Section 8 Housing, is it still worth it?

[Brittney McIntire]

Hi All! I am looking to purchase my second investment property and want to buy a multifamily (preferably 4 units). I was interested in making some, if not all of the units section 8 housing. I have heard mixed things about section 8 right now. Some say it is amazing while others say it has been more difficult to get properties approved for section 8 at the moment. Curious to know what section 8 investors think. Is it hard to get properties into section 8 right now? How would I vet which markets are best for this? Thank you for any insight. 

[Matthew Irish-Jones]

Quote from @Brittney McIntire:

Hi All! I am looking to purchase my second investment property and want to buy a multifamily (preferably 4 units). I was interested in making some, if not all of the units section 8 housing. I have heard mixed things about section 8 right now. Some say it is amazing while others say it has been more difficult to get properties approved for section 8 at the moment. Curious to know what section 8 investors think. Is it hard to get properties into section 8 right now? How would I vet which markets are best for this? Thank you for any insight. 

 Section 8 is C/D class investing.  That means potentially higher returns, as well as higher risk.  

Our data shows C/D class investing can work, but when it goes wrong it goes further wrong than A/B class investing.  

Some things to consider: A roof does not change cost based on asset class, so if you purchase a cheap property that needs a lot of CapEx, you can get underwater quick.

Higher Risk = higher chance of property damage.  Property damage can cost years and years of cash flow.  If someone does 20K in damage, you have an $800 deposit to cover and almost no recourse on collecting for damages. 

People fall off of section 8 frequently and become responsible for the rent themselves, that can and often does lead to an eviction.