How easy or complicated is Section 8 Paperwork?

5 Replies

I am trying to learn more about Section 8.  I know that it is guaranteed income because the government guarantees it.  However, what are the chances that the tenant trashes your place?  If they mess up your place then who will pay for the damage?  I am assuming that it is you.  If the Section 8 people move out, then can you rent the place to non Section 8 people?  Are there any other drawbacks to Section 8 besides the fact that they have a stronger likelihood of trashing your place and that you have to work with the government?  How does the government usually pay?  Do they do direct deposit?  Does anyone know of any other major concerns that I should be aware of?  This place would bring in a 9% Cash on Cash return assuming it would stay rented.  However, I have not yet gotten the deal...  I am just in the beginning stages...  The seller has a 1031 exchange that he is doing and needs to sell by the end of this month.  

How well Section 8 runs often depends on your local agency.

That said, I've had Section 8 tenants in 4 different states and found some consistent reasons that I personally avoid renting to Section 8 tenants.  

Yes, I have had more damage from Section 8 tenants than ones with a security deposit.  Yes, you eventually get paid.  But, you will find it is the minor repairs that are most annoying.   If a regular tenant cracks a window, you may not hear about it, but you can charge them for it when they move out.  If a Section 8 tenant cracks a window, at the next inspection the Section 8 authority will stop rent payments until you fix the window.  Same goes for little things like no battery in the smoke detector.  There are lots of little annoyances like that.  How much is your time worth?

Also, I have found that tenants with partial Section 8 are often more responsible and take care of things better than tenants with 100% Section 8.

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Thanks guys.  I appreciate your responses.  These are really great.  It is interesting that you both have such different opinions.  My friend who is an investor in Los Angeles has a person that he has known for many years in his Section 8 and everything is going well for him.  He lives in the same area as the property.  I was considering it for long distance.  I don't think that it seems like a good choice for me if it is long distance.  But I am keeping an open mind.  

Can we pick and choose section 8 tenants? Can we run their credit? look at the criminal history etc?? can we restrict and prohibit additional occupants? 

I can see it working better with a tenant that is grateful to have a SFH. 

AND could we do rent to own with that section 8 money?  Can we have any side agreements with the tenants so they fix their own home? 

can we use mobile homes as a section 8? 

This is a lot of questions.  I’ll answer below your questions.

Originally posted by @Charley C.:

Can we pick and choose section 8 tenants? 

Yes, you set criteria and screen tenants just like you would with any other tenant.

Can we run their credit? look at the criminal history etc?? can we restrict and prohibit additional occupants? 

Yes.  

I can see it working better with a tenant that is grateful to have a SFH. 

The tenant chooses the property so they generally choose the style home they prefer and can afford.

AND could we do rent to own with that section 8 money?  

Yes, I have had a SEC 8 tenant who also had an option to purchase agreement that was separate from the lease. 

Can we have any side agreements with the tenants so they fix their own home? 

SEC 8 requires that the property meet certain standards before the tenant moves in.  For this reason you would have to have the property ready.  You can’t put a SEC 8 tenant in a fixer upper house.

can we use mobile homes as a section 8? 

Yes, as long as they pass inspection.