Section 8 Sucks

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Section 8 Sucks

Tuesday, April 26

Yeah I know. You’ve heard all about what a great program this is. I know that I hear newbie real estate investors hyperventilating all the time about how “the government is going to pay the rent!!!”.

Well there’s no such thing as a free lunch Sparky.

When I got started in this business six years ago I didn’t really have a clue as to what Section 8 was. All I could recall was hearing horror stories about nightmare tenants that trashed units and housing agencies that turned a blind eye to all of the problems.

As I think back, I don’t even recall when it was that I received my first Section 8 application. But I do recall that the tenant knew the process inside out, and she coached me on how to fill out the paperwork.

I also recall that we talked about my impressions of the program. She explained that some time back the rules had been changed and now Section 8 held their clients to a higher standard, and that if they screwed up even once by missing rent or doing damage they were out and would lose their Section 8 “voucher”. They were also not allowed to move to a new rental unit with their voucher if there was any sort of outstanding balance for utilities or damage.

Well a little research confirmed that all of that was indeed the case. Officially at least. So I decided to play ball. After all – the government was paying the rent!!!

Since that time I have had six Section 8 renters in my houses and six others in my apartment building. The results have been anything but positive. And what I found is that the problem goes way beyond the poor quality tenants you tend to get – the Section 8 agencies are as bad or worse in most cases. The twelve vouchers that I have dealt with have been from eight different agencies. And every single one of the agencies ranks somewhere between grossly incompetent and despicable, with the Detroit Housing Agency, as you might expect, defining the lower boundary.

And none of the hyperventilating newbies have any clue about this because, well, they’re hyperventilating newbies.

Here’s just a taste of what it’s like to deal with Section 8 agencies and tenants:

Section 8 tenant cracks a very large plate glass window. She wants to move, but I won’t sign off because of the damage. Even though this would have been identified as broken in the front-end Section 8 inspection if it was broken prior to her tenancy, the agency rejected my claim and let her move with her voucher. The reason? They said I couldn’t prove that she broke the window. I ate the repair cost.

Tenant needs to move to a less expensive rental, so she gives me notice. I pull the water bill and it’s $900. She hasn’t made a payment in a few months. I tell Section 8 that I’m not going to release her because of the balance. Their response? It’s not their problem, they’re not getting involved, and by the way they already approved her for her new rental and that I could sue here if I liked in order to recover the water bill.

Three other cases of tenants leaving damage and utility bills that exceeded their security deposits. Each of the agencies responded the same way – it wasn’t their problem.

Two cases where the tenant moved still owing rent – the clearest violation of the Section 8 rules. What did the agencies do? Nothing. The tenants were allowed to take their vouchers to new rental units immediately.

And finally, the worst of the worst was a Section 8 tenant that I inherited in my apartment building. I was forced to evict him for non-payment of rent and several other reasons, and on the way out he did almost $2,000 damage. The Section 8 agency looked the other way, and even after the eviction, he was allowed to keep his voucher and literally get evicted from my unit and move right into another apartment. With Section 8 paying the rent.

I have three Section 8 tenants left across the 31 units that I manage myself. Once they’re gone I’m done with the program.

What the newbies fail to understand is that while Section 8 tenants are easy to get, and it's a blast getting the rent checks direct deposited every month, the pain happens at the end. And by pain I mean turnover costs that exceed the net cash flow that you made during the entire term of the Section 8 tenancy.

For those of you keeping score at home that's ZERO ROI. If you're lucky it's zero. It can easily be negative.

Don’t get sucked in by Siren’s Song of free rent. Free is never worth the price you pay for it. So run away from Section 8 and don't look back.

Because there’s no such thing as a free lunch Sparky.

Comments

Jon Klaus Reply
10 months ago

Dennis, thanks for another alternative view. When investors brag about getting $900/mo from section 8 in a $725/mo neighborhood, you have to know not all is as it appears.
Dennis Fassett Reply
10 months ago

Thanks for the comment Jon. It's great in theory but sorely lacking in execution.
Joshua Dorkin Reply
10 months ago

As a former section 8 landlord, I can say that without a doubt, it is not all that it is cracked up to be.
Dennis Fassett Reply
10 months ago

Yes the Siren's Song of government paid rent is too strong to ignore when you're just starting out in a lot of cases. I'm just thankful that it wasn't a more expensive lesson.
Kevin Kaczmarek Reply
10 months ago

interesting observations and experiences Dennis. Here in Indinapolis the section 8 program is running short on funds and the two sec. 8 rentals I have have actually delayed paying me my monthly rent. Its getting to be a royal pain.
Loc R. Reply
10 months ago

I personally don't believe in Section 8, so I never got into Section 8 rentals. I always figured that the sh!t would hit the fan sooner or later.

Looks like the cracks are beginning to appear, and they're quite big.
Michael Zuber Reply
10 months ago

Interesting. I have been in the game for about 10 years, have 100+ rentals and I would estimate that at any one time I have 25 section 8 rentals. I certainly have had issues but and the end of the day I enjoy the program. The biggest wrinkle for me is I am extra careful on selecting a section 8 tenant and I double check everything. Free rent is not worth the head ache if they have even one issue. So from my end I am net positive on the program but I certainly had to learn the hard way to insure the details of the application. There is no free lunch.
Jeffrey K. Reply
10 months ago

I think this is great for new buy and hold guys. There are not many people talking about the specific negatives of dealing with the office part of sect. 8. Most of the guys on here talk mostly about the tenants.
Dennis Fassett Reply
10 months ago

Kevin - don't get me started on the payment aspect of this! I've had two housing agencies unilaterally decrease my payments mid-contract because of funding issues. And with all the problems right now with government spending I only expect it to get worse. Yet another reason to stay away from the program.

Thanks for bringing that up.
Dennis Fassett Reply
10 months ago

Michael - I think the difference here has been the agencies. I've seen a real (unfavorable) change in the amount of oversight and enforcement of the rules over the past three years.
Charles Perkins Reply
10 months ago

I've had good and bad experiences with Section 8. Some agencies are okay and others are a joke. I will no longer do section 8 with one agency because of the problems I had with them.
Allison Schnur Reply
10 months ago

Very helpful article for a "hyperventilating newbie" such as myself :) I have always heard that section 8 "isn't that bad" but I couldn't imagine throwing another party into the mix, especially if they're just as incompetent as some tenants. Sounds far too frustrating, whether you're profiting or not.
Dennis Fassett Reply
10 months ago

LOL Allison!

Then my work here is done because if you decide to go with Section 8 at some point you'll do so with your eyes wide open.
Bryan A. Reply
10 months ago

we were running out of section 8 money in my area as well...they weren't accepting new tenants for a while..it's only a matter of time until the program is completely bankrupt, leaving landlords who depend on the inflated rental rates high and dry
Matthew Tortoriello Reply
10 months ago

I have 98 section 8 tenants and I would say only 10% are the type you are talking about, the rest are not great but mainly just need training.

What I do agree about is the agencies. They rarely help the landlord. There needs to be a complete restructure of how they run.
Dennis Fassett Reply
10 months ago

Bryan we're seeing that as well. Unilateral "take it or leave it" rent decreases mid-lease are getting all too common. They supposedly have a freeze on new vouchers here as well.
Dennis Fassett Reply
10 months ago

That's good news Matthew.

Even if we screen tenants heavily and train them properly, the agencies here have become so lax that the tenants know they can get away with just about anything. So the rules don't mean much anymore.
Ralph PeÃ±a Reply
10 months ago

Look into making stronger addendums in the lease. Such as the tenants exceeding their monthly limit on the water bill.
Dennis Fassett Reply
10 months ago

Sure thing Ralph. Nothing keeps tenants in line like really strong addendums.

I'd love to see you try to enforce water usage limits.
Bryan A. Reply
10 months ago

lol yep...well said dennis...that sounds like such a simple 'guru' answer..."Oh, just make the tenants sign their name on a piece of paper...that'll work" seriously ralph, that works for you??
Ralph PeÃ±a Reply
10 months ago

Not renting to section 8!
Dennis Fassett Reply
10 months ago

Ralph -

Did you happen to see the blog post up at the top. You know, that writing above the comments? Or perhaps the title of the post?
Chris Clothier Reply
10 months ago

Dennis -

Great article. It would be funny at some point if it were not such a pitiful and easily avoidable situation. We manage over 800 properties for investors around the country and do not have a single section 8 house. The program is a complete joke around here.

Chris
Dennis Fassett Reply
10 months ago

Thanks Chris. I agree that it would be funny if it wasn't such a joke. Maybe when the memories fade it might be.
Ralph PeÃ±a Reply
10 months ago

srry Dennis i didnt get to read the comments prior. Wow, idk that the government would soon stop funding the section 8!! I'm glad you spoke on this, because i was considering investing in section eight only for my next investments.
Jody Palmerino Reply
10 months ago

I have one Section 8 and he surely knew the drill and told us what to do. But he saved us a lot of time. He told us the office was a joke. They actually raised the amount they are paying us. So, our Section 8 guy is fine, now if I could say that about all our tenants. We have another one who is always late and not even paid this month yet. So, I think you can get good and bad of both kinds of tenants.
Maxcee Reply
9 months ago

From a Section 8 tenant: I am disabled and need help with cleaning, otherwise I am fairly quiet and it's just me and my cat. My neighbor, also on Section 8; has parties all the time (there are knocks at his door at 2 in the morning (questionable characters), standing out on the corner talking on the cell phone as cars come and go...I know what's going on over there, but when I tried to bring it up the management shut me down. I have never been a problem but guys like this ruin it for me, when I want to move into a better place with a better landlord. The Section 8 program is nessesary for the disabled and elderly. You don't want us all on the street do you?
I think that social services and careful screening is the way to go but even the troublemakers have to live somewhere!
I have seen my mother struggle to keep her places rented and in shape, but she doesn't do a credit check or filter anyone it seems...big mistake. The housing rules make it difficult as you can very easily be accused of discrimination.
London Thomas Reply
9 months ago

Sounds to me like anything less than excellent insurance coverage will leave you looking some pretty deep wounds. No one likes their property destroyed and certainly no one likes not being paid to fix it. All I can say is the system is broken both for landlords and for the tenants.
Bryan A. Reply
9 months ago

how is the system broken for tenants? the tenants that get free rent, also have favorable laws in most cases, free attorneys if they want to sue a landlord for some frivolous reason, free food stamps, even a free cell phone in my city, and on top of that, the government sends them a check each month...it seems like they're living the good life
Maxcee Reply
9 months ago

No, Bryan it's not that good...even with some of the free stuff, because you have government employees in your business, that you are dependent on and have to suck up to. I get some food stamps and if I have to pay a dental bill or eyeglasses they divide it by 12 and give it back to me in FS. After I take out both of my medical insurances, then I am left with $720, Section 8 is about $180...and then there are car repairs. So I am living on the edge and no it's NOT fun, and it NOT the good life! Trying to sell jewelry I make on Etsy is not easy...2 weeks and not one sale, but at least I am trying. Anything I do sell goes to pay for materials I have already bought. Be glad that you are young and healthy enough to make enough money and buy buildings!
Sergiu Spinu Reply
9 months ago

I' m totally agree with Bryan

Thanks
Dennis Fassett Reply
9 months ago

Maxcee -

Thanks for your comments here.

There are of course exceptions to every rule, and you do sound like the exception. But unfortunately there are three parties to a Section 8 transaction - the tenant, the property owner, and the Housing Agency.

So while you may be the exception, the fact that at least in my area the agencies have all gone to hell means no deal. Because after you sign the lease I need to deal with the agency to get paid. They're taking a lot longer to pay these days, and lately they also have been unilaterally decreasing payments as their funding dries up.

With the economy and job losses I already have more risk than I need. So now for my money it's a lot less risky to rent to fully paying tenants.
Maxcee Reply
9 months ago

Dennis, I understand, but here in Portland, Oregon, HAP has been raising our rents and the Management thinks because they put in some new windows that they can raise the rent $200. Well, that extra is paid by the government not me for the most part. Elderly and persons with disabilities get a $400 break on the rent as our incomes are limited and they can't just go get a job.
My solution is to get rid of half the government employees and give EVERYONE near the poverty line $15,000 a year to pay full price for rent & health insurance. Yes some people may try and blow it and there will have to be some management....prepay rent for 6 months?
The woman who renews my food stamps every year doesn't deserve to make $25 a hour, that's ridiculous and wasteful when someone else could do it for $15 a hour. I wonder why the government doesn't try to offer some easier jobs for us but they would rather have us sit on our butts and then pay someone else $25 to process paperwork!
Dennis Fassett Reply
9 months ago

Maxcee -

I'm disgusted by your response.

This is the problem with handouts. Start giving them then the people think they're permanently entitled to them. How dare you think that people "deserve" a handout from the government. I grew up in a large family below the poverty line and I worked my way out of it over a number of YEARS. Was it easy? No. Was it worthwhile? Yes. I expect that everyone else that's able do the same, or, to be blunt, shut up about it.

Since you don't pay taxes you don't realize that it's not the "government's" money you're spending - it's MINE. And I have a problem with that.

Not having to deal with this "gimmee gimmee gimmee" attitude is another side benefit of no longer dealing with Section 8.
Maxcee Reply
9 months ago

I thought I was giving you a theoretical solution. Can't you see that if Section 8, Food Stamps, Medicade and Medicare was done AWAY with, there would be less waste by just giving people the money to survive and pay for their basic needs? I don't think you know what it takes to get on Disability, some people get passed over that really need it. I had a good job in Boston for 10 years, I wasn't always disabled! Sure, in a good economy, if you have health & talent, you can work your way up in the world... There are more people in crisis today, than there ever has been.
Think "Star Trek", a society where there is no poverty, where even the poorest has a clean, safe, small place to call home. I don't think that taking care of the people that are already here is too much to ask. Sterilize all the Welfare Women!
Bryan A. Reply
9 months ago

sorry for the hijack dennis..there's so many things i want to say in response, but i feel like i already took your post off course intoa political discussion..
Maxcee Reply
8 months ago

Fine. Euthanize the poor, disadvantaged and disabled, and that will fix everything. Bring in the New World Order!
Joshua Dorkin Reply
8 months ago

Maxcee - Do you have any value to bring to the discussion or are you here merely to troll?
Dennis Fassett Reply
8 months ago

Hey Bryan - no worries. I think that at it's roots Section 8 is a political tool and nothing more, so a political discussion is certainly relevant. So please feel free to continue the discussion.
Dennis Fassett Reply
8 months ago

Sorry Maxcee - your position is indefensible.

The New World Order is - you work, you eat. You don't work, you don't eat.

And the producers get to decide who, if anyone, gets handouts.
Jon Klaus Reply
8 months ago

Dennis, the truly disabled? Who cannot take care of their own needs? I'm NOT saying the fed or landlords should do it, but who should take care of them?
Dennis Fassett Reply
8 months ago

Jon - the producers get to decide if anyone gets a handout.
Jon Klaus Reply
8 months ago

I'm an Ayn Rand fan too, but I think she fails when it comes to those who are truly in need.
Maxcee Reply
8 months ago

Let's hope that if you all become disabled and can't work, that you have enough resources, insurance and a place to live. What if it was your adult child and you weren't around? What? Create a slum for us like they have in third world countries? Your only logical choice is to Euthanize the "eaters". When is the next Bohemian Grove gathering? It doesn't seem like you have a legal solution at the present time.
Wolf Halton Reply
8 months ago

Though I have never owned a section 8 property, I have lived in neighborhoods where section 8 is common. Some of the people using section 8 were quiet and easy to live near and some weren't. If you are looking for or own low-cost housing, it must just come with the territory. You probably won't see to many section 8 vouchers if you work the higher-rent districts.
Nadia Reply
4 months ago

I just evicted my section 8 tenant. This tenant was such a huge problem that ALL of the other tenants in my complex threatened to move out if this tenant wasn't evicted. These Section 8 tenants caused unbelievable amount of noise and there was so much domestic voilence happening in the apartment that the police were regularly summoned to the property. Police reports said there were knives involved in the domestic abuse fights and the other tenants who lived in the floors above and below were scared to death for the safety of their own families. I complained to the Section 8 authority and was told to seek eviction. I did and they finally moved out yesterday! I was pregnant during this process and this caused me so much stress that I went into preterm labor which I was 5 months pregnant and my baby passed away. I am convinced that the stress I had over this ordeal was the demise of my health and led to the death of my baby. Here are the pictures that I just took tonight (the day after the tenants moved out). The repairs to the apartment will take me several weeks, maybe months to fix. And the Section 8 people are allowing this tenant to continue to receive federal assitance and I feel SOOOO sorry for the landlords of the new place where this tenant moves to. After I received approval from the court to evict this tenant I found out that they had been evicted before however they continue to receive Section 8 funding. Its unbelievable. There are a lot of great people out there who need the assistance yet the government is allowing tenants like this it receive taxpayers money. Take a look at the pictures in the link below. Its going to cost me THOUSANDS of dollars to make these repairs which is way more than I ever received in profit from renting to these people. NEVER AGAIN will I allow Section 8 tenants to move into my properies. I recommend you all do the same unless you want to spend $5000+ on all repairs. The security deposit will not even cover a fraction of my repair costs. Unbelievable.

Pictures taken right after the tenants moved out:
http://img72.imageshack.us/slideshow/webplayer.php?id=dsc01697t.jpg
Dennis Fassett Reply
4 months ago

Thanks for sharing Nadia. I wish I could say that your experience was the exception, but unfortunately its becoming all too common these days.

When I bought my first apartment building I inherited two section 8 tenants with a strange situation. They claimed to the prior owner that they were engaged, but they each had a section 8 voucher and they each rented separate apartments across the hall from each other.

Shortly after I closed on the building the problems started. Noise, drug dealing, parties and music at all hours of the night even on week nights. I gave them two warnings but things didn't improve.

So I decided to do a stakeout because I had a hard time believing that these two people in their pate 50s could be making all that noise.

What did I find? That my two tenants were actually living in one of their apartments together - and that they had allowed what appeared to be a family of relatives - 5 or 6 people, I never did find out for certain, live in the other 1 bedroom apartment.

So I immediately filed to terminate both of their tenancies. The hearing was humorous. They yelled and screamed at me in court, but the judge saw through it with the help of three letters from tenants who had moved out because of them.

And they of course trashed the place before they left. I had never, nor have I seen since, that much damage done to an apartment before.

And section 8 let them keep their vouchers and move right into someone else's apartment building right from mine.

That's just one of the bad experiences I have had with the program.

Never again.

I'm very sorry to hear about your baby Nadia.
LITTLE T Reply
3 months ago

ALL I CAN SAY IS THAT THE BAD TENETS MESS THINGS UP FOR THE GOOD ONES. TRUST THERE ARE SOME GOOD SECTION 8 TENETS OUT THERE... DO A GOOD BACKGROUND CHECK ON THEM BEFORE RENTING YOUR UNITS AND THAT WILL BE THE BEST THING TO DO,,,
Andrew Fortune Reply
3 months ago

This is a great blog and comment thread. Thanks for posting Dennis. Very helpful!
CJ Reply
2 months ago

I am a section 8 tenant and it's not right to categorize all of us as problems. I don't consider section 8 to be a handout. I am a professional who's been in the airline industry for over fourteen years and I'm now attending school to be a sign language interpreter. I qualify for the program because I meet the income standards. I'm currently looking for a place to live that accepts section 8 in a decent and safe neighborhood for my children and I, but it's been an uphill battle. No one wants to take section 8 vouchers because they either don't know the details of the program, or they think that we will destroy their property. Usually, I'm referred to a less desirable neighborhood. I feel like giving up on using my section 8 voucher but I know I won't ever be able to get one again. Just give us a chance. Screen, do background checks,reference checks, sit down and have a conversation, but don't discriminate!
Arif Islam Reply
2 months ago

I have one Section 8 and he surely knew the drill and told us what to do. But he saved us a lot of time. He told us the office was a joke. They actually raised the amount they are paying us. So, our Section 8 guy is fine, now if I could say that about all our tenants. We have another one who is always late and not even paid this month yet. So, I think you can get good and bad of both kinds of tenants.
Jim Ingersoll Reply
2 months ago

I have about 25% section 8 and don't have any more issues with the section 8 than I do with anyone else. I screen them before signing a lease. I do like getting that check right on the 1st every single month and have section 8 tenants that stay in my houses for multiple years without problems.

Maybe one difference is apartments vs. single family homes. All my section 8 tenants are in regular homes and not in war-zones. The front-end inspections can be a pain, but I do not want deferred maintenance in our properties anyways.

Jim
MAXCEE Reply
2 months ago

Well, I think I am justified to say that a stable income flow and stable tenants is a good and beneficial situation...if you screen properly. By the way don't lump the Elderly or Disabled in with the rest of the Section 8 population, generally we have no interest in causing any situation that may cause us to lose our homes. YES, a crappy apartment built in the 70's is a HOME to someone with needs. I am moving out in a couple of months and going to a senior living, Section 8 in Las Vegas as I am now 55. They will need to tighten and clean the carpet, and do some regular maintenance. The dishwasher always left dirty dishes and the toilet never flushed well, so I am glad to be going to a newer apartment with at least some different problems!
You 'New World Order' guys should be happy that all the FEMA camps are ready now for us, and the plastic caskets are piled up...
The only thing that separates you guys from us is that you had 'Family money' or a good education and career$ that enabled you to buy your properties! I never smoked, did drugs or drank, just poor and disabled with little resources.
It's almost Christmas and I have been alone for many years and broke with a Chicken and a couple of Potatoes, on this day...hope I'm not living too high on the hog for you all!
Beckie Stephens Reply
about 1 month ago

I've been a REALTOR and a landlord for quite a long time. I never had taken section 8 until about a year ago. The tenant that really wanted my rental - was a section 8 approved tenant. So, I accepted it. I have not had one problem - it has been fine. Rent is always early from both Housing Authority and tenant. So, personally I have never had an issue.
Gracie Reply
about 1 month ago

To be fair there are good property managers and bad property managers... Just like there are good/bad tenants and housing authorities. Under the parameters set by HUD it can sometimes be difficult to locate a residence which is in a low crime area. If only we could screen owners and property managers the same way as tenants are allowed to be screened. BTW under HUD , participants are screened for criminal backgrounds. Ever signed a lease in a good area then have the manager move someone else in nearby with no screening? The tenant is now forced to live out the remainder of their tenancy next to bad tenants. Otherwise you would have to both break the lease and lose the section 8, what for many is indeed a lifeline. It goes both ways. It should be noted that different regions and office's may operate at different levels of competency. I know that the offices that I as a section 8 tenant have had to deal with, are quite strict. Aside from the self-justified bigoted comment from Bryan which belie his animosity over the mere possibility that someone has to be at fault for his frustrations, I tender my empathy to anyone who has been dishonestly dealt with in an otherwise assumedly honest business transaction. If only the world had not these nefarious types who skim, swindle and cheat to various degrees their duties and dealings, then Atlas would not have shrugged.

Does it make sense that someone is complaining about not receiving the extra benefits of tenancy regulation that HUD should have afforded them (in addition to local legal regulations that regular tenants get) while at the same time extolling that every man should rise according to his own work ethic and ability.

If the HUD office you working with does not full fill their duties then write a letter to the overseeing manager above that office.

Have some empathy for the people the program was designed to help and think of the outcome which you ascribe to effect.

At the end there are good section 8 tenants just like there are bad ones, and likely less bad ones due to the screening for criminal backgrounds. Don't let the lure of an easy payday preclude you for actually using standard filtering processes.

Roughly the same advice you stated in your blog just perhaps less derogatory.
John Jackson Reply
about 1 month ago

This may be the best thread/internet info about Section 8 bar none.
Here's the bottom line.
If you get something for free, you'll tend to treat it as something you got for free, vs. something you worked your a$$ off for.
If the government is always there to give you a free pass, then you'll eventually lose your natural born seed of responsibility.
Hence, government programs=dependency = assured votes to continue the programs.
IE: social security.
If I gave you a $100 bill each week....just because...and I did that for every week for a year....the first few weeks you'd be ecstatic....by the end of the first 6 months you'd expect it...
If I stopped after 12 months, you'd be pissed..
Yet, I was just giving it to you for no reason. But after a while you think you "deserve" it.
Luana Reply
about 1 month ago

After reading this thread I appreciate the level headed people that understand a few facts:
1)Not all section 8 tenants are parasites with no home training. 2)If you want quality tenants spend the money for thorough screenings and background checks. It's YOUR business,YOUR property stop expecting others to be responsible when you won't take the time or energy to make sure your renters are quality. (this of course does not apply to those who have inherited current section 8 tenants, until AFTER their current lease is up)
3)There are actually people who live in the U.S. that cannot take care of themselves and do not have family to do so. God forbid that any of you get so old with no family that you have to live off of SSI, Foodstamps and yes, maybe Section 8 to survive. And as far as I'm concerned if they happen to be good citizens that have worked and paid into the system all of their lives THEY SURE AS HELL DESERVE THE BENEFITS!
It seems to me that many of the complaining Landlords are guilty of being just as irresponsible and lazy as their problem tenants when it comes to handling their business.
Dennis Fassett Reply
about 1 month ago

Really Luana?

Perhaps you should re-read my post. My main problem with Section 8 is the PROGRAM itself. They are getting extremely lax and in some cases they even refuse to enforce their own rules. And when they fail to enforce the rules even good tenants take advantage of it.

Second, thank you for the third grade lesson on tenant screening. Of course thorough tenant screening is necessary. And while that can serve the purpose of eliminating problem tenants, like I mentioned even good tenants take advantage of it when the rules are not enforced.

Third, I'm running a business not a charity. And that's the same for every landlord that I know. So while it may sound harsh to you and your delicate sensibilities, I'm in business to make money to support my family, and that means not taking on problem tenants OR problem Section 8 agencies.

So why don't you put your money where your mouth is and buy rentals and rent to only section 8 tenants instead of telling everyone else to?
Luana Reply
about 1 month ago

Really what Dennis?

I apologize if you think my post was a personal attack on yours but maybe you should re-read mine. I was commenting on the thread, not your post. I understand your issues with Section 8 agencies because I have had some of the same issues as a Landlord and other difficulties as, believe it or not, many years before a (Gasp!) Section 8 tenant. Like most government programs, the idea is great but the course of development and end product leave much to be desired.

As far as good tenants taking advantage if the rules are not enforced, well it seems to me you are getting good tenants mixed up with the crap you dealt with. You wouldn't have had those unfortunate experiences with Section 8 if you were dealing with 'good' tenants in the first place.

Though you may think my sensibilities are delicate, I don't think there is anything harsh about you not wanting to take on problem tenants or problem Section 8 agencies. We are all (landlord's) running a business to support ourselves and our families. I wouldn't disgrace myself by telling anyone who they should and should not rent to. I guess I'm just able to separate my delicate sensibilities from shrewd business practices when it comes to not repeatedly choosing irresponsible tenants and the agencies that represent them.
Dennis Fassett Reply
about 1 month ago

Golly Luana -

More lectures on tenant screening?

So if I'm to understand correctly from your pontificating, your tenant screening process completely eliminates bad tenants. I'm impressed. Extremely impressed actually.

You know, I've been to a couple of seminars and bought some books and materials on being a landlord, and talked to a bunch of other people that own rental property, and all had a lot to say on tenant screening, but you know what? Not one ever mentioned a process like yours that's foolproof.

I think you're on to something Luana.

So what you need to do is write down your formula for doing that and sell it. I would be the first one at your door to buy it.

You would be doing me and all the rest of the incompetent landlords around a big favor by sharing your wisdom.

Golly. I never even imagined that someone had THE process for perfect tenant screening. You should get the Nobel Prize for it!
Dennis Fassett Reply
about 1 month ago

Sorry Maxcee - I'm not biting.

It's so easy for you to blame others for your lack of success isn't it.

And you're 100% wrong Maxcee - we have all had the same opportunities. Some choose to act and others do not. THAT's what separates the landlords from the tenants. And that's all that separates us.

It's simple for us to see. I'm sorry it isn't for you and that you have to blame others.
Dennis Fassett Reply
about 1 month ago

CJ -

As always the bad eggs ruin things for others. It's a shame but that's what happens with a freebee. Hardly anyone appreciates it, then they grow to expect it, then they think it's their right to have it.

No amount of convincing will ever get me to rent to a Section 8 tenant. It's not discrimination. To me it's simply good business.
Dennis Fassett Reply
about 1 month ago

Gracie -

Write a letter? To a HUD office? And expect a favorable response?

I can't believe you actually wrote that with a straight face.

I am busting a gut laughing out loud at all the responses with saying that "all you have to do is good tenant screening" to get "good" Section 8 tenants.

Not a single one of which has ever owned a property or received a rent check.

If it's that simple then why aren't you doing it?
Dennis Fassett Reply
about 1 month ago

John -

I'm right with you on the appreciation thing.

I even saw a marked difference between the Section 8 tenants that were paying a portion of their rent and the ones that weren't paying anything when I was accepting them. Those that paid some were better tenants.

But now it's not an issue anymore! YAY!

Thanks for the comment. :)
bill Reply
about 1 month ago

Interesting thread. I am currently about to get into the real estate "game" and am taking this year to do my homework and right now I am leaning strongly towards Section 8. Dennis, I feel your pain in talking about dealing with the agencies. I have worked in the non profit sector for the last 13 years and have had to navigate some of the most incompetent and insufferable people imaginable to get paid on ridiculous contracts that would never stand in the private sector (not without ending up in court). I have been very successful in my NP career because I have been able to navigate these types of agencies by learning a few lessons that I would like to pass on to you. 1) You have to become intimate with the details and specifics of your contract, and you can't do that through just reading it. You need to make a few friends in the agency somehow. I have always found an offer to treat someone to lunch can often yield huge dividends. If that's not possible, treat it like sales and try and find someway to connect with someone either through a shared interest, dislike whatever it takes. This is critical because you will need advocacy and knowledge that only an insider of that agency can give you. Don't get me wrong, I am not saying you have to bribe anyone, but make a few friends in the agencies because that ALWAYS helps. 2)Virtually all government workers have a "CYA" mentality and this means that they aren't motivated by bonuses or customer service or just plain human decency. The one thing that motivates all of them though is lots of exposure which draws the attention of a supervising person or agency which might jeopardize that gravy government job/contract. If you are having trouble with an employee, then you need to start working above them. Try supervisors and if that doesn't work, try directors. If you are having trouble with an agency that is a government agency or government funded then sometimes your local representative can be helpful, and certainly the media can put the fear of god into people. Of course, R's are usually more helpful than D's in this regard but not always. The bottom line is that a well cc'd letter sent to a supervisor, legislator and a media person can often get miraculous results, particularly if you are clearly being wronged by the agency. 3) Be tenacious by the rules. Once you are experienced and understand the ins and outs of your agreement in your state, and you know you have been wronged you have to show employees at that agency that you will not let it go and are willing to scream bloody murder. This is critical and it's like that old adage about beating up the tough guy in the school/prison yard because once you do it, you won't be challenged again. If the employees know that you know the rules and they know you aren't going to let it go then they aren't going to let your tenant skate on a broken window or violate any of the rules because they know that you are going to bring lots of uncomfortable attention.

Lastly I would say that I have read the section 8 bible and I thought it was a great book filled with really useful information and I would advise anyone thinking about section 8 or already in section 8 rentals to read. I know it's been great for a newbie like me. The landlords seem harsh, but having worked with many clients that are section 8 amongst other things, I understand the mentality and I think these two tough landlords from Philly have the right attitude to make sure that it ends up being a win win for the tenant and the landlord. I know there are some really decent people on Section 8, but I also know that there are some flat out scumbags so you have to watch your back. Hope that's helpful and I will check in after I have bought and rented my properties to see what I have right and what I have wrong.
paisley Reply
about 1 month ago

thank you to everyone that uses common sense on this site.please do not turn down all section 8 applicants because of this one guys rant and problems in the past. we are not all ghetto loud rude people.
Dennis Fassett Reply
about 1 month ago

Too funny Paisley.

So telling the truth about bad Section 8 agencies and tenants is now defined as "ranting".

And I was always taught that using past mistakes to help make decisions in the present IS common sense.

I guess things are different in your world.
Dennis Fassett Reply
about 1 month ago

Bill -

Thanks for the detailed reply! I appreciate you taking the time to write it out like that.

You bring up several important tactics that I think can be useful, but let me pose a scenario that I went through and get your thoughts on getting the issue resolved.

Tenant comes to me through a city Housing Authority, not the state organization. Unit passes the inspection and tenant moves in. Prior to the year being up, tenant decides to move. I do a walk through and notice that a 5x5 picture window pane is cracked. Tenant denies breaking the window and claims "it was there when she moved in". The crack was significant and never would have made it past the inspector, who had always been tough but by the book.

Tenant wants to move to another Section 8 subsidized unit. I refuse to sign until all damage is repaired. (There were several other items)

Housing Agency sides with tenant on the window and refuses to "get involved". They say they can't force the tenant to pay because "there was no direct evidence that she broke the window". They didn't even review the move-in inspection.

I wrote a series of letters to the head of the agency, the mayor of the city, and the head of the state agency. The head of the local housing agency basically told me to get lost. The mayor told me he didn't have any power over the housing agency, and the state person never replied, refused to take my calls, and never returned any of them.

The only thing I didn't do was go to the media.

But in this day of Obama where the government rules absolutely, they wouldn't have cared less about the press. The local housing agency even told me they knew they weren't following the rules.

So - what else could I have done?

Also, I run into the law of diminishing returns on this stuff as well. Yes I want reimbursement for the $150 pane of glass, but I don't want to spend the 40 or 50 hours that it might take to chase it down.

So I just choose from the start to eliminate the issue, the hassle, and the headaches - and not take Section 8.
Dillard Reply
about 1 month ago

Frustration is understating the feelings I have while dealing with the Housing Authority here in Kansas City. It's our common frustrations that we share in dealing with the various agencies administering Sec, 8 that make this blog relatable. However, it is the lessons we learn from those frustrating experiences, and how we assimilate them into our lives as real estate investors, that make this thread even more interesting.
I could go on and on about my problems with the HAKC, but at the end of my ranting and raving I will still give a Section 8 applicant the same consideration that I would a regular market applicant. In fact, in my ideal business world I would rent exclusively to Section 8 Tenants.
I have my opinions about many of the opinions shared in the above thread (so many potentially great conversations), but there was one statement in particular that prompted my response. Dennis stated, "And you're 100% wrong Maxcee - we have all had the same opportunities. Some choose to act and others do not. THAT's what separates the landlords from the tenants. And that's all that separates us."

opportunity

1. a favourable, appropriate, or advantageous combination of circumstances
2. a situation or condition favorable for attainment of a goal.
3. a good position, chance, or prospect, as for advancement or success.

Dennis, we have not, and can not, all have the same opportunities.
It is because of this reality that I will continue to provide quality housing for qualified Section 8 tenants.
Dennis Fassett Reply
about 1 month ago

Hi Dillard -

Thanks for your response to this thread. I agree that there are many other worthwhile discussions that could come out of this conversation.

My statement to Maxcee about opportunity was really about the opportunity we have here living in the US. From that perspective, we all have the same opportunity. And just living in the US satisfies all three of the definitions of an opportunity.

I don't want to get too deep into the details of my own experience, but I grew up in a disadvantaged household. My parents both worked then divorced when we were relatively young. It was difficult, but I knew that if I was ever going to "get out" (a phrase I found that several people I grew up with used) I had to get good grades in high school, which I did, then go to college, which I also did and paid for every dime of it myself. And so on.

I know that we have different perspectives on this, but I think that it's the decisions we make that define us.

Perhaps folks on Section 8 made bad decisions in the past. Perhaps they faced a stretch of bad luck or unfortunate circumstances. Perhaps something else impacted them. None of that really matters. Because I'm not holding any of that against them.

I just don't want to deal with the Section 8 program. Not because of the people. But because it's now a bad program that breeds bad tenants.

And with all the other risk in this economy I don't want to take on the additional uncertainty with Section 8. Which is too bad. In the past I had a mix of over 20% section 8 tenants, and it worked well. It was nice to get the funds direct deposited before the first, and the tenants took decent care of my properties.

Then it all changed.
Mark G Reply
about 1 month ago

Thanks for the article Dennis. I'm a newbie in the Albuquerque area with regards to buy and hold. I've got a triplex in a mostly Section 8 area but I don't play Section 8. Several investors I've talked with have mentioned section 8 to me and the benefits of the "guaranteed rent" but I'm with you. I look beyond just the check. I want quality tenants because I provide a quality product and service. I'm not implying that all Section 8 tenants are bad tenants but the reality is that there is a good majority. When you were taking Section 8, what kinds of screening did you employ? If I ever decided to take on Section 8 I would definitly have the same standards I use now for my current tenants. Income is equal to or greater than 3 times the rent, good rental history, no felonies, drug convictions of any level, domestic violence, or gang affiliation. I think if I tried section 8 the income issue would be nulled. Seems like I would have to loosen up my standards. Hmmm, maybe I'll stick to my rules. After all, it is my property right? Thanks for your perspective!
bill Reply
about 1 month ago

Dennis,

A few quick thoughts based on what you have told me. In dealing with these agencies paperwork should be king and since you passed the initial inspection you should be able to make a valid argument that this proves that the window was intact when the tenant moves in because you wouldn't have passed if it was broken. It's troubling that the head of this agency told you to get lost but it's not completely surprising. That person thinks you are some fat cat businessman and that you are lucky to have this business.

I think for this agency you need to follow the money. If I understand it correctly, Section 8 is a federal program so even if it's a city agency that is administering the program it means they applied for the contract through a federal agency like HUD. I would recommend calling HUD and seeing what their grievance process is for you as a landlord and if you find one go back to the head of that agency and let them know that you will be filing a grievance. Also, if it's a local non government agency like a non profit then they have a board and that is how you get the Director to sit up and pay attention. I guarantee you that if you write a non profit board that you are going to be filing a grievance with HUD and that it might jeopardize this huge contract they will grill that director. BTW, if it is a non profit you can find out who the board members are by looking at their 990 on a site like guidestar.com. This is all public information, and with the internet you are talking about 2 hours worth of work tops.

If it is a local government agency then you really have to work with your local representative, remember since it's federal you can contact both your state and federal reps and you might get a little traction that way, particularly if you get a sympathetic ear. Just call their staff and explain the situation, they'll probably tell you to put it in writing so already do that and have it ready to email them and see where it goes. Once again, you are talking about an hour or two of work and for any of these solutions works then you may save money in avoiding future losses.

Lastly, I am wondering if you can drag the agency into small claims court. In my area it only costs $35 to file a claim, you don't need a lawyer and just the official paperwork showing up may be enough to make them take you seriously. Plus this one would be fun because you know how incompetent these folks are so they'll almost assuredly miss the court date or be complete bufoons in front of the judge. Plus you can tack on all of your time in your claim, and if they are foolish enough to try and interfere with future business then you have a real claim of retaliatory discrimination.

So that's how I would handle it. Once again, you have to make the evaluation if the trouble is worth it in terms of the people that you are going to tick off and the time and money that you are going to invest but each of those solutions are pretty low in labor and cost. I would also say that while noone likes to have their profits nickle and dimed, someone once told me that the cost of doing business sometimes involves more than the costs of doing business meaning that sometimes you accept some irregular losses because of the other advantages or good margins. I like the fact that you don't have to chase down rent in section 8 so to me that makes this particular headache worth it,(at least I am hoping it will when I get started.... it's easy to talk smack when you haven't even gotten in the game yet).
Dennis Fassett Reply
about 1 month ago

Bill -

I'm going to be charitable and say "thank you" for your suggestions.

Let's leave it at that, shall we?
Dennis Fassett Reply
about 1 month ago

Hey Mark -

I used the exact same strict screening criteria for Section 8 prospects as I did for non-Section 8 folks. Credit, criminal record, sex offender record, judgements and liens, the works. And employment and rental history going back five years, and I drive by their present residence.

Except for income. My income requirement is 3x rent as well, but I'll go below that a little if both their job and rental history shows stability.

That was the main issue with section 8 tenants. They didn't have much income so if they go bad and do damage or leave owning a balance, then I have no recourse because they're not collectable.

It's just too much of a headache, and it's additional risk, which I don't need. So I washed my hands of it.

Good luck with your property - sounds like you made a great first start!
Joi C. Reply
about 1 month ago

Section 8 Nightmare tenant;
You are so right, my husband and I rented out condo Dec 2010 to a section 8 tenant, at first I thought she was ok but man was I wrong. long story short her portion of rent was$672, and section paid the rest, she was late evry month even though we gave her until the 5th of every month to pay, in Aug 2011 she paid only half as well as Sept, and Oct. We has already started contacting section8 in May 2011 but they said everything must be in writing. So we made a deal with the tenant and she wrote out a letter stating she would move by Dec 1, 2011 because she could not afford the rent and because we keep having confrontations. Well after that she paid no rent in Nov and Dec (the tenant has sickle cell) so we thought we were being nice but we still gave 3 days or quit notices for both months and told section 8 she is not getting her deposit back of $1,000. Well She moved alright on Dec 26, 2011 but told us she had not moved. When we finally said forget it and went to check the condo this tenant STOLE OUR WASHER AND DRYER UNIT this is in California, our gate keys, destroyed both toilets in the unit, and damaged our remotes to the garage. we called section 8 right away this tenat lied about everything, said we locked her out and we sold her furniture so section 8 believed her over us. Well we fixed that we went to our condo complex and asked all the tenants had they seen her moving, the neighbor directly next door helped her move all her furniture, clothing, and anything else into a U-Haul Dec 26, 2011. So we are taking her to small claims for the remainded or our rent, stolen property, and now section 8 says she has proof she tried to pay us rent in Nov and Dec. So we added fraud and forgery to the lawsuit, this woman was so disrespectful it was crazy, my husband and I were called every name in the book. So this has taught me too, NO MORE SECTION 8 TENANTS, IF YOU HAVE NO JOB YOU CAN'T RENT OUR CONDO. Those tenants and the housing authority are a joke.
Dennis Fassett Reply
about 1 month ago

Hi Joi -

I'm very sorry to say - Welcome to the Club!!

That's the same way that the agencies behave here. At least the ones that I have dealt with. Thankfully I'm in areas with neutral courts, so they play it down the middle and don't coddle section 8 tenants.

The word must be spreading about Section 8 - I have never before received the volume of calls from Section 8 tenants like I'm receiving now for the house I just closed on and posted for rent. Most are offering to pay more than the published rent and/or do some sort of side deal.

No thanks.
Jeff Rabinowitz Reply
about 1 month ago

There are 2 types of landlords: those that do not take section 8 and those that will soon not take section 8.
Tom B Reply
about 1 month ago

Given the tenor of this blog and the fact that Dennis describes himself as a Vulture Capitalist, it's a good thing he doesn't rent to Section 8. It's a philosophical conflict. Demeanor speaks volumes.
Dennis Fassett Reply
about 1 month ago

Sorry you haven't read the blog or all the comments Tom.

If you had you'd see that after accepting Section 8 for five years, I changed my mind after the bad experiences I've had.

It has nothing to do with philosophy or even being a vulture capitalist. It was a business decision.

Perhaps you're familiar with it, you know, business? Where you need to have your revenue exceed your expenses in order to feed your family?
Tom B Reply
about 1 month ago

Actually Dennis, you've assumed incorrectly that I haven't read it. And with not a scant of evidence indicating otherwise. Interesting...
Dennis Fassett Reply
about 1 month ago

Then clearly you didn't comprehend it. Scant evidence? I suppose, but only if you exclude the fact that your conclusion is completely unsupported by anything that I wrote.

Do you have anything substantive to add to the discussion Tom?
Jackie Reply
25 days ago

The Apartment Complex I live in requires tenants to carry Renters Insurance. I have always carried Renters Insurance. Even as a tax paying Section 8 Program Participant I can and want to pay a mere $18. to $22. per month in order to protect the contents of my home, and have the inclusive liability insurance.
I have been a Participant for 3 years. It is not fun being in need of a subsidy and the stigma attached to having one even less so. When I look for a rental I am interviewing my potential landlord just as much if not more that I am being interviewed. It is imperative to me to be welcomed where I live, regardless of my disability, my economic status and my subsidy.
I hold a Realtor, Property Owner, or Property Manager who does not want to use HUD programs in the same regard as ones who do. To each his own. More so, I do not want to live in a situation where any of the above mentioned are miserable due to my subsidy. This is a bad situation for everyone involved.
Dennis Fassett Reply
25 days ago

Jackie -

The relevance of renter insurance to this discussion eludes me.

Also, your presumption of "misery" on the part of some rental property owners is incorrect, at least from the perspective of this post. To me misery implies an emotional component, which is lacking here because this is just business.

And as I stated at least a couple of times in the comments thread, not accepting section 8 is simply a business decision.

Thanks for your comment.
Jackie Reply
25 days ago

Thank you for your response to my post Dennis. It was interesting to read this thread.
Samuel Ksiazkieicz Reply
24 days ago

Wow, I love this site but I've been off of it for about a year; and this is the post I come back to. Talk about putting a bad taste in my mouth!
Everyone has different views and we certainly may not agree with others' decisions or actions, but to presume to judge someone when you know nothing of their background and use statements like "I am disgusted by your response" in an open forum; that is not the sort of garbage I expect to see on such an awesome site.
I'm not here to argue and I'm not going to respond beyond this post but I was really enjoying the info in this post and quickly switched to very disappointed after I got about 20 replies in.
I am a Marine officer, I have Marines from all different backgrounds and I can tell you unequivocally that everyone "here" has not "had all the same opportunities" and to state that, is close to preposterous.
Again, I'm not attacking anyone, I appreciated the information in the post. I am just really disappointed to see a blog degenerate like this, and be allowed to do so. I'm sorry that my first post back is of a negative nature.
Dennis Fassett Reply
24 days ago

Preposterous? Really? I guess it depends on your perspective Samuel.

Thanks for the comment and thanks for stopping by.
Dale Osborn Reply
21 days ago

Anytime the government stick their nose into free enterprise it will always be a disaster. Many feel there should be a requirement for the Section 8 recipients to pass a drug test to qualify for their monthly hand out from the government.
Dennis Fassett Reply
21 days ago

That's the truth Dale. I've asked several people to name one single program, besides war, that the government does right. And I have yet to hear a single answer.

Something needs to change, but only if the government wants to have the program accepted by a broad cross section of rental property owners. With the people I know in the business, it's now the exception not the rule to accept Section 8.
Terri Pour-Rastegar Reply
11 days ago

First, let me just say that I do not participate in the Section 8 program, for many of the reasons already stated, but also because my rents are higher than what most vouchers would pay, and I don't have time to wait on all the inspections and such. Generally, my places are under lease within a week of putting a sign in the yard. That's way to fast for the government.

Second, I am no bleeding heart--I despise hand-outs and personally know of so many people taking advantage of these programs.

However, I must remind everyone to consider what would happen if you yourself were to become disabled. Suddenly, you cannot put food on the table or pay the bills. What then? Do I think that a young, unmarried woman who has pushed out her 5th child in so many years should be given a hand-out? No. But when I was a child, my own father injured his back and needed major surgery. He was laid up for about a year. He'd always worked very hard, and even though we were never well off by any means, there was always food on the table and a roof over our heads. My mom went off to work, but really was only qualified for things like cashier and such--that's not going to feed a family of 4 and pay the bills--not for a year. We had to go on public assistance. As soon as my dad was well, he went back to work and no longer needed the hand-out. But we were glad it was available when we needed it.

Bottom line is, I think we all need to cut some slack to the Elderly and the TRULY disabled. You may choose not to rent to them if they come through Section 8, but don't despise them because they're getting a "hand-out". I hope we all get a little hand-out if ever we truly need it some day.
Dennis Fassett Reply
11 days ago

Terri -

Thanks for your comment.

The point that we're trying to make is that not accepting Section 8 is a business decision, pure and simple. I don't "despise" anyone (except maybe some realtards, but that's another blog post) and it's not personal.
Reply
about 4 hours ago

Dennis Fassett, I would encourage you to not take section 8 anymore. I would also encourage you to pray and ask God to show you what He thinks and says about your money and your heart. Wisdom without love and humility is foolish pride. And pride leads to destruction. It always leads to destruction. Thank you for listening.

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Phone:	(248) 971-0764

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