Section 8 housing

7 Replies

A lot of investors will do a house that can qualify for Section 8 because of a higher net yield. They work but be choosy on the tenant. Some folks use Section 8 as a bridge, they fall into a hardship have a family, take pride in themselves, single parents, work, trying to get out of the system, just need help because of other variable personal reasons. However, some folks abuse the system. Typically Section 8 move outs require more attention than other tenants. They may abuse the property, tenants move out without notice etc., there also could be other unforeseen problems. Good luck should you go down this path.

I invest in Section 8 housing in the Cleveland area. There are some key points to consider.

1. Tenants have to "win" a lottery to get a section 8 voucher. These are not easy to come by.

2. Once a tenant has a voucher they are loathe to let it go. It is a valuable asset to someone of little means.

3. Most landlords get in trouble with section 8 tenants in my opinion because of neglect. We have an employee who meets with each tenant each month, does monthly walk arounds and quarterly inspections. It doesn't take long and it is not hard. We collect copays on time and charge for tenant caused damage. It is in their lease and HAP contract that they will be charged for damages beyond wear and tear.

4. The process to get a section 8 tenant is mind numbingly challenging. Only because of all the follow up with the section 8 people, the inspections, the rental offer, the move in and the annual inspections. But if you have a system in place and boots on the ground, it can be done. We do it all the time.

5. Section 8 and property management companies do not mix in my experience. If you are going to go down the section 8 route, you are better off doing your own landlording. There is little incentive in my opinion for a property manager to deal with all of the nuances of the section 8 program. There is GREAT incentive for a landlord however: namely GUARANTEED GOVERNMENT RENT PAID MONTHLY. This is a huge benefit to a landlord. If you govern your properties carefully and screen your tenants well, it is possible to make some great investments in section 8 properties.

I have had section 8 tenants for years. We have very little to none tenant related damage because we communicate with our tenants regularly and treat them like human beings deserving of our respect and compassion. Every so once in a while there will be an issue with ALL rental properties.

I personally LOVE the section 8 program and continue to make these investments.

@Faisal Sami Agree with much of what you have said regarding systems, clear communication of expectations, regular inspections, etc. The one point I would quibble with is regarding property management. As with most industries / businesses, there are people who specialize in particular niches. Most are generalists but some have areas of focus.

I own a multi-family property in Cleveland which does take Section 8 and the PM company I work with deals with Section 8, EDEN, etc. all the time. They understand the process, inspections standards, etc.

So far so good. If anyone is looking for a recommendation, happy to share as I have been pleased with them so far.

My dislike is the landlord's lease is audited and rewritten to Sec 8 approval.  As noted elsewhere on BP,  my pref is 3 month lease renewable to m/m an Sec 8 demands a full years lease.  I don't need Uncle Sam in the middle of my investment management, so I decline to get Sec 8 qualified and thus have no such tenants.

If I screw-up, let it be on my head - - I'm allergic to scape goats.

@Jeff B. - SEC 8 does not audit and rewrite a lease.  They do mandate that the FIRST lease period when placing a tenant be 12 months, and they mandate the lease contain key elements such as what appliance are included, who pays what utilities, how a tenant gives notice, what the renewal options are, etc.  The only time this causes me grief is when I place a tenant in the winter months, because normally I would roll a lease to a little longer than 12 months to get a lease expiration date in a more desirable month.  At the end of the 12 month period, the lease can be any period the tenant and landlord agree to - month to month or 10 years if you want.