section 8

28 Replies

Hi I am in the processes of creating my business plan. my original plan was to start off with  3 or 4 family building owner occupied. In the process I was contemplating going to a section 8 building. I am a newbie to this site although I've been thinking about investing in real estate for a long time now. Can anyone tell me if they think it would be a good idea for my first property to be a section 8 rental Thanks

Section 8 is pretty strict, but the flipside of that are reliable and dependable payments. In areas with rent control, it can also be almost impossible to move them out.

See also:

http://www.biggerpockets.com/renewsblog/2012/08/10/disadvantages-section-8-rentals/

@John S.

My first SFH rental was Section 8 and I have never looked back. In my area, Baltimore County, the Sec 8 rentals are above market prices. If you have a good screening process you should be fine.

Good Luck,

Scott

That's what I've been hearing a lot have a good screening process.  Thanks Scot 

Excellent book on this subject is called Section 8 bible. You can buy it on Amazon, it has really made me consider getting into section 8 properties.

@Aaron Carter

I've never heard of that book.  Thanks for pointing it out, I'll have to check it out.

Thanks,

Scott

also thanks Juan

I'd of course heard about Section 8, and perhaps because of my brothers' experiences with poor upkeep of their units when renting to Section 8 tenants, had been reluctant to consider trying it.  However, my rental market is completely different than theirs, so as an experiment we did lease one of our 21 units to a young person on Section 8.  They went through the same vetting process as any of our other tenants, and so far has been just as good as the rest.  While I won't actively seek out Section 8 in the future, I won't turn it down flat either.

thanks Aaron I'll be sure to check it out

One factor you need to consider is the area you are going to be personally moving to. Some markets cater to section8 in certain areas much more prevalent, and not so much in other areas. 

In my home town, without being told you wouldn't know the difference between a cash renter and section8 (I have a mix of owners, cash renters, and one or 2 section8 renters in my neighborhood).  However in some of the places that I've owned there are high-volume section8 areas that I absolutely would NEVER, EVER move my family. 

I have a section 8 tenant in one of my units and I have far fewer issues with her than some of my others.  

In February, she ended up missing a bunch of work because she got in a car accident.  She sent me an email on Feb 25, asking if she could please short pay her rent on March 1 and she would make it up when she got her March 20 paycheck.  I agreed because she was paying about 75% of it on the 1st.  On the 20th, she called me and said she had the rest and did I want to pick it up or should she mail it.  

She's been very communicative about everything, her portion of the rent (except for the issue above) has always been on time and the Housing Authority direct deposits their portion directly into my account on time.

My only complaints:

When the county came to do the inspection, I had just finished what I thought was a deep clean.  However, they wrote me up for crumbs left in the back of a cabinet and a window that sticks.  I guess they have to find *something*.

My first payment from the county didn't come until the 15th of month because they had to set me up in their system, etc, etc.  It wasn't a big deal, just a bit of an annoyance accompanied with some anxiety on my part as it was my first Section 8 deal and I had no clue how it was going to work.

The tenant is not in the habit of calling for repairs, based on how she was treated by her last landlord.  We had a discussion about the bathtub faucet leaking that cost me a moderate amount to fix that would have been much cheaper if she'd called me earlier.  She seemed shocked that I would care.  

YMMV

@Scott C. how do you screen one section 8 applicant versus another?  this is difficult for me because earnings have typically been my main factor. 

Great thanks for the advice guys it is all very helpful

@Dooreuhn Cee

I quickly found out that screening for a Section 8 tenant is different than a conventional tenant. 

The first thing is that the credit check is mostly useless.  Most of them are going to have bad credit due to financial difficulties which necessitates them being in Sec 8 in the first place. 

The second thing is that the income versus rent rule is also less important.  Normally you wouldn't rent to someone if they weren't making at least 3X the rent.  That doesn't apply to Sec 8 because they are getting the housing subsidy.  That being said I do have them list their sources of income (job, disability, child support, etc...) on the application but it is never enough to qualify for the 3X rule.   I don't have a hard and fast rule but I like to see at least some income since they are going to have to pay at least their portion of the rent.  It is also made more difficult because most of my tenants also qualify for energy assistance so they get help with the utilities.

My biggest screening tools are the criminal background check, previous landlord call, and meeting them in person.  I don't rent to anyone with a criminal background. I also make them sign a form that I can call their previous landlords.  This part is a must. I have accepted and rejected tenants based on this. With a couple of my existing tenants the landlords were very sad to lose them so that is always a good sign.  Finally I always meet them in person when I show them the property. I make it clear to them that we are fair but have standards and rules.  I can usually get a pretty good feel for them in that meeting.

I hope this helps and I would love to hear other investor's experiences.

Thanks,

Scott

Scott that is a tremendous help thanks again

@John S.

Section 8 can be great, as many other posters have mentioned here, but often the issue isn't with your Section 8 tenant, it's with everybody else's. If you're buying a property on a street with a lot of other Section 8 tenants, you could be buying into some headaches. In some areas, heavily Section 8 neighborhoods have higher crime, high maintenance costs, and lower rents. You'll want to do your homework on the area before you buy a property.

You also need to watch for neighborhoods that are resistant or won't allow Sec 8.  There are a couple of neighborhoods in my area that won't allow Sec 8 tenants. 

Hey guys can you turn any property into a section 8 provided the area or town allows it.

@John S.

my experience is that any property can be made sec8 friendly, but has to pass their inspection and rent amount (and any other costs) must match criteria of a sec8 tenant. Don't know for sure, but given the regulation on housing equality I'll bet that you can't legally restrict Sec8 tenants from certain areas - but a neighborhood / HOA can regulate rentals.

Ok great thanks Blair

Hey John, I have 1 section 8 tenant and she has been with me for 4 years now, with minimal hassle. The biggest problem I have is the yearly inspections-you should budget money every month for this, in addition to the typical maintenance you budget for, because they WILL find something wrong.

Just check with other landlords in your area about what the reimbursement rates are. If they are less than market, that might give you more to think about before signing on to the program.

I own 60+ units. I have several units rented to voucher programs. Including section 8. It's very easy. I would go online and check it out. In the Boros the New York City Housing Authority (NYCHA) and the Housing Preservation Development (HPD), run the programs. It is a simple process. Just follow the rules and guide lines.

Thanks so much guys. I belong to the site for two days and already I have gotten so much valuable information from the people on BP. Thank you so much guys. I love this site.

By the way my background is building maintenance for commercial property in New York City aka building engineer.  So if anyone needs some advice or has questions. About maintenance I probley can answer it.

one thing to note, section 8 will not allow a property to be nest to an abandoned property, just food for thought. But I love the program, so far so good. Can't wait to get another  

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