies in affordable housing rentals?
Advertise early, work with local housing agencies, and build a network of caseworkers. Mike often fills units within days of closing.

5. What happens if Section 8 funding is reduced?
You still own an asset. Mike notes he can always rent privately, just as he has with executive rentals. Section 8 is an added advantage, not a dependency.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. This episode with Mike Caggiano proves again why the show continues to be the leading resource for investors, developers, and advocates.

DM me @kentfaiheon IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.