Trying to Wrap My Head Around Section 8 Rentals in Ohio

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Trying to Wrap My Head Around Section 8 Rentals in Ohio

Jeff G.Pro Member
Investor · Wethersfield, CT · Member since 2013 · 371 posts · 191 votes

I have my eye on the Cleveland and Akron OH markets for my first rental property. I'm out-of-state, in CT where properties are more expensive and property taxes are extremely high. Those markets caught my eye, not just because of relatively low property prices but because it looks like it would be straightforward to convert the properties to Section 8 rentals and make significantly above market rents in some zip codes. However, I know darned well that appearances can be deceiving.

Can someone please tell me what I don't know — but should — about Section 8 rentals in Ohio?

I've collected the following nuggets of information about Section 8:

* I can't have a property pre-approved for Section 8, I have to wait until I have an otherwise qualified Section 8 applicant in the pipeline.
* The initial approval process takes 1-2 months. So either the property is vacant for 1-2 months OR a Section 8 tenant is coming in to replace a standard tenant.
* Section 8 requires additional inspections.
* Vouchers are sized to bedroom count based upon family size.

These parts more or less make sense. But, now I'm hearing rumors that despite the "fair market rents" published on the Section 8 site it's entirely possible to NOT get anything like the published maximum. Is that accurate and, if so, how do I know enough information ahead of time to factor that into my numbers? My basic plan was to take the published maximum and shave off $50-$100 and target that price point. Now I'm questioning my underlying assumptions. I could really use some clarity here.

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  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    3y

    I’ve noticed that they actually pay here in Florida pretty close to market rents!

    You have a great list of bullet points, one thing to add on there. Once you get your inspection done, and lease signed, it takes months to receive your first payment, and god forbid you miss your deadline for renewal etc… i’ve had them hold money until you get everything signed, and don’t usually pay the arrears😳

    The other positive note, my hedge fund I work with received all their rent money during covid/pandemic unlike some that got shafted on theirs 

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  • Jeff G.Pro Member
    OP
    Investor · Wethersfield, CT · Member since 2013 · 371 posts · 191 votes
    3y

    @Kim Meredith Hampton, wait, what? So, you go through that process and Section 8 eventually starts to pay you for your new tenant and then won't give you any of the arrearage?

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  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    3y
    Quote from @Jeff G.:

    @Kim Meredith Hampton, wait, what? So, you go through that process and Section 8 eventually starts to pay you for your new tenant and then won't give you any of the arrearage?

    I’m referring to the renewal time, not the new first time. We have had it happen. There are some great upsides, and then again their are some downsides. The one thing I do know, is that  A LOT of people can’t afford much anymore, and these are great programs for them to afford housing 
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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Jeff G.:

    Kim is right. There's a lot of extra paperwork involved to get your rental approved for a Section 8 renter. Some places pay more than market rate, some places (like mine) pay less than market rate. There's more paperwork every time you move. And, to top it all off, you are renting to someone that is probably fully capable of earning a living but they've somehow managed to latch on to the government teat and live on easy street. I've rented to dozens of Section 8 Tenants and they are typically below-average when it comes to paying on time (they pay a portion of the rent), communicating, and maintaining the home.

    Because my state doesn't require it, I no longer accept Section 8 Tenants.

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    3y
    Quote from @Jeff G.:

    I have my eye on the Cleveland and Akron OH markets for my first rental property. I'm out-of-state, in CT where properties are more expensive and property taxes are extremely high. Those markets caught my eye, not just because of relatively low property prices but because it looks like it would be straightforward to convert the properties to Section 8 rentals and make significantly above market rents in some zip codes. However, I know darned well that appearances can be deceiving.

    Can someone please tell me what I don't know — but should — about Section 8 rentals in Ohio?

    I've collected the following nuggets of information about Section 8:

    * I can't have a property pre-approved for Section 8, I have to wait until I have an otherwise qualified Section 8 applicant in the pipeline.
    * The initial approval process takes 1-2 months. So either the property is vacant for 1-2 months OR a Section 8 tenant is coming in to replace a standard tenant.
    * Section 8 requires additional inspections.
    * Vouchers are sized to bedroom count based upon family size.

    These parts more or less make sense. But, now I'm hearing rumors that despite the "fair market rents" published on the Section 8 site it's entirely possible to NOT get anything like the published maximum. Is that accurate and, if so, how do I know enough information ahead of time to factor that into my numbers? My basic plan was to take the published maximum and shave off $50-$100 and target that price point. Now I'm questioning my underlying assumptions. I could really use some clarity here.


     The published maximum is normally for a new build completely renovated property. You need to work back from that

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  • Jeff G.Pro Member
    OP
    Investor · Wethersfield, CT · Member since 2013 · 371 posts · 191 votes
    3y

    @Remington Lyman, that makes sense unfortunately. How do I learn to eyeball that? Keep in mind I'm several states away. I assume someone somewhere has a handful of rules of thumb written down that are reasonably accurate for this kind of thing.

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    3y
    Quote from @Jeff G.:

    @Remington Lyman, that makes sense unfortunately. How do I learn to eyeball that? Keep in mind I'm several states away. I assume someone somewhere has a handful of rules of thumb written down that are reasonably accurate for this kind of thing.


     Learn through experience, ask your property manager, as other investors, or ask your Realtor

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    3y
    Quote from @Jeff G.:

    I have my eye on the Cleveland and Akron OH markets for my first rental property. I'm out-of-state, in CT where properties are more expensive and property taxes are extremely high. Those markets caught my eye, not just because of relatively low property prices but because it looks like it would be straightforward to convert the properties to Section 8 rentals and make significantly above market rents in some zip codes. However, I know darned well that appearances can be deceiving.

    Can someone please tell me what I don't know — but should — about Section 8 rentals in Ohio?

    I've collected the following nuggets of information about Section 8:

    * I can't have a property pre-approved for Section 8, I have to wait until I have an otherwise qualified Section 8 applicant in the pipeline.
    * The initial approval process takes 1-2 months. So either the property is vacant for 1-2 months OR a Section 8 tenant is coming in to replace a standard tenant.
    * Section 8 requires additional inspections.
    * Vouchers are sized to bedroom count based upon family size.

    These parts more or less make sense. But, now I'm hearing rumors that despite the "fair market rents" published on the Section 8 site it's entirely possible to NOT get anything like the published maximum. Is that accurate and, if so, how do I know enough information ahead of time to factor that into my numbers? My basic plan was to take the published maximum and shave off $50-$100 and target that price point. Now I'm questioning my underlying assumptions. I could really use some clarity here.


     lol....You'd think they wouldn't post rent amounts on their site unless those where the rent amounts they'd pay......But you'd be wrong lol.

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