BiggerPockets

I have a friend who was a successful landlord for many years. When I mentioned Section 8 to him he advised me never to get involved with it, that it was only for experts who know how to handle it. He said the Section 8 lease renews automatically every year and it's almost impossible to get rid of a holdover tenant, or a problem tenant.

Now, to be fair, he's never actually done Section 8.

What's the truth? I was rather surprised to hear all of this, since people often speak positively of S8 on this forum. I was under the impression that the inspection and making sure they have the correct vouchers were the two big hurdles. Is it a lot more complicated than this? Thanks.

Hi, yes a lease will need a renewal option but the way it is written can give room for a landlord to terminate the agreement. Depending on the property and its rent level, Section 8 can be the best startegy. In most places there is a waiting list due to appropriated funding and a shortage of housing, so PHAs will work with the landlord to keep them in the program. Another aspect is that tenants need to play by the rules or they can lose their entitlement, so you can expect compliance. Now, in reality, many of the tenants have certian personality problems or mental issues, a contributing reason why some are in the program, these people may be difficult to deal with at times, but you are in control. But many of the tenants are really good and reasonable people, so screening is important, you're not required to accept anyone, deals are made between tenants and owners.
If you have a property that is within the rent range for Section 8, I suggest you check it out. It depends on the PHA you'll be dealing with so talk to them.

Past Commission of a "Large PHA" Good luck, Bill

Section 8 gave me a list of the inspection items and I made sure they were all in compliance. My property passed the first time, for the last 2 years.

As far as tenant compliance, Mike is right - tenants are tenants, and if they choose to comply or not, it's irrelevant to Section 8. My S8 tenant decided to get herself a pit bull last year, despite the lease saying no pets. She admitted that she knew she wasn't allowed to have pet. She has no fear of losing her funding. A letter from my attorney took care of that issue. Being an S8 tenant also doesn't stop her from complaining and getting belligerent on occasion, like any other tenant.

I just bought my third property, and the tenants both have good jobs, no rental assistance. The rent should be as timely as Section 8, but we'll see.

In my state, S8 leases are a year. You sign a "contract". It can be canceled with 30 days written notice if all 3 parties (landlord, tenant, and housing authority) agree.

I agree with your friend, Section 8 is not all it's cracked up to be. I will admit that different states have different programs, and are run differently, however my experience has always been poor. I buy and sell 50+ homes a year. I hang onto a number of them. I am speaking from real experience. I find that the biggest issue is with the tenants. At the end of the day, they are on Section 8 for a reason. Generally a history of irresponsibility that led them to require a handout from the government to get by. While not always the case, it is the majority of the cases. When folks are hit with bad circumstances, they start to sacrifice. They don't clean, they don't maintain, my homes started looking like hotel rooms where the tenants would move out after a year of abusing the home, and I had no recourse with the Housing authority. I actually came to one of my homes to find the tenant sweeping the carpet. Granted I was pleased that she was trying to keep things clean, but it really hit me that in many cases, folks can't even afford a vacuum cleaner. So while you might save in vacancy costs due to having the housing authority on your side, I'd budget about 2x for maintenance. I've ALWAYS found that my very best returns are in purchasing properties just below (10%) the median home price for an area. This gives you the best combination of reliable tenants, good rents, and low vacancy costs.

Jeffrey King
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My S8 tenant is obsessive/compulsive about cleaning. She follows me around with a mop when I walk in the kitchen. She may have many faults, but poor housekeeping isn't one of them.

I agree that many S8 tenants have learned how to work the system. My tenant gets just about every handout there is, yet she still has money for tattoos, piercings, cell phone, wide screen TV, her daughter's room is filled with toys, house is very nicely decorated, etc.

I have another tenant that gets temporary rental assistance. She's also very clean. The one that lived in the house prior to her, also on rental assistance, was a filthy slob. S8 or not, you just never know. But the S8 checks show up like clockwork.

Second 8 is really what you make of it. I happen to have a great relationship with our S8 office and the girls that work there take care of me. I had one tenant who basically left a huge mess for me to clean up after he moved out. They demanded a itemized list of damages and my time to make the place rentable again. They set him up on a payment plan and he had to continue to pay me every month until I was repaid for all my cost.

Not all S8 tenants live in low to no income neighborhoods. My current tenant happens to be a full time student and works part time as a home health aid and she has one little baby. She is so far the perfect tenant.

As far as the lead paint issue. I haven't ran into that yet. I imagine, as with any other lead paint issue, as long as you repaint over it, it will be sealed and you won't have any problems. Remember, if your tenant has any children under 6 yrs old, you can have no flaking paint anywhere on the property, including the garage.

I have to go through a yearly dwelling inspection permit process through my city, so the yearly S8 inspection really isn't a big deal. The best part if you have any problems with your S* tenant, you call their case manager and they handle the issue, at least in my case

About 1/3 of my tenants are on Section 8. I have to sign a one-year lease with them, but after that it's a month-to-month contract. If the tenant violates the lease, I can kick him off. In fact, tenants on Section 8 are typically scared of pissing off their landlord, in my experience, because their landlord can get them kicked off of housing. I've never had a problem with rent decreases. In fact, I've been very happy with the yearly automatic increases (as long as I remember to request them).

The downside is that I've found that on average, Section 8 tenants don't take as good of care of the place. Their damages usually exceed the security deposit, although only once has it been by more than $500.

It seems that the best luck I've had, for some reason, has been with tenants where section 8 pays the majority of their rent and they pay around 20-30%. I'm not sure why, but these tenants always seem to take good care of their places and pay their portion on time, and not cause problems.

Tip: If you have a Sec. 8 tenant that is a full time student, well, you don't want to go there, Sec. 8 is not for student housing. Sec. 8 requirements are federal, not state, under HUD. Adminstrators may differ on what regs they enforce more than others, but they are supposed to enforce all requirements. PHAs and adminstrators (not all Sec. 8 offices are PHAs) have the authority to pull entitlements for many reasons, so they can help the landlord keep a fire lit under them. I didn't mean to imply all lease neded to be renewed or for one year, but initially the tenant must be there for a year since they are not going to send payments to different landlords every three months...whatever.

From what was stated about led paint inspections, did that mean that the PHA will have the tests done (pay for them)? If you had led I guess you could say you just wouldn't put it under Sec. 8 and go on. Hmmm, I guess you could just move on knowing you had a led issue. What happens then?