Apartment Value when replacing section 8 tenants

[Marc Izquierdo]

Hi Everyone.  

I was wondering what the effect is on the value of an apartment building when replacing Section 8 tenants.

For example, would two identical buildings be worth the same if their rents were the same (same NOI) but one had all section 8?

[Ray Harrell]

@Marc Izquierdo, section 8 tenants generally have little to no skin in the game, so really don't care about your plumbing or walls or how the place looks. If you get a car for free are you going to treat it the same way as if you are making $700 payments every month? Probably not! If you have a car for free and it gets dinged, you say, "Oh well, it was free!" If you're paying $700 a month, you get pissed and do everything u can to prevent getting dings.

So the real value of section 8 vs not section 8 is the tenant and wear on your property.