It felt like I was walking into a cave. A dark, messy, smelly cave. I looked around at the walls of my Section 8 rental and saw black, only black. The tenants had decided to add some “color” to the décor. But seriously, who paints walls black? And poop? Who leaves dog poop all over the floor? And trash? How can a family of four leave two, not one, but two dumpsters worth of trash? I started calculating the cost of priming and repainting, carpet cleaning and trash removal. How could a newly renovated property go from rent ready to needing 4K of repairs in only a matter of months? At 4K, this Section 8 rental holds the record for my most expensive turn.
While renting under Section 8 has advantages as I mentioned in my last blog (see other blog), below are a few challenges.
Disadvantages of Section 8 Rentals
1 – No Recourse for Damages
Besides the initial deposit, landlords find it tough to get money from a tenant who damages a property. If a Section 8 tenant trashes your unit, you can email documentation to the Section 8 office. I’ve been able to get destructive tenants to lose their vouchers, but I haven’t been able to get any monetary compensation.
2 – Extra Repairs
Section 8 has fairly strict rules about repairs that are needed to get a home approved. Before you market your property as a Section 8 rental, get a copy of the requirements so you know what to address beforehand. When the inspector comes out, try having a handy man around to make instant repairs. Many minor issues can be addressed on the spot and you can avoid delays in passing your inspection. Failing the initial inspection and needing a re-inspection takes a lot of time and keeps your property vacant longer.
3 – Wear and Tear
A Section 8 tenant doesn’t pay a mortgage or even all of their rent, so they are not invested in your property. Consequently, you might find that some Section 8 tenants aren’t as concerned about keeping up a property.
4 – Guest House
Also, be aware of long-term “guests”. That family of three on the lease might offer floor space to a boyfriend, cousin, parent and niece. The extra people mean extra wear and tear. You can report families for added tenants but you have to make the judgment call.
5 – Section 8’s Version of Bait and Switch
The Section 8 office might state they will pay $798 per month rent for your property. But after your tenant moves in, you might suddenly be notified that the rent amount has been lowered by $50.
6 – Section 8’s Second Version of Bait and Switch
Section 8 might initially agree to pay $770 of the $798 rent and the tenant will pay $28. Later, you might get a letter changing the allocation. Section 8 might now pay $500 and the tenant pays $298. In my experience, these changes happen most often during the month after a tenant moves in.
7 – Yearly Inspections
The Section 8 office will inspect your property at least once a year. You will get a sheet with the repairs you need to make and the tenant needs to make. I sort of like this because you get to look closely at your property but the inspections repairs can add up.
8 – Accounting Issues
Section 8 staff members are stretched thin. Once, after a Section 8 tenant moved out, I kept getting checks. I called and mailed the Section 8 office but the checks kept coming. I ended up getting 6 extra checks. Granted, unwanted checks are better than no checks but unwanted checks add to the monthly dose of paperwork. Be on top of your paperwork for Section 8. Submit any address or property management changes as soon as you can. Try to get some extension numbers for staff members because it can be tough to get through on the phone.
9 – System Issues
In one of my investment areas, embezzling occurred at the Section 8 office. Try getting an answer from anybody there that month. Files were seized and the office sort of shut down for a bit. One unfortunate outcome was that rents went down. I believe this type of scenario is rare, but investors need to recognize they have no control over Section 8.
Section 8 is a government organization where the rules can change at any time. With Section 8, you have to roll with the punches and realize you can maneuver Section 8 a bit but you can’t control it.
Photo: chrstphre ㋛ campbell
{ 35 comments… read them below or add one }
Yikes! The Advantages of Section 8 rentals was much more heart warming to read. Lol.
Great post on the realities that people need to be aware of when it comes to Section 8 rentals. Paperwork and guidelines to follow… more paperwork and guidelines to follow. Not for the unorganized property owner and that’s when a good property manager is a must.
Hi Paul,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
I wish the Advantages blog had been much longer than this one. Section 8 does have its share of paperwork. I agree that you need an organized property owner or manager. Thanks for the comments! mck
McKellar, do the Section 8 rules allow for a “reverse deposit?” That is an offer to the section 8 tenant that if he/she/they leave the unit in the same condition as the move-in date that the landlord will “reward” them with $200 or gift certificates. I know this cuts the owner’s profits especially since it would have to be the same offer to every Section 8 tenant.
Hi Kevin,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
I talked to Jenny Wright, a Section 8 police officer here in Chattanooga. She enforces Section 8 policies, especially when people commit fraud. She told me that Section 8 follows the leases provided by the landlords. If you have a “reverse deposit” in the lease, she said “Section 8 would uphold the lease and be okay with the provisions.” Since you submit the lease with the paperwork, Section 8 would notify you if they didn’t agree with the terms. I personally think a reverse deposit would be a great idea. I’ve never tried it before though so I can’t give any examples of it working. Have you used the reverse deposit idea with your rentals? Thanks! mck
McKeller, I work in the financing side of the business and do not have any Section 8 rentals.
It just seems to me that a natural (economic) solution to the problem of getting money back from tenants who have damaged the property AFTER they left is to offer them incentives to leave it the way they found it … no damages, no exotic paint colors etc. If the tenant knows that they will get money back IF the property is in decent shape, they have incentive. Of course, that incentives would have to be sizable to overcome some damages and it does cut into the landlord’s profits.
I too fell victim to Section 8 renters and programs. Thought it was a super good deal for everyone, found out the hard way, it wasn’t. I’ve rented out five of my rentals when Section 8 called me and wanted me to get on their program. Within 6 months 4 were trash almost beyone repairs, only one was a good renter. How can people like that get on their program? I like helping people who are down on their luck but, NO MORE Section 8! 1-5 was spot on. They invite their friends family and dumpster buddies to stay at “their” place and there’s nothing you can do because “they have a lease”. At least they keep the neighborhood clean, ALL the trash is in their house. To quote Edgar Allen Poe- never more, never more.
Hi Jim,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
Bummer about your Section 8 rentals. Did you do your own property management? I like to inspect my properties or have my property managers inspect them every few months to double check how they look.
You can complain to Section 8 if the tenant is trashing your place. Document everything you can with pictures and descriptions.
Did you sell your Section 8 properties? Are you now focusing on higher end rentals? Thanks! mck
Section 8 = FAIL.
Hi Jeff,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
I like the cash flow from my Section 8 rentals but the hassle factor is definitely greater. I don’t get to buy as much equity with these types of properties and don’t expect as much appreciation either. I have been upgrading from lower to higher end properties. Thanks for the comment. mck
WOW! what city are your section 8 houses in? 1) the bait and switch are base on how much income they make. Section 8 reviews their income and if the tenant has an increase then section 8 will adjust their payment to you. 2) In Detroit you better visit the tenants current resident before you rent to them. All section 8 tenants are not good section 8 tenants. You need to screen your tenants better and don’t be to anxious just because there section 8. In Detroit the WORST city in America I let my section 8 tenants know before I rent to them I must visit you at your current residence other wise I can’t rent to you. If they no, I don’t rent to them. This will cut down on some of the problems with section 8 tenants trashing your houses. Feel free to contact me if you have any questions.
Hi Keith,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
I have Section 8 rentals in 4 cities. If the Section 8 office accepts a rent of say $600 at the start of the lease, I just don’t consider it ethical to change the rate to say $575 or $550 after a tenant moves into my rental. This manipulation has happened to me a handful of times. As far as the allocation bait and switch, I can more readily understand why Section 8 makes the change.
I agree you need to screen well and inspect within the first few weeks and then regularly. Great idea to visit an applicant’s residence to see how well they take care of their place. Another idea is to look in their car. The amount of wrappers on the floor can give you a feel for their cleanliness. Thanks for your comments. mck
My favorite Section 8 experience as a property manager is having our contractors clean the tenant’s bathroom after the yearly inspection. The inspector cited it for mildew and “unclean conditions”. The problem was the tenants had never cleaned it in the year they had been there. They didn’t understand why we didn’t renew the lease next year – their rent was all paid!
I’ve had some decent tenants on Section 8 too. You have to screen them just like anyone else.
Hi Melissa,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
I can smell that bathroom from here!
I agree you really need to screen Section 8 applicants well. Thanks. mck
Uhg, the dilemma of the Section 8 renter. Sometimes its all we get in our rental units – so we have no choice. The inspections, the “entitlement” attitude, the permanent guests, the repairs…not a big fan except you know the check always clears! Section 8 renter headaches is one of the reasons I now almost exclusively flip houses instead of do buy and hold real estate investing now!
Hi Mike,
Most of us have to start out with the cheaper houses so we often have to deal with the woes of lower end rentals. I’ve been upgrading my portfolio, but like my Section 8 cash flow.
I flip houses too but I love the regular “passive” income from rentals. Try a medium priced rental when you get back into the long-term hold game. Thanks! mck
At one point, we had 8 Section 8 properties at the same time. We now have zero and will never do one again.
Enough said.
Hi Karen,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
I understand your point of view. Well said. Thanks. mck
heh, as far as the renting goes, section 8 renters= market rate renters, its up to you to screen and do a 6 month inspection.
As far as the bait and switch, as far as Keith said, if their income is different, they do actualize the cost based on their income. However, I did take a few notes from this article I did not realize.
And, I am okay with section 8 renters, but not every person knows how to deal with section 8 people well. Some are better than others.
Hi Lisa,
I’ve been in the North Carolina mountains without much internet access so sorry for the late reply.
If the Section 8 office accepts a rent of say $600 at the start of the lease, I just don’t consider it ethical to change the rate to say $575 or $550 after a tenant moves into my rental. This manipulation has happened to me a handful of times. As far as the allocation bait and switch, I can more readily understand why Section 8 makes the change.
I agree screening and regular inspections are key. If you don’t live in the same town as your rental, make sure your property manager screens well and is experienced working with Section 8.
Thanks for your comments. mck
Wow. $4k is huge! I had one last year that cost me $6k….and yes, there was poop involved. Unbelievable. I don’t know when that will pay back. Good talking to you McKellar and great article. Keep on blogging.
Hi Kevin,
Ouch on 6K! Another good reason to have a nice reserve fund when you have rentals.
Oh the poop. I’m not sure how some people can live like that. I also see poop on a weekly basis when I look at foreclosed properties. I now wear tennis shoes or boots whenever I preview a house.
Thanks for your comments, Kevin! Please keep me posted about your property management changes. mck
There are a lot of good points observed, regarding the potential drawbacks of renting to tenants on Section 8. Being a new landlord, it’s good to get an idea of the pro’s and con’s. A close friend of mine has had a successful time working with Section 8. He has had the same family in this rental house for the last 5 years, and they have a good landlord/tenant relationship. However, I know that this is not always the case. The way he summed it up for me is that it’s not “only” about renting to tenants on Section 8, it’t about screening your tenants and finding a good one. True, screening is not absolute, but it can certainly help weed out some of the bad apples, so to speak.
‘Screening’ is a relative term. Screening Section 8 tenants, at least in my experience, has been akin to screening for your new basketball team from a group of seriously short players.
Hi Jeff,
Send me some tall players! mck
Hi Marybeth,
You make a good point about screening your tenants. I’ve had more extremes with my Section 8 rentals then my other types of rentals. By extremes I mean I’ve had really really really messy and destructive and then extremely neat as well. I like the idea mentioned by some to stop by someone’s residence to check out their homes before renting to them. Thanks. mck
Hello McKellar,
I absolutely agree with your assessment of how Section 8 tenant seen to range to one extreme or the other in terms of cleanliness a caring for a rental. Checking out their residence is a good idea. I’ve also heard that some landlords will add an addendum to their rental agreement/ lease & will allow the landlord to conduct quarterly, or even monthly, inspections of the rental – to ensure that the property is being properly maintained and cared for.
“I’ve been able to get destructive tenants to lose their vouchers, but I haven’t been able to get any monetary compensation.”
Please, landlords, I beg of you to do your civil duty to continue to report and pursue damages from people who do this sort of thing. It will take some time and effort, yes, and may yield little or no financial avail.
Although you may not see any monetary compensation for your follow ups in these cases, I hope you’ll help enforce the loss of Sec8 vouchers so we can get this hideous behavior out of our neighborhoods and keep them clean for responsible Sec8 recipients as well as those of us who pay full price and live next door to them.
I have turned them in, but they just keep giving them vouchers. Because Section 8,in my area anyway, does nothing but turn them loose to victimize another landlord, I very rarely look twice at their application. It is such a gamble and Section 8 makes me feel they are stacking the deck against the landlords.
I’ve told them repeatedly of the thousands in damages and they look the other way. The tenants knock holes in the walls, break vanities into pieces, then throw half in the backyard and Section 8 has the BALLS to mark the damages as 0 for owner to fix!!!!
My Mother had between 40-50 and I’ve had to throw most of them out. I can’t find a single property they have rented that she hasn’t taken a tremendous loss.
I agree with trying to get them off, but Section 8 doesn’t care. What is really bad is I’ve had renters who really need Section 8 and can’t get on. They either work and make little, or are mentally slow. The list is full and Section 8 does nothing to get the ‘lifers’ off that can work but do nothing but lay up all day in front of their wide screen TV.
If the American taxpayer saw the abuse of this program they would demand it be done away with. I’ve sent in rap sheets, some as many as 17 pages that I’ve gotten from the police department and Section 8 does nothing but issue them another voucher. It is disgusting.
@ Kevin Yeats August 10, 2012 at 10:52 am
“‘That is an offer to the section 8 tenant that if he/she/they leave the unit in the same condition as the move-in date that the landlord will “reward” them with $200 or gift certificates. I know this cuts the owner’s profits especially since it would have to be the same offer to every Section 8 tenant.”
Nice. Yet another freebie for the Sec8′ers that the rest of us full-rental-tenants never get to see.
I have 2 sec 8 rentals. As soon as these tenants move out, I will be off the program. Worst decision I have made in rentals. I have good luck with tenants (somewhat), but sec8 offices are terrible. They have cost me thousands. Frankly, I will be happy to see the program go away entirely.
Jason
Crooked HUD area Housing Administrators and Local HUD officials who don’t do their jobs are what gives Section 8 its bad name. There are only a hand full of bad tenants but the majority of Section 8 tenants do what the law requires of them.
“100+ PEOPLE JOIN A GROUP ON FACEBOOK EXCHANGING HORROR STORIES AND EVIDENCE OF U.S. HOUSING AND URBAN DEVELOPMENT AKA HUD AND THIS AGENCY’S ABUSE OF POWER, SUBSTANDARD AND EVEN DANGEROUS HOUSING THEY ALLOW PEOPLE TO LIVE IN. HUD’S NEGLECT OF REPAIRS OF THAT HOUSING, BREACH OF DUTY BY HUD, AND HUD REGIONAL OFFICES IN ATLANTA AND OTHER AREA’S COVERING UP COMPLAINTS OF FAIR HOUSING AND HQS LAWS BEING BROKEN BY AREA HOUSING ADMINISTRATORS WHICH HUD FUNDS YEARLY IN PUBLIC AND PRIVATE RENTAL HOUSING. THE SAME HOUSING THAT PEOPLE RENT OR HAVE RENTED THRU HUD REGULATED AREA HOUSING ADMINISTRATORS IN MULTIPLE STATES, AND PUBLIC HOUSING OFFICES THRU OUT THE U.S.”
FOR MORE ON THIS STORY SEE: THE PEOPLE VS HUD CORRUPTION ON
CNN IREPORT http://ireport.cnn.com/docs/DOC-872808
I was doing some online research and found this great forum. I work in property management-overseeing some 200+ res/commercial properties in 2 states. I am the property manager at our largest complex and today I got a call inquiring if I take Section 8. Without thinking I said no I’m sorry and wished the caller good luck. Then I went online only to find out my response was illegal. I made a call back to this person to offer a few places I had heard of-in hopes she wasn’t going to cause any trouble. Can anyone advise me on the best or top 3 responses that say no without actually saying no? If I lie and say the complex didn’t meet the inspection in a previous situation can the voucher holder learn if this is fact or fiction? Or is it best to go ahead and process an application with the hopes that I will end up with a poor credit report? I admire anyone taking the initiative of making a visit to the persons current residence, as well as running a criminal check, however, my company doesn’t do any kind of BCI checks and I can’t see myself tracking down these people on my own time. Would appreciate any advice.
Bait and switch…oh yes. I’m beginning to think they are as shady as the ones they give the vouchers to. That has been pulled on us several times at renewal. I’ve been getting rid of the section 8 tenants. They are filthy excuses for human beings and I don’t understand why we taxpayers are supporting such with our tax dollars. Most on the program are lifers. The real neady that need a temporary leg up can’t get on for them. They just keep having kids and swilling up the tax dollars. I wish the program would be done away with.
I find your posting very discriminating. Not everyone who has section 8 are bad tenants. You should watch how you put section 8 recipients all in the same group… There are also SLUM LORDS who take advantage of these same section 8 recipients. A person doesn’t have to be a section 8 applicant to be a HORRIBLE TENANT!!! Stop discriminating!!! It’s Illegal!!& could cost you more money than a bad section 8 renter… Have a nice Day
I am a client of section 8 and I often times I feel like I get the short end of the stick too. When landlords refuse to make a necessary repair in a timely manner, I am left, like right now caught in a lurch trying to figure out if it’s still my responsibility to continue paying my portion of the rent which I am, but I am like, how can I save money to move. I have two mental disable children, one is a young adult and a teenager. My intentions for this year was to move before my 2 years lease is up I lived here for over 10yrs now and I am sorry I stayed this long. My mother was staying here with me,( legally) and helping to pay half. But in January of this year she had to be rushed to the hospital because of breathing complications and in February she had heart surgery and in March she was placed in a rehabilitation center, where she is as of today. So I am left to pay rent and utilities by myself. And when I read stuff like that, I feel that there is no hope of finding another place because landlords are getting sick and tired of renting dealing with section 8 and their clients. Like I said I lived here for over 10 years and I have done my best with the up keeping of this property. But I want to move back to the area where I grew up at.