Hello guys,
What do you think about idea rent apartment to section 8 people?
What is advantages and disadvantages?
Thanks.
Hello guys,
What do you think about idea rent apartment to section 8 people?
What is advantages and disadvantages?
Thanks.
Section 8 can be good and bad, depending on the area (state, county, city), your strategy, and the investment vehicle.
The good: Guaranteed rent checks from the housing authority, direct deposit to your account, more prospective tenants to choose from.
The bad: Getting set up with section 8 can be a long process with paperwork and inspections. It can be a huge hassle at times, but once you are set up, the process is much smoother. Some areas such as Los Angeles, have very poor landlord favorable laws and unfavorable housing authority inspections. Some of our sec 8 areas have ongoing quarterly inspections of the tenant and the condition of the apartment while other areas, you may not ever get any help with that.
I am not a section 8 expert and have not had a ton of experience, but some.
Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
info@barnardenterprises.com
I've dealt with tenants on state aid and have resulted in good experiences.
I wouldn't necessarily say that a Section 8 tenant is any better or worse than a regular tenant. Every tenant has their downfalls.
In my opinion, getting the rent every month is definitely a perk. Plus, you have the backing of their case worker in the event terms of the lease aren't being met. You do have some leverage because the tenant fears loosing their voucher if they don't comply with the lease. But, on the other hand, if you harp on them all the time, they'll leave as soon as their one year obligation is up.
I've found if you treat them just like any other tenant (with dignity and respect), you will have very minimal problems.
Mark makes a good point and I failed to mention this which is of upmost importance. Regardless of section 8 tenant or not, you MUST do the same and proper screening of the tenants EVERY time. Just because they come from sec. 8 does not mean you do not use the same screening methods and background checks. In fact, you should be even more critical of the sec. 8 screening.
Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
info@barnardenterprises.com
Yes, good point, Will.
Just because a tenant is Section 8 does NOT mean that I change the requirements to qualify someone.
Thank you guys for yours reply. Right now I confused a little bit. I lived in Detroit for while and now I live in Los Angeles. I will spent less money if I buy in Detroit and rent to section 8 people. And I will spent more money if I buy in Los Angeles and rent to section 8 people. Which place is better for investment. Let say if I sell these properties after 5 years, where I can make more money?
Thank you
Mario,
You need to look at the economic conditions of both places. If you want cash flow, Detroit will give you a greater cash flow per month but probably not any equity. However, California will add equity but little cash flow (based on where you buy and how much you spend). I would see what happens with the big 3 before going forward in Detroit.
Mario,
the answer to your question could be quite complex and really depends on your individual strategy and abilities. Buying in CA, you are going to pay very low cap rates, too low for my tastes. Detroit can give you better cap rates and better cash flow, but the future growth looks bleek. The demographics in Detroit are very bad, loss of poulation, job loss, etc.
Picking the right area to invest is key and again, depends on YOUR strategies.
Good luck.
Will Barnard, Barnard Enterprises, Inc.
E-Mail: info@barnardenterprises.com
Website: http://www.barnardenterprises.com
info@barnardenterprises.com