Looking for my first investment property in Atlanta area and was reading about Section 8. Is there any Real Estate investor here that has experience in that?
What characteristics of a Section 8 investment interests you as a strategy and why do you think it's the best strategy for you?
Thank you for responding. Fact that section 8 rentals are in demand and the rent is paid by the government so the property will have a good occupancy rate and rent is 'almost' guaranteed. I understand there are downsides as well, like the continuous inspection but I think it should be manageable.
Real Estate Broker · Atlanta, GA · Member since 2017 · 229 posts · 145 votes
3y
I think Section 8 is a great opportunity for a specialist or a niche investor. However, I would recommend not limiting yourself to this one type of property. If you want high occupancy rates and qualified paying tenants, most quality rentals in metropolitan Atlanta in C class or better areas with tenants placed by a professional property manager should enjoy low vacancy rates and high likelihood of on time rental payments.
Section 8 does have plenty of red tape, paperwork, inspections, etc. that come along with it, but it's not insurmountable for an investor that specializes in this type of property. Some of the market rents for Section 8 can be fairly generous, also. Tenants are also likely to be less picky about the location (busy roads, commercial adjacent, etc.), amenities, finish level, and other criteria, as long as the property meets Section 8 standards and the landlord accepts the program. However, in my experience, most property managers and private landlords in Atlanta won't accept housing vouchers because they feel they can get quality tenants with reliable rents without the hassle of those programs.
Due to the niche and specialized nature of Section 8 rentals, I believe there is an opportunity to acquire occupied Section 8 rental properties at a substantial discount to retail market rates or non-Section 8 occupied properties. The risk of acquiring a tenant-occupied property is also mitigated because at least a portion of the rents are guaranteed by the federal government and the property meets minimum inspection standards (on paper at least).
As an investor, you will just need to ask yourself what is it about this strategy that attracts you to it and if it's worth the hassle to specialize. However, the Atlanta metro area has a robust renter pool, a diversified economy, and no shortage of opportunities in the conventional rental arena.
I'm always happy to hop on a call, if you'd like to discuss in more detail. I've been working in the rental property space for many years and I'm always happy to share my experience.
Looking for my first investment property in Atlanta area and was reading about Section 8. Is there any Real Estate investor here that has experience in that?
Its just like renting to a cash tenant with more paperwork and a bit more detailed on repairs., screening is key. Hire a PM co, learn then go on your own . Do not try and go it alone.
Rental Property Investor · Los Gatos, CA · Member since 2017 · 123 posts · 131 votes
3y
@Ashish Wa Section 8 can be a great way to secure your rents. Be somewhat selective when renting to housing tenants. Although there aren’t many income underwriting guidelines as they’re on section 8, vet them like you would any other tenant. And then stay on top of the government with rent increases and you should be golden. I’ve found that section 8 tenants take a little extra effort but the squeeze has been worth it so far. One benefit of the section 8 tenants is that they also can usually get help with deposit from non profits, so I try not to give heavy discount on section 8 deposits, if anything I up it a little as the units may get a little more worn.
I went at it alone right out of the gate and have been happy with it, again it will take more effort than a non section 8 tenant. But if they’re vetted correctly you’ll just be doing some extra paperwork and maybe take a few extra phone calls. Any tenant not properly underwritten could be a headache. I’m not a property manager and didn’t start with a property manager the only tenants that have been major issues are ones that we have purchased.
Do what you think is enough due diligence and then some. You can’t do enough due diligence when renting to someone, whether you know them or not.