Is Section 8 in high demand pretty much everywhere?

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Is Section 8 in high demand pretty much everywhere?

Gary Dezoysa
Orlando, FL · Member since 2011 · 176 posts · 23 votes

Greetings, I come from Southern California where section 8 housing is in high demand. However, I plan on moving to a cheaper area of the country where $30,000 houses in working-class areas can be found.

I'm not sure if I should be concerned about narrowing my list of choices by "section 8 demand" or not.  

Is the section 8 program in high demand virtually everywhere in the country, or is it something I need to dig into before I consider an area?

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Darrin CareyPro Member
Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
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I can't speak for the other cities, but in Dayton, there is high demand for section 8 housing. I got a lot of those calls when I have a unit available.

Additionally, Every time section 8 announces additional vouchers available, the line far exceeds the availability of vouchers.

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  • Tatyana Shevnina
    Specialist · Los Gatos, CA · Member since 2014 · 73 posts · 28 votes
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    @Gary Dezoysa- I'm not a section 8 expert, but I wonder if the high demand is cause by the discrepancy between the section 8 allowed rents and market rate rents. At least that seems to be the case in some of the Bay Area cities. Something to consider before you commit to section 8 along with the inspections your property will need to pass.

    If you search for section 8, there are a lot of other threads on this topic. I also heard of a "section 8 bible" book.

    Good luck!

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
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    I think you're going to find the responses cover the gamut.

    Its really a local market answer because every area is different.

    Even throughout neighboring counties, you'll see vast differences.
    Here in Illinois, Cook county sec 8 rents are incredibly low.
    They are well below market. Will county, on the other hand appear
    to be pretty decent.  Cook county is easy to get sec 8 applicants.
    Not all areas in will county are.

    Kankakee county right next door is another one. Rents are a little bit lower
    and the number of applicants is probably in the middle. But it also depends on the town you're in too. If you're in a bigger area, I believe you'll see more sec 8. But the really nice areas, you might not see many sec 8 applicants at all.

    To determine the demand and relative rent rates in the area you're moving to, I'd give out the area you're moving to (state, county and town(s) ) and see what the people in those areas thing.

    I think you'll get a lot more value of the answers if you bring the focus down a bit.....

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  • Gary Dezoysa
    OP
    Orlando, FL · Member since 2011 · 176 posts · 23 votes
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    Hi, I'm physically relocating to Ohio, I haven't decided which city yet. Right now the choices are between Cleveland, Akron, Toledo, and Dayton.

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
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    Originally posted by @Gary Dezoysa:

    Hi, I'm physically relocating to Ohio, I haven't decided which city yet. Right now the choices are between Cleveland, Akron, Toledo, and Dayton.

     Hi Gary,

    Feel free to reach out if you come to Toledo.

    We have bought quite a few in Toledo and Dayton over the last 6 months.

    Thanks

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  • Darrin CareyPro Member
    Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
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    I can't speak for the other cities, but in Dayton, there is high demand for section 8 housing. I got a lot of those calls when I have a unit available.

    Additionally, Every time section 8 announces additional vouchers available, the line far exceeds the availability of vouchers.

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  • Ryan Pyle
    Multifamily Investor · Toledo, OH · Member since 2008 · 296 posts · 308 votes
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    Definitely high demand in Toledo, but like market rate rentals the demand for Section 8 ebbs and flows with the quality of the neighborhood. Even Section 8 tenants don't want to live in war zones.

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
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    I actually was sent an email today from a contact I have a CHA (Chicago housing Authority) that they will be handing out 1000 new vouchers in the next few weeks. 

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  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
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  • Gautam S.
    Real Estate Investor · Eola, IL · Member since 2014 · 137 posts · 22 votes
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    How is section 8 in Bradview, IL area?

    How long does it take to get all approved from the County/State?

    If a tenant calls looking at my 'FOR  RENT" sign, can I say that I do not rent to section 8 or My property is not section 8 approved?

    If the process takes too long then I will prefer to rent out to a cash renter.

    Any thoughts from the pros @Mark Ainley  @Mike H. 

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  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
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    Section 8 is in high demand for Fresno and Tulare County.  These are cheaper areas in California.  I don't think it matters if you are in the Bay Area, So Cal or Central Valley. 


    Frank

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  • Account Closed
    Miami, FL · Member since 2014 · 125 posts · 7 votes
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    Are you looking to purchase for yourself or investment or to rent for yourself?

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  • Account Closed
    Real Estate Investor · San Antonio, TX · Member since 2014 · 785 posts · 190 votes
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    I'm no expert, but I know that section 8 is viable in my city. When we do rentals, we go section 8 and no major complaints . It will vary by city though. 

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
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    Definitely not a pro at section 8. 

    You can definitely say you do not take section 8 - at least the way they do it here in Illinois.

    1) They require annual inspections. 

    2) They have their own rent schedule which is typically much lower than what you can get from the public market.

    So I don't see any possible way anybody could require you to rent your house to someone and force you to deal with all their additional guidelines PLUS force you to take less rent than what you want.

    That would be the equivalent of someone going in to best buy telling them that because some customer is on assistance, they should have to sell them their tv for 25% less.

    Now, maybe other areas do section 8 differently too and, if so, then maybe they can force a landlord to take them. If sec 8 in other areas doesn't require additional inspections and/or doesn't force the landlord to take lesser rent, then maybe the county there could force you to accept them.

    But the way it works here is that the applicant is accepted and then you have to sing some documentation and then wait for sec 8 to come up with the price they'll allow the tenant to pay for rent. And I don't just mean the tenant's portion. I mean the actual total rent that you will collect from both tenant and housing authority.

    For the areas I've looked into section 8 (richton park, lansing), section 8 just doesn't pay the market rent. Not for the size houses I have.  For the Richton Park house I have, they were only willing to let me get 1k a month in rent.  This is in a nice subdivision and is a 3/2, 1,600 sq ft home with a fenced in yard. Market in that subdivision for those homes is about 1,500 to 1,600.   Why would I take 1k???? 

    Guaranteed rent? Not a chance. You'd be surprised at how much section 8 messes with the vouchers. These tenants go from having to pay $300 a month to having to pay $700 a month in a heartbeat and then you're in worse shape than if you just took a regular tenant in terms of collecting. 

    I honestly think the real model for section 8 are  to pick up the small homes in the nicer than war zone areas. People in the war zones want to get into a better/safer area with better schools. The smaller homes are treated like the larger homes by section 8 so  you may be getting 1k a month from sec 8 for a house that the market would dictate a 1k a month. Then it makes sense.

    I think ultimately, the sec 8 tenants are really getting hosed by the limited rents though. Sec 8 should let them pay whatever they want. The landlord should decide whether they can afford it or not.  I've seen some people that can definitely afford to pay more for rent but simply can't because of the sec 8 rules.  So they end up having little chance at getting a decent home. Seems a bit off to me.

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  • Jeff Brower
    Real Estate Agent · Willoughby, OH · Member since 2014 · 560 posts · 690 votes
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    http://www.huduser.org/portal/datasets/fmr/fmr_il_history.html

    take a look above at the link which will give your FMR for any county. compare this to what you might find on craigslist ads for rent. lake county ohio (30 mins east of Cleveland) is comparable for section 8 vs non- section 8.

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  • Bradley Bogdan
    Investor · Eureka, CA · Member since 2014 · 233 posts · 222 votes
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    @Gary Dezoysa The answer, as usual, is: It Depends!

    Section 8 vouchers are always in demand in a locality, and therefore rentals that accept them always are, to a degree. As some other folks have pointed out, whether market rent prices make Section 8 a good strategy for an area are just as important as whether anyone wants to live in that neighborhood. If market rents are far above the limits Section 8 imposes, then you might be in high demand, but you might also be leaving plenty of money on the table. If market rents are comparable to the Section 8 limits, you'll still have demand as not all landlords are willing to work with the program which constricts supply, but it will be lower. If market rents are far below the Section 8 limits, you might be looking to invest in an area that's too rough even for folks with vouchers, and you should make sure you'd have demand from any segment of the market. Remember, just as any other REI strategy doesn't work in all areas, not all areas are cut out for focusing on Section 8 rentals.

    Despite the many horror stories here on BP, most areas don't require much of a landlord beyond what we all should be striving to provide at a minimum, safe, clean, functional and legal rentals. That said, there are a couple areas where the local PHA is not a good partner. Ask a few different landlords what their experience has been and you should have a good idea. 

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  • Ceril S.Pro Member
    Rental Property Investor · Ithaca, NY · Member since 2014 · 180 posts · 80 votes
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    Originally posted by @Jeff Brower:

    http://www.huduser.org/portal/datasets/fmr/fmr_il_history.html

    take a look above at the link which will give your FMR for any county. compare this to what you might find on craigslist ads for rent. lake county ohio (30 mins east of Cleveland) is comparable for section 8 vs non- section 8.

    Does FMR equal the amount that section 8 would pay? I've never thought much about section 8 but it's very comparable to non-section 8 maybe even better if so.

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  • Jeff Brower
    Real Estate Agent · Willoughby, OH · Member since 2014 · 560 posts · 690 votes
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    I do believe so. Though I think that there may be some variations depending on the local PHA.

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  • Bradley Bogdan
    Investor · Eureka, CA · Member since 2014 · 233 posts · 222 votes
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    @Ceril S. FMR equals the amount your local PHA believes is the 40%ile for rents+UTILITIES in your local market, so it isn't necessarily what you could expect for your rental.

    That said, depending on how much your tenant makes for income, and what utilities you include as part of the rent, you can match or sometimes exceed that FMR rate when everything is factored in.

    In short, yes, but its not a given depending on your unit and tenant's circumstances. 

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  • Ceril S.Pro Member
    Rental Property Investor · Ithaca, NY · Member since 2014 · 180 posts · 80 votes
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    @Bradley Bogdan thanks for the info. Definitely something that I will look into given the areas that I've been looking into.  Sounds like I have some research to do...,

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  • Bradley Bogdan
    Investor · Eureka, CA · Member since 2014 · 233 posts · 222 votes
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    @Ceril S. Once you pull together numbers for what market rents and your local utility allowances are from the local PHA, I'm happy to help you crunch the numbers on the Sec 8 end and see what you'd be able to get renting through the program. The official calculator is here on BP in the file share, but its not at all intuitive. Just shoot me a PM sometime and we can set up a time to chat in detail. 

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  • David P.
    Wholesaler · Westminster, CO · Member since 2013 · 224 posts · 77 votes
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    I have a few Section 8 tenants in the North Denver metro area. Yes demand is up but so is the demand for housing. With less than a 6 week supply it is not only driving up prices for home purchases but also for rents.

    When I leased my units, I was able to secure the two Section 8 tenants - with less than stellar jobs, but I must say I have been lucky! They both pay on or before the 1st of the month and I do inspections quarterly and they always keeping the place in pretty good shape. No complaints and when a small issues arises, I take care of it right away.

    I am very hopeful that they both stay when I raise the rent upon lease renewals. (Several of my expenses have increased - this is not a greed play!) My rents are fair market value for the area - but I also provide a nicer unit in the area and keep the places maintained. In our area, Section 8 requires annual inspections - which I have passed with minor issues.

    My advice is to ensure you screen any tenant to qualify to live in your property.   If you understand the risk then having Section 8 tenants can be a good/bad thing!

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  • Ceril S.Pro Member
    Rental Property Investor · Ithaca, NY · Member since 2014 · 180 posts · 80 votes
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    @David P. Did you run the section 8 tenants through your normal screening process? Do you have them pay an application fee, etc? This may be a stupid question but can you deny them using the same criteria you normally use (minus income)?

    @bradley I have several phone calls to follow up on, then I will take you up on the offer!

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  • David P.
    Wholesaler · Westminster, CO · Member since 2013 · 224 posts · 77 votes
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    @Ceril S. yes you screen the tenants through your normal process - including the income.  Always call back to 2nd and 3rd landlords as this is where you will receive the truth about personality, cleanliness, etc.

     I use "Smart Move" to screen tenants - this site allows for the tenant to pay for their own background and credit check.  When I review their application I check their credit score along with their employment record - if they have one.  The combination of all these things helps paint the picture.

    One of the biggest thing is not to discriminate because the tenant is Section 8 (or any other protected class) stick to your screening criteria/process like all other candidates and you should be fine.  One plus is due to lack of Section 8 vouchers, the precipitant losing their voucher is a fear.  If the Section 8 tenant doesn't pay their portion of the rent or cause damage you the landlord can report them, server them notice and notify their case worker - after investigation, they can lose their voucher.  I am not sure if this is the same everywhere, but worth checking out!

    Good luck and I wish you success!

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
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    @David P.   you mention increasing the rents this year. Doesn't section 8 dictate the allowable rent for the unit.  Wouldn't your rent increases be dependent on section 8 allowable rent changing.  (Unless you are below their allowable rent now which I don't think is usual. )

    We don't do section 8 but I do track their local rates as one indicator of rents in our area.  This year section 8 rents went up here and I am just wondering how that figures into your increases for section 8 tenants.

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  • David P.
    Wholesaler · Westminster, CO · Member since 2013 · 224 posts · 77 votes
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    @Colleen F. increasing rents is all up to you - Section 8 does have what is called fair market value (FMV) for different cities and that is good. My rents are close to this FMV, but just because my cost go up doesn't mean I cannot raise the rent. I can only however raise the one per year (on lease renewal).

    What this means is either Section 8 approves the additional amount or the tenant can choose to either absorb the additional cost or move.  I include trash and water as part of my rent - and when these cost go up or the tenant decides to leave the water running and I receive a high water bill - I the landlord can only absorb these cost for so long before I start losing money.  

    I think most landlords think that once the have a Section 8 tenant that they can never charge more than the FMV for rent when renting to Section 8. To give an example, one of my units was renting for X (at FMV) and when the non- section 8 tenant moved out the market (not FMV) was approximately $150 higher. When I listed this property at this price which was +100 above the Section 8 limit I received all kinds of calls. The tenant I screened for the property just so happened to be Section 8. The choose to rent my property because it was nicer and the also chose to pay the difference above and beyond the FMV. I am not discriminating against Section 8 - this is the rent I want for my property and anyone can choose to pay the rent I wish to charge for my property.

    The thing to remember when renting to Section 8 - there are many factors involved in the decision making process - not just the price of the rent but the utilities included.  Each state is different but I bet most have the same type of policies regarding the rent a Section 8 tenant can pay but they allow variances as well. 

    Word of advice - know what you are getting into.  Talk to the tenant's case worker and read the policies, guidelines, etc.  Think of it this way - everyone needs a place to live and just because someone is Section 8 doesn't mean they have to live in Class C and below properties.  The system isn't perfect but the more you know the better you can manage your property (aka ==> your business)!

    Best of luck; I wish you success! 

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