Why Mike Caggiano Is Still Buying Section 8 Rentals in 2026

Real Numbers, Townhome Deals, and 6.25% to 11.7% Cash-on-Cash Returns

Real estate investors often freeze when interest rates rise.

Headlines predict crashes. YouTube fills with fear. Investors start waiting on the sidelines.

But the most experienced affordable housing investors often do the opposite.

They keep buying.

In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He sits down with Mike Caggiano, a seasoned Section 8 investor and co-founder of Section8Secrets.com, to break down why he is still actively acquiring rental properties in 2026.

Mike walks through real numbers from recent deals, including a townhome purchase in Raleigh, North Carolina, and explains why stable housing demand from voucher tenants continues to make Section 8 investing attractive even in higher interest rate environments.

He also explains something many investors overlook: why he prefers townhomes and HOA communities instead of single family homes for many of his Section 8 rentals.

For investors who want predictable cash flow while providing housing to families who need it most, this conversation provides a clear and practical blueprint.

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. Conversations like this one help investors understand how to build sustainable rental portfolios while expanding access to affordable housing.

Let’s break down the lessons from this episode.

Why Are Some Investors Still Buying Rental Properties in 2026?

Many investors assume rising interest rates mean real estate investing no longer works.

Mike sees it differently.

He explains that what often changes in higher rate environments is not the opportunity itself, but investor psychology.

When uncertainty increases, many investors stop taking action. That reduced competition can create opportunities for those who continue underwriting deals carefully.

In Mike’s case, he is still acquiring properties that meet his long term criteria:

• Strong rental demand
• Good school districts
• Stable neighborhoods
• Reliable government backed rental payments

Section 8 housing, also known as Housing Choice Voucher housing, provides a particularly resilient tenant base.

Voucher holders receive rental assistance through local housing authorities. This means a portion of the rent is paid directly by the government each month.

For investors focused on stable cash flow, this reliability matters.

Mike emphasizes that the key is not trying to perfectly time the market. Instead, the goal is to find properties where the numbers still make sense today.

Why Does Mike Prefer HOA Townhomes Instead of Single Family Rentals?

One insight Mike shared in the conversation is why many of his rentals are townhomes in HOA communities rather than traditional single family houses.

Many investors initially avoid properties with HOA fees because they reduce monthly cash flow.

Mike sees a different advantage.

In many townhouse communities, the HOA covers several major maintenance responsibilities, which can reduce long term risk for landlords.

Typical HOA services may include:

• Roof repairs and replacement
• Exterior maintenance
• Landscaping and lawn care
• Common area maintenance
• Sometimes exterior insurance components

For landlords managing multiple properties, these responsibilities can become expensive and time consuming when handled individually across several homes.

In an HOA community, those costs are often spread across all units.

Mike explained that this structure can make property management easier, especially when scaling a rental portfolio.

Instead of worrying about large unexpected expenses like roof replacements or exterior repairs, those responsibilities are often handled by the HOA.

Another benefit is neighborhood consistency.

HOA communities usually maintain stricter appearance standards, which helps keep properties well maintained and attractive for tenants.

For Section 8 rentals, this can also help properties continue to pass housing inspections more easily.

While HOA fees slightly reduce monthly cash flow, Mike believes the tradeoff is often worth it because the structure reduces maintenance surprises and simplifies long term property management.

What Did Mike’s Recent Section 8 Townhome Deal Look Like?

One of the most interesting parts of the conversation is when Mike walks through a recent acquisition in Raleigh, North Carolina.

The property:

• 3 bedroom
• 2.5 bathroom
• 1,600 square foot townhome
• Built in 2010

The property sits in a neighborhood surrounded by million dollar homes, with a smaller townhome complex nearby.

This type of location can create an interesting opportunity. Investors sometimes find smaller housing options within otherwise high value neighborhoods.

Purchase Details

Original listing price: $308,000
Negotiated purchase price: $236,000
Seller concessions: $3,500

The property had been sitting on the market for months, which gave Mike room to negotiate.

He ultimately secured the property for more than $70,000 below the original listing price.

How Did the Financing and Cash Flow Work for This Deal?

Mike used a DSCR loan, or Debt Service Coverage Ratio loan, which is commonly used by rental property investors.

DSCR loans evaluate the property’s income potential rather than the borrower’s personal income.

Loan Terms

Interest rate: 6.5%
Loan type: 30 year fixed
Down payment: 25%

Monthly Numbers

Rent collected: $1,897
Total monthly mortgage: about $1,118
Total monthly expenses: about $1,564

The expenses include:

• Taxes
• Insurance
• HOA fees
• Maintenance reserves
• Vacancy reserves

The final result was approximately 6.25% cash on cash return.

Mike openly admits that this is one of the lower return deals in his portfolio. However, he still chose to move forward.

Why?

Because the deal offered other advantages.

Why Did Mike Accept Lower Cash Flow on This Deal?

Not every real estate investment is purely about immediate cash flow.

Mike highlights two additional factors that influenced his decision.

1. Long Term Appreciation Potential

The property sits in a highly desirable neighborhood with expensive surrounding homes.

Areas with strong schools, amenities, and job access often experience steady long term appreciation.

2. Strong Rental Demand

Mike received immediate interest from tenants after listing the property.

Demand for affordable rentals in desirable neighborhoods remains extremely high.

This demand helps reduce vacancy risk, which is one of the biggest threats to rental property performance.

Mike also notes that the rent could actually be higher.

The property qualifies for a three bedroom voucher rent of around $2,050, but he intentionally accepted a slightly lower payment from a tenant with a two bedroom voucher who urgently needed housing.

This reflects an important element of affordable housing investing.

Many investors are balancing financial returns with the opportunity to help families secure stable housing.

What Was the Second Section 8 Deal Mike Bought from OpenDoor?

Another interesting deal Mike discussed came from a source many investors overlook: OpenDoor inventory.

Companies like OpenDoor, Zillow Offers, and other iBuyer platforms often acquire homes quickly and then resell them. When properties sit longer than expected, these companies sometimes become motivated sellers.

Mike identified one of these opportunities and purchased the property directly from OpenDoor.

Why OpenDoor Deals Can Create Opportunities

OpenDoor properties sometimes present unique advantages for investors:

• Homes are typically vacant and ready to close quickly
• Pricing adjustments happen automatically when listings sit too long
• Negotiations are often straightforward because the seller is a corporation rather than an individual homeowner

Mike noted that the key is patience. Many of these homes start priced aggressively, but price reductions often occur after several weeks or months on the market.

For investors actively monitoring listings, these moments can create strong buying opportunities.

What Did the OpenDoor Deal Numbers Look Like?

The second property Mike discussed offered significantly stronger returns than the Raleigh townhome.

While the first deal produced around 6.25% cash on cash return, the OpenDoor property was projected to generate approximately 11.7% cash on cash return.

That difference highlights an important lesson for investors.

Not every deal in a portfolio needs to be identical.

Some properties may offer:

• Strong appreciation potential
• High quality locations
• Lower volatility

Other deals may deliver:

• Higher cash flow
• Better purchase discounts
• Faster portfolio growth

The OpenDoor deal represented the higher yield side of the strategy.

Mike emphasized that he is constantly analyzing deals and maintaining a pipeline so he can choose the strongest opportunities when they appear.

Why Monitoring iBuyer Inventory Can Be a Smart Strategy for Investors

Large iBuyer companies operate on scale. Their goal is to move inventory quickly.

When homes do not sell as expected, price reductions can occur rapidly.

For patient investors, this creates a consistent opportunity.

Mike recommends watching for several signals:

• Properties that have been listed 30 to 90 days
• Homes with multiple price reductions
• Listings that return to the market after a failed contract

When these factors combine, investors may be able to negotiate meaningful discounts.

Those discounts are often the difference between a mediocre deal and a strong one.

How These Two Deals Fit Together in Mike’s Portfolio Strategy

Looking at the Raleigh townhome and the OpenDoor deal side by side reveals Mike’s broader approach.

The Raleigh property offers:

• Strong neighborhood quality
• Stable rental demand
• Long term appreciation potential
• Approximately 6.25% cash on cash return

The OpenDoor property offers:

• A deeper purchase discount
• Higher immediate cash flow
• Approximately 11.7% projected return

Together, they balance the portfolio.

Some deals focus on stability and appreciation, while others focus on higher cash flow.

That diversification helps investors maintain steady performance over time.

Key Insights from the Conversation with Mike Caggiano

Here are several important takeaways from this episode of the Affordable Housing & Real Estate Investing Podcast:

• Rising interest rates do not eliminate real estate opportunities, but they do require more careful underwriting.
• Section 8 housing continues to provide stable rental demand and reliable income streams.
• Negotiation opportunities often appear when properties sit on the market longer.
• DSCR loans allow investors to qualify based on property income rather than personal income.
• Long term appreciation and neighborhood quality can justify lower short term cash flow.

These insights help explain why experienced investors continue to acquire properties even when markets feel uncertain.

Best Quotes from Mike Caggiano

“People are kind of paralyzed right now because of interest rates and predictions about the economy.”

“The deal penciled out pretty good, but honestly it’s one of my lowest cash on cash returns.”

“The bigger picture for me is the long term appreciation and the ease of renting this property.”

“I had tenants lined up immediately once I listed the property.”

“My next deal is almost double the return, around eleven percent cash on cash.”

These quotes highlight how experienced investors evaluate deals beyond simple headline numbers.

Common Questions This Episode Answers

Is Section 8 investing still profitable in 2026?

Yes. While interest rates have increased, strong rental demand and government backed voucher payments continue to make Section 8 rentals attractive for many investors.

What is a DSCR loan for rental properties?

A DSCR loan evaluates a property based on its rental income rather than the borrower’s personal income. This allows investors to qualify for financing based on the property’s ability to cover its debt payments.

Why would an investor accept lower cash flow on a deal?

Investors may prioritize long term appreciation, strong tenant demand, or strategic portfolio positioning rather than maximizing immediate cash flow on every property.

How much rent can Section 8 properties generate?

Rental payments depend on local housing authority payment standards and unit size. In Mike’s example, a three bedroom voucher could generate about $2,050 per month.

Why are townhomes sometimes attractive rental investments?

Townhomes can offer lower purchase prices than single family homes while still providing strong rental demand, especially in desirable neighborhoods.

Why Section 8 Housing Remains a Powerful Investment Strategy

Affordable housing demand continues to grow across the United States.

Millions of households rely on rental assistance programs like Housing Choice Vouchers to access stable housing.

For investors willing to understand the system, Section 8 housing can provide:

• Stable tenant demand
• Reliable government backed rent payments
• Opportunities to serve families in need

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. Through conversations with investors like Mike Caggiano, the podcast continues to educate developers and investors about real strategies that expand affordable housing supply.

By combining responsible investing with thoughtful underwriting, investors can build portfolios that produce financial returns while helping solve the housing shortage.

DM me @kentfaihe on 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.