Open Market vs. Section 8

We have already had one of our client's affected by the lost job issue and we are nervous about 2 to 3 other tenants. Obviously we cannot openly say we only rent to Section 8 or other government programs.

As a property manager we have an obligation to advise all of our client's of the best possible situations. At what point do you start advising strongly against open market tenants? The tenant we lost was employed by a fairly large company in our city whom abruptly closed their doors and bounced his last 3 paychecks.

I have talked to our clients and warned them of this very fact, but obviously i have a legal obligation to provide equal housing for everyone. It's a tough situation to be in as a property manager.

Would be curious to anyone and everyone's opinion and if any of you have started to worry about this like I have.

Have a great week!

Edited: 06/26/2010 at 07:03AM

Michael Rossi

Real Estate Investor · Ohio

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Jan 26 '09, 06:06 PM

Job cuts are a risk in this market, but so is being too heavily weighted toward Section 8. The government can do ANYTHING it wants to. It could lower rents and force landlords to accept it. It could declare a moratorium on evictions of Section 8 tenants. Personally, I like to have a mix of tenants so that I am minimizing my risk.

Also, remember that even in the great depression, unemployment only reached 25%. The REAL unemployment number today is probably 17% to 18%. Yes, it could (and will) get worse, but most people that want a job will still have one.

Mike

Edited: 06/26/2010 at 07:04AM

Account Closed

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Jan 26 '09, 06:20 PM

Personally, I have always steered clear of Section 8 programs. However, your question is how to discourage non-Section 8 renters from renting from you.

The fair housing act is very specific in what you CANNOT use as criteria for qualifying your tenants. Ability to pay the rent is not one of them, at least not yet. :roll:

So, you could advertise you accept Section 8, prefer Section 8, etc. While you could say you exclusively accept Section 8, I doubt you would need to do it.

Edited: 06/26/2010 at 07:04AM

Michael Rossi

Real Estate Investor · Ohio

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Jan 26 '09, 07:24 PM

The other question is whether you could really fill all your units efficiently with only Section 8 tenants. I know I couldn't. In my market, it takes both Section 8 and market tenants to find enough qualified tenants to fill my units quickly.

Mike

Edited: 06/26/2010 at 07:04AM

John Patchin

Real Estate Consultant · Kansas City, Missouri

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Jan 26 '09, 10:35 PM

Thanks for all the replies.

I can see everyone's point about relying on Section 8 or any other government sponsored program, and it does have to factor in.

And we would never violate any equal housing laws by not considering anyone outside of Section 8. Those are problems we would not need the additional headaches over.

Just reading countrywide headlines about this company laying off thousands and another company doing the same thing, makes me cringe in fear that I will get 7 phone calls one day from our tenants saying they have been laid off. And of course it would happen on Monday :D

Thanks again everyone!

Have a great week!

Edited: 06/26/2010 at 07:04AM

Michael Rossi

Real Estate Investor · Ohio

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Jan 26 '09, 11:13 PM

Just reading countrywide headlines about this company laying off thousands and another company doing the same thing, makes me cringe in fear that I will get 7 phone calls one day from our tenants saying they have been laid off. And of course it would happen on Monday

...and in my experience that's EXACTLY how it works. I'm down to ONE (1) vacancy right now and I'm fully prepared for 5 or 6 to fall on me at any moment. The rental business is all about extremes that move about an average. One day you think you're a genius with no vacancies and the next day you're humbled with 5 vacancies and 3 evictions in a single day! It all averages out over time, but there's a lot of drama getting to the average!

Mike

Edited: 06/26/2010 at 07:04AM

Tom C

Real Estate Investor · Ohio

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Jan 27 '09, 06:46 PM

You are so right Mike.. I went from sleepless nights one week over 2 vacancies to having a tenant pay 6 months in advance and getting 2 deposits a day later.

Edited: 06/26/2010 at 07:05AM