What are your experiences with Section 8 Tenants?

Question

Based on your experience, what are the Advantages/Disadvantages of investing into California properties with Section 8 tenants?

Michael Ealy · Answer

I have about 500 section 8 tenants. I love them. Guaranteed rent baby!

I am OK with section 8 because just like market rent tenants, I prescreen them and I provide the best housing they can find so I attract the best section 8 tenants.

Sometimes, landlords struggle with section 8 because they don't screen tenants and they are cheap. Even though section 8 is government subsidized housing for the lower income population, it does not mean that as the owner, that you provide them crappy apartments. If you don't renovate and update the units as per section 8 requirements, you won't pass section 8 inspection and if your units are marginal, it will attract the not so good tenants.

Kurt Jones · Answer

In our experience, they are just like any other tenant class. Meet them screen them and make a decision. Some will be good some may be bad but that’s part of the residential rental business

Patti Robertson · Answer

@Manny Awasom To add onto what @Michael Ealy said, it is pretty unusual for a Housing Authority to pay less than market rents as an overall budget.  If they are paying less in your case, assuming you asked for a higher rent, either the tenant has a voucher with a bedroom size less than the number of bedrooms in your house, or the tenant didn't have enough income at the time you submitted the RFTA.  So often tenants call to see a property when they are "between jobs".  A tenant with no income will not get approved for market rent in my area.  I require a SEC 8 tenant have at least one months rent in verifiable, dependable income. Same goes when you are submitting a request for a rent increase.  Before you submit your rent increase request, find out what your tenant's income is.  If the tenant just had a baby and is home on maternity leave, for example, wait until after she goes back to work to submit your request.  I always submit rent comps with my increase requests, so I know I will always pass the reasonableness test for my rent amount.  Choosing a tenant with enough income will ensure you will also pass the affordability test.

Patti Robertson · Answer

@Michael Ealy - AMEN to everything you said!!!

@Shawn Choi -  I love SEC 8 too.  85 of our leases are voucher holders.  It's my preferred tenant in a low income neighborhood.  All low income tenants, SEC 8 or not, are higher maintenance than higher income tenants. There is a TON of info and advice on BP about the program.  Just search for it and you will have days of reading material.  My fingers got tired typing my experience over and over, so I put it in a blog.  Here's a link if you want to check it out.  https://www.biggerpockets.com/member-blogs/9232/55313-intro-to-section-8---your-perceptions-vs-my-realities

Nik S. · Answer

@Michael Ealy

I like section 8 tenants too! My recommendation for others would be to utilize S8 tenants where the asset location requires them...DON’T utilize S8 in higher quality assets.

I have some buildings that are mixed, some S8 and some financially responsible tenants. Other buildings are exclusively financially responsible tenants. Mixing is OK just know you’re location and asset class.

People who don’t know the section 8 system don’t really know the requirements. In my area, S8 inspectors and fairly reasonable and we adhere to ALL requirements, it’s not that hard.

Like Michael said, you screen (credit/background) S8 tenants just as you would a finically responsible tenant. In my area, there is a long waiting list on Section 8 vouchers, tenants generally don’t want to lose their voucher status so they adhere to the program rules....not all but a lot do!

Manny Awasom · Answer

@Michael Ealy Ok I see. I was not sure if I had to go through the tenant or the housing authority... but that makes sense. Thank you!

@Patti Robertson Thank you for the clarification and for that information! The current rent is not so much below market rents but rents in the area have been increasing each year so in anticipation for next year (if i was to increase rent on the unit), wanted to be sure of the process. But I like that strategy and approach. Will definitely keep that in mind. Thank you again.

Trevor Ewen · Answer

@Shawn Choi

Had a very good experience with my Section 8 tenants. This was in Virginia, but since it's a federal program, the lessons should transfer.

As others have said. The guaranteed rent is very nice. The scarcity of Section 8 vouchers has also made them desirable enough to ensure good behavior. Even though we sold the property this summer (because we liked the sales numbers), I would happily do it again.

Tony F. · Answer

Have had good luck. The tenants know that they will lose their benefits if they screw up. The local housing authority seems to want to help keep good tenants in our units so we are willing to keep making them available. If we evict, the tenants leave gracefully they can move to another section 8 funded property, if they cause problems they loose their voucher. The approval of the unit process with the housing authority doesn’t happen fast here, and can result in prolonged vacancy the first time you convert to sec 8. They are government employees, they don’t move quick like the rest of us.

Matt Vezina · Answer

Your experience with section 8 will vary depending on the state/local housing authority in your area.  I've had two tenants in the program who have both been excellent, elderly folks on fixed incomes.  My state's housing authority is easy to work with and the inspections are nothing to worry about unless you're a slumlord.  Keep in mind that the money is not guaranteed in the event of a prolonged government shutdown, and you may not evict a tenant for the housing authority's failure to pay.

Bob Prisco · Answer

@Shawn Choi just like ALL tenants its about screening .  I have done 100s of sec 8 and other govt programs, again screen them properly .

What are your experiences with Section 8 Tenants?

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