5 Unit Property with Section 8 Housing
I have recently come across an off-market deal for a 5-unit property that has 3-units listed under section 8 housing. I'm in Boston and was wondering what experiences other people have had with buying section 8 units?
I have a number of units rented out to section 8 tenants in Boston. There are plenty of pros and cons, but my experience has been overall positive. Happy to answer any specifics or talk further. That sounds like it could be a great opportunity for you.
Sounds like it could be a great opportunity. This gives you a chance to increase rents and get a direct deposit check monthly. As long as the tenant is respectful and treating your property right, there's no difference in S8 or market renters - it's all an appropriate gamble.
I don't have experience in Boston but I do have experience with a 5 plex and section 8. The 5 plex we have has been a PAIN to manage. The walls are thin as it's an older single family house that was converted to a 5 plex. The tenants hear & smell everything from the neighbors.
With lower class tenants you'll potentially get all kinds of fun....we've had the police called cause one tenant was kicking his girlfriend in the head in the hallway, a couple good tenants had criminal boyfriends that moved in with them (without our permission) and were breaking into the other apartments stealing ...lost one of our good tenants cause his apartment got robbed when he went away for the weekend, constant complaints of weed and smoke smells..if one tenant smokes they all complain constantly. Oh and one tenant on the 3rd floor decided to have a water fight inside their apartment with water gushing out below. We've had tenants bring in pitt bulls (we strictly don't allow dogs) that were aggressive towards the other tenants. We've had multiple tenants we kicked out because they were bringing in their bad friends/family to live with them...when these poor tenants rent the larger units then almost guaranteed they will have people moving in with them at some point...their friends/family who are out of prison and no where to go kind that terrorizes the other tenants. Oh and we also had bed bugs cause one tenant had them and then infected the whole building...it cost 2K to treat the property.
We eventually have this building under control after huge headaches and good tenants now. I have about 12 security cameras set up all over the property & super strict with screening. But these lower class multifamily are tricky to manage. One bad apple tenant can ruin the whole place. And if you get a bad PM who doesn't really screen tenants & just puts a warm body in then it can REALLY screw you over and cost thousands and thousands of dollars..much worse than a bad tenant in a single family. You'll need to be nazi like diligent with who you let rent since it's going to effect all the other tenants there & this sounds like a lower income property.
As far as section 8 I'm a fan of the program as long as the property is in good enough shape to pass inspection. You just have to screen the tenants same as you would anyone. But our section 8 tenants have been some of our best. Long term and clean and respectful ....if you choose the right ones.
Hope this helps you :)
@Laura Williams, glad to see you are still active in KC real estate.
@laura
@Laura Williams Thank you so much! Those are great things to consider that I hadn't thought about. Do you screen with simply a traditional background check?
Well the first thing we did was to fix up the place and added a washer/dryer to the lobby so the tenants have a place to do laundry & don't have to go to a laundry mat. I think having laundry in the building is a big deal for getting good quality tenants. We also gave them free wifi as part of the rent ...I had to get wifi anyway for the security cameras. Sounds like a small thing but for someone who is on a tight budget having an extra $60-80/month they don't have to pay for wifi is a big deal. So we tried to make it as nice and clean as possible to attract more and better tenants & clear out the riff raff.
Then for screening I have a strict no criminal policy, no dog policy and no smoking & no one moving in with them without permission so if there's any issues I can point to that in the lease and kick them out. I've found that the credit history is usually the best indicator of tenant quality. The good lower income tenants may not have high credit scores but there isn't anything really bad on there like collections or non-payments & they have a history of paying bills on time. Also we check the landlord references....anything bad with previous landlords is a no. I also try to get older or retired tenants ...at least one or 2 in the building who are always home to keep an eye on things. I advertise it as a non-criminal building in the listing to discourage bad kinds from even applying & attract the good people who don't want to live around that. Our main issues that caused us so much grief was the property manager we first had managing it. He was placing people in there without running background checks...we assumed he was but he wasn't and then we found out the hard way when we started having big issues.
Good tenants are good tenants. Bad tenants are bad tenants. I don't think Sec 8 has much difference than market renters. Good luck! and GO FOR IT
As a long time property manager, I have had great tenants who are Section 8 approved. The good thing is that the majority of the rent gets paid by Section 8. The rule of thumb that I always use, is to be sure to get a new application from all of the existing tenants once the property changes hands so that you have a good knowledge of their history, contact information and past rental experiences.
I have section 8 tenants in Florida. I have not had any issues. I am not sure why section 8 scares people off. You have a choice on who you put in your units. Vet them out just as you would any other tenant. They do some inspections to make sure units are safe/livable. Rent is never late!