I've been thinking about renting to section 8 tenants because from what I understand you can buy cheaper properties that aren't glamourous, and a portion of the rent is guaranteed via a government check.
The cons, of course, is having to deal with 'shady' people, and potentially having your property trashed.
Any thoughts on if section 8 is worth it for a first-timer just starting out?
The people receiving section 8 aren't necessarily 'shady'-- they are poor.
You will not be able to run low income properties like you would run properties rented to high income/high credit score tenants. Protecting their credit score is sufficient motivation for most high credit score tenants to play by your standard lease rules.
Low income tenants are playing by different rules. It (literally) pays for you to put rules & processes in place so that you can work with them when they have a TEMPORARY financial emergency without losing money
Section 8 probably skews the rules for dealing with low income tenants because keeping the voucher is probably a motivator. I don't have any section 8 tenants. I have a number of tenants that use to pay less to live in public housing and choose to pay me more.
No, it is a matter of preference. There are low income people live on government handout. The kind I do not like are passed on from their parents who never learned to work so they expect you take care of them.
There are some restrictions and annual inspection most have to do with safety(railing), smoke alarms, and sanitation....
People that have Section 8 are regular people just like you and I. Whenever you rent to anyone you take a risk of them not being able to pay or damaging the rental. Unfortunately that's life! You have people on Section 8 that take care of the rental better than some that aren't on the Program. You actually have more protection if a person has Section 8 because chances are the Government is either paying all or most of their rent. Also if they cause any damages to the rental Housing will not allow them to rent again until the damages are paid or they lose their Voucher.
@Yolanda Eiland is correct. I manage over 100 SEC8 properties. In though and come neighborhoods is that it’s really hard to find people with verifiable, reliable income. As was mentioned when one life emergency happens low income tenants do not have the cash cushion to handle it. SEC 8 works like an insurance program for both the tenant and the landlord. When that life emergency happens and a tenant can’t work, even for a short time, section 8 kicks in more rent so you still get paid.
I wrote a blog that shares a lot more if you want to read it. Section 8 Blog
The way department of housing deals with sec 8 tenants must be different from state to state. I did property management in CA (years back) and I remember there was no rules or regulations. Tenants trashed the place and they could just leave and rent another place. I also did property management in MD recently. Landlords can report and send pictures of their regular or move out inspections to the housing. If the tenants destroy the property, then they could loose their benefit (at list that's what the Sec 8 office told me I never experienced it) Also Landlords are allowed to give surprised visit to applicant's current resident prior to approval and if the property is kept in bad shape or they don't allow you to enter and inspect, then you can decline the application. That in addition with checking the rental history kinda helps find the good tenants.I didn't have any big issues with Sec 8 Tenants there. Actually, as @Yolanda Eiland stated, some keep up the properties like their own. Now trying to learn how it's done in FL.
@Tim Lyons the rules have definitely changed from years ago. There's a 3 Part contract (Rules and Regulations) that has to be signed. One for the Landlord, Housing, and the Tenant. Now days the moment a Landlord contacts Housing to say that a Tenant owes money (for damages, late fees, back pay rent, etc) Housing will notify the Tenant to pay or lose their Voucher. I think accepting Section 8 is worth the try.
@Farhad Rahmani Section 8 is Federal so it should be the Rules and Regulations should be the same everywhere in the U.S.
@Yolanda Eiland - Just a slight correction based on my experience. (I currently manage over 100 SEC 8 leases.). We do notify the HA that the tenant owes us money and that we have obtained a judgment. That in itself does not trigger the HA to terminate the tenant’s contract. What it does is prohibit the tenant from getting their voucher reissued so they can move until they are either in compliance with our lease or we give permission by way of a mutual termination. Now, if we actually evict, that triggers a termination of the voucher. This happens very rarely. Because the judgment puts the tenant in such risk of homelessness, they can almost always find a charity to donate the money they owe.
Also, while the HCV is a federal program, the HAs do have some authority to oversee their budgets. For instance, they determine the formula for calculating bedroom size. In our market we have one city that gives the voucher holder her/his own bedroom and separates the sexes for anyone over the age of 10 into two people per bedroom. (Under 10 is 2 people per bedroom no matter the sex.) Every other city calculates on two people per bedroom, no matter what the sex, age, or relationship.
@Patti Robertson I read your Blog! I liked it a lot. I especially liked, "Have you had any luck in finding an insurance company that will provide you insurance that will kick in in the event your tenants lose their jobs? Me either, but that’s just one of the benefit that SEC 8 offers landlords who participate in the program.....In low income neighborhoods, landlords are significantly better protected financially with a SEC 8 tenant than a non-SEC 8 tenant."
@Patti Robertson I guess the Rules and Regulations are a little different per State. Here in Grand Prairie (Dallas) if a tenant wants to move and the landlord contacts the HA that the tenant owes back pay rent the HA will notify the tenant to pay otherwise they can't move to a new place. The Voucher will be placed on hold and if the tenant doesn't pay then they'll be remove from the program.
Now if the Landlord contacts the HA saying the tenant owes back rent and the tenant disputes the charges then it has to be settled in JP Court. If the tenant gets Evicted in JP then HA will terminate their Voucher.
Yes, I agree that the HA normally are the ones that determine Bedroom size and may use a different formula than other HAs.
Thank you @Yolanda Eiland !
It all depends on the area you are in and how the system is managed in that area. In my jurisdiction I would leave a unit empty indefinitely before renting to anyone on any form of government assistance. Do your homework first.
Most S8/welfare people are the bottom of the barrel conning the system and living off of tax payers. To protect yourself the local government officials managing the system must care about their jobs and responsibilities.
"even though 85% of my rentals are not section 8 I would not classify the people how you are"
It comes down to your local area. In my area the vast majority of welfare recipients are bottom feeding low life's scamming the system. They are on welfare for life by choice not circumstance. Their children grow up wanting to be a government employee like their uncle dad and drink beer on the front porch all day long. Additionally their handlers could care less what they do and will not hold their wards responsible for anything. Our system does not ever cut them off of benefits and does not pay the landlords rent directly. Any landlord here that is not a slumlord is a fool to risk renting to anyone on welfare. It really does depend entirely on the government jurisdiction your property is in.
@Thomas S. they probably feel the same way about you. It's really ashame to stereotype people. You have no idea what a person is like or what a person has been through just because they receive government assistance. If you choose not to accept Section 8 that's fine that's your choice. But to classify people because of the resources they use is outrageous. Honestly if they're scamming the system that's for the government to figure out not you.
in low income areas the tenant pool is not exactly great . Section 8 atleast assures you get paid and having the voucher as a carrot / stick is nice for the landlord . I have noticed no difference in tenant quality for section 8 or non section 8 .. in these neighborhoods everybody is savage in their own way . Gaming the system is just part of day to day life in the ghetto . If you’ve never seen your father lace up his workboots every morning and go to work it’s beyond your context to have a strong innate work ethic . If you’ve seen your family grift off others and try to get every assistance available then that’s all you know to do to make a living . Sadly most Low class tenants have no concept of shame or dishonor