I am looking to buy my 1st investment property soon. A house just came on the market at a good price that my realtor wants to show me. We just found out that it has a Section 8 tenant already living there and that has made me wonder if this is a good idea.
I have read the postings on BP about Section 8, the pros and cons, good stories and horror stories. But what I haven't really seen is if it's a good idea to purchase a home that is already Section 8 approved, has a section 8 tenant who has been a long time tenant (we have been told the tenant has been a renter there on and off for the last 10 years).
Also, since this will be my 1st rental property, would it be recommended that I avoid Section 8 or does it not matter? The lure of having the immediate cash flow from Section 8 is tempting, the house is already Section 8 approved. I also don't know if I will have to do all the Section 8 paperwork to get the property re-approved since I will be the new owner or does it automatically stay on their list, and just have the yearly inspection to make sure it is still up to Section 8 standards?
Any information and/or advice on this would be greatly appreciated!! I am looking at the property tonight and then will need to make a decision on if I want to move forward or look for a different property that is not Section 8.
Also, one last note, the lease that is currently in force is set to expire in May. I am guessing I will have to have the Section 8 inspection at that time if I want to continue offering it to Section 8. If I decide against Section 8, do I have to go through the eviction process if the current tenant refuses to leave or does Section 8 make sure tenants leave properties that are no longer Section 8 approved/available?
Hi @Joe Swagerty ,
I purchased a pair of duplexes last summer and one of the already had a section 8 tenant living there. Renting to a section 8 tenant is really not very different than renting to anyone else. If you visit the property and the tenant is taking good care of it, I see no reason not to renew the lease if they want to stay. The Housing Authority will continue with their annual inspections. I purchased in July, they inspected in November.
Section 8 does not guarantee anything as far as someone being a good tenant, nor do they help with eviction. If you find you need to evict a section 8 tenant, you do so as if they were any other tenant. No matter who you rent to, my biggest piece of advice to properly screen tenants so they meet what you are comfortable with, ie. income, rental history, job history, references, etc.
Hope this helps
Section 8 is just a program, a tenant can be a good or bad tenant regardless if they are on Section 8. However if someone has lived in a property for 10 years, more than likely they are a good tenant because otherwise they would have been gone.
If you're not going to renew the lease with the current tenant, you will have to give them notice according to the Section 8 guidelines. If they don't leave, you will have to evict them. More than likely they don't want to be evicted because they may lose their voucher, so they'll move, but they won't be happy about being kicked out if they didn't do anything wrong.
I recently purchased with a sec8 tenant in place. No issues but they had to re-do all the paperwork.
The tenant themselves should be your best indicator. Do they work? How long? Do they want to stay? How long at last address? Hopefully they will be there to talk to.
Why would you want them to leave if they are paying rent?
More important, how are the numbers?
The above posts are very insightful. See how you feel after you view the property. If the tenant is a slob, maybe you don't want the place. But maybe the tenant is a gem. Just because someone is on public assistance does not make them a bad tenant (or a bad person- you don't know their story yet). There is no need to be afraid of people because they don't have a lot of money. They're just people. And when you become a landlord of properties that rent at a lower price point they are also your customers.
For me a property having a section 8 tenant in place is a big plus. It shows that the place was already inspected and approved by section 8. Just one more positive thing to add to the properties resume.You don't have to continue renting it out to section 8 but at least you know that its an option and if you ever decide to sell that could help as well.
I definitely would be interested in keeping the current tenant if what we have been told is accurate, but I am concerned that the rent is on the low side, and I don't know if that is due to Section 8 or from the current landlord keeping the rent low.
prop is for sale for 140k, I plan on financing about 70k. Rent is $1175/mo but all the housing in the area that I see that is comparable (at least 3 bedrooms) are going for 1300 - 1500+ /mo. That would be the only reason I would want to have the Section 8 tenant removed and find a new tenant who could pay the going market rate.
I agree with @Dawn A.
There is absolutely nothing wrong with Section 8 tenants, Especially if the tenant has stayed in the property for over 10 years. I think you have a GREAT DEAL!!! If you decide against the section 8 you will be faced with possibly more renovation cost on top of the possibility of no rent for a few months until it is rented out. Plus an unhappy renter.
Just continue to do inspections on the property.
I personally do not participate in S8, and have not bought any properties with any S8 tenants, so I can't speak from experience. I have, however, heard some of the typical horror stories about S8 tenants, such as: they may not agree to raise rent to what you want to charge upon lease renewal; it can be harder to get the tenant out at the end of the lease (they may argue you're not renewing simply because they're S8, even if that's not your reason); they're not as responsible/clean of a tenant (let's face it, people tend not to appreciate and take care of something as much if they're not the one paying for it).
Clearly, these anecdotes are not universal, and I'm sure some S8 tenants are good tenants and good people. You'll have to do your own research on S8 and decide whether it's something you would like to be involved in. Perhaps once you see how the tenant maintains the unit, you'll have your answer.
What do you mean the renter has been there "on and off" for about 10 years?
Ask the seller a copy of the last section 8 inspection report. The yearly inspection report gives you a general idea of the condition of the property and the house keeping of the tenant. The inspection report outlines deficiences that needed to be corrected and general notes. The quality of the report will very by section 8 inspection. For example this report will include... leaking roof, dirty carpets needing to be cleaned, overgrown yard, rat problem, broken light covers. This report provides clues for your due dilegence. If the owner of the property does not want to provide this report... hmmm I wonder why.
This is my experience with buying property that has existing section 8 tenants.
From what I understand, the renter lived there for a few years, moved, and then moved back again. I don't know if that means she lost her voucher at some point, if she found a better deal else where that fell through, or what the situation is behind it, but that is what we were told, that she has lived there on and off over the last 10 years.
We will be getting form 17, but that's a great idea to ask for the last Section 8 inspection to see what was on it.
Thanks for all the replies and advice. Unfortunately the hunt continues for me. I went and looked at the property and it just does not look to be in very good shape. Roof is definitely ready to be replaced, siding doesn't look like it is in very good condition, and I am concerned if this tenant left, it would be hard to keep people in it because it is so tiny. it's a 3/1, but 2 of the bedrooms feel like walk in closets, not bedrooms.
Thanks again for the advice, hopefully it will come in handy for a future purchase. Back to looking for another property!
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