BiggerPockets

Hi All - this is my first post here, though I have been lurking for a while and have learned a great deal from all the great advice on this forum.

We are in the process of buying our first rental, a duplex. It is occupied on both sides, by tenants of 9 yrs and 2.5 years. The tenant of 9 yrs is on the section 8 program. I understand that with section 8, the tenant sends you part of the rent while the govt sends you the other part. The leases will be transferred into our names as part of closing, but what steps are necessary with the housing authority so that they know that we will be the landlords and that they should send us the payments?

Thanks in advance for any responses, and for being patient with my newbie questions! We are in Dallas County, TX, if that helps.

Peter, thanks for your response. I've read the leases, and they contain the total amounts, but not the portions. Our purchase contract does cover the deposits, but not the pro-rated rents. I will ask my realtor about these.

Thanks again for taking the time to help!

Harry-

Section 8 has their own paperwork that they have you fill out. I bought a duplex a few years ago and just sent a letter to section 8 with a W-9 stating that I was the new owner and that the rent would need to be sent to me.

Once the lease term if up or if the tenant's quota changes they will have you fill out their paperwork which is very easy, and then they do an inspection. I have never had a problem because the duplexes I buy are usually brand new. But they can have issues with light bulbs burnt out and other small things. You have a few days to remidy and you won't get your check until they have inspected.

I personally love section 8 due to the guarantee of rent. I also figure if our taxes pay for this program, I might as well benefit from it.

I now have two section 8 tenants.

I am finding that in certain areas of the town in this economy you can generate more rental income with section 8 than non section 8 tenants based off competition. (mainly advertising to section 8)

Section 8 paperwork is straight forward but there can be a lot of it.

Section 8 tenants consume more utilities and generate more garbage than non section 8 tenants.
There are a few reasons for this.

Most are not educated on importance of recycling and how much utilities actually cost.

Most do not work so are home ALL the time.

Since they are home they take care of relatives' kids during the week.

The inspections are basic and straight forward.

Contact the housing authority, they will have a form that will need to be filled out in case the property is sold or changes hands. You and the previous owner will need to sign this document. Get is signed at the closing table. Take signed document and voided check to the housing authority office the day of closing.

housing authority payments are made by direct deposit. Any change to the bank for direct deposit after the 15th will NOT be changed for the following month. You must submit form before 15th to get it changed to deposit into your account the following month. If you are closing on last day of month, make sure seller signs agreement that they will transfer money deposited into their account by xxx day of the month since direct deposit will be sent to them after the closing.

When take form into housing authority, ask to fill out form for direct deposit and attach your voided check to it.

while at housing authority get name and phone number of tenant's case manager. Any problems you call them. Case manager can verify the tenant's portion, if any, of the rent and how much housing authority pays. Case manager can also tell you when the next annual inspection will be held - actually the month not the actual day.

Get another letter signed by you and seller that you give to tenants telling them to send next month's rent to you not to the seller.

Section 8 is a good program because you get the rent direct deposited into your account the first of each month. But you do get bad tenants on this program. I have had several sec8 tenants that my partner and I have converted their names into verbs to represent very bad terrible thing.

Jennifer - thanks for the info! This is especially relevant since we are closing on the 20th. I've been talking with my realtor about what to do about the August section 8 deposit.

Realtyman - thanks for your advice. I'm definately building a mental pro's and cons list from all the advice on this thread for future tenants. The specific section 8 tenant we have for the property we are buying has been there for 9 years and has kept the place in really good shape, so I'm definately giving her the benefit of the doubt.