Landlord getting into section 8 rentals. Any Tips?

Question

I'm in the process of converting my properties into Section 8 rentals and wanted to connect with experienced landlords who have navigated this space. Have any of you faced challenges with getting your properties valued correctly for rent under the Section 8 program? The HUD guidelines suggest a certain rent amount, but after inspections, the figure came back significantly lower than expected.

Additionally, do you have any general tips for working within the bureaucracy of the Section 8 program? What should I expect in terms of timelines, paperwork, or other administrative hurdles?

Any insights or advice on these topics would be greatly appreciated. I'm still relatively new to this, and I’m looking to learn from those with more experience. Thank you in advance for your guidance!

Jonathan Small · Answer

I have had section 8 rental since 2008. The longest tenant stated 16 yrs. They took care or the property. They paid their portion of the rent.

I have found a lot of investors bring their personal or political feelings into the investing conversation. I too have feelings and thoughts about the programs.

After I get past my feelings, I have found that I consistently get paid and vacancy is low. Low cost housing is a huge motivator to change behavior and keep their housing voucher. Send me a DM is you want to discuss.

Nicki Thiessen · Answer

As others have stated, there are Income discrimination laws in Kansas City so if you are an investor with rental properties in this city, make sure you understand the regulations.  One size does not fit all and I wouldn't take much stock in any advice stating that housing assistance tenants are better or worse as a whole.  The specific assistance organization, the screening of the tenant, the property, and the PM company that should be communicating with the tenant all play a role in the success of your investment in regards to tenants. Similarly to what Mark Cruse stated above, provide dignified housing, respect your tenants, and either have a good PM or make sure you are updated on the regulations and best practices for placing tenants.

Mark Cruse · Answer

I fully concur with this. I just acquired a duplex, and the tenant has been there 15 years and takes care of the place like it's her own. Not only do some landlords allow their personal and political ideology to be in the mix, but many do not understand how to manage this population. If you already have low respect due to a pre-determined mindset, it's hard to approach the community with an even or reasonable keel. If they don't know how to screen and get the horrible tenant, they apply it to all. If the tenant hates them and they destroy something, it's a generalized depiction of what they think of all Section 8. There are several great tenants on Section 8 but the overall ideology is never reflective of them. Like I have told many, there are several people who know how to make this work, and you are one of them.

When people take advice on here, they need to consider all things involved and not run with one perspective. It was just last week a landlord here said it doesn't matter if the tenant hates because they all do, so it really doesn't matter how you run it.

Mark Cruse · Answer

I repeat this often in this forum; Understand how to screen, understand the community you are serving, understand the culture and treat your tenants with respect. If it's just a money grab and there is no desire to associate with the aforementioned, you will most likely be on the losing end and feel very negative about the program. There are several people who make this approach work well for them so It no reason you cannot be one of them.

Greg M. · Answer

Kansas City has source of income discrimination laws. Therefore, only accepting S8 is likely a violation of this law and can get you sued by the city (unlikely) or a prospect (way more likely).

S8 is the business of last resort. There are many people here who will tell you that S8 is great as the rent always arrives and some places even pay higher than market rents. There are many more that will tell you horror stories.

Why someone willingly wants to work with a government agency that will slow down turnover, dictate rents and rent increases, and dictate repairs is beyond me.

Drew Sygit · Answer

@Nicholas Stout S8 rents are set by the number of bedrooms, that's pretty much it.

The HUD guides are just that - guides!- Each Housing Commission sets their own rent rates, based upon market rents for Class C properties in their area.

You should be able to find an online list of S8 rents per bedroom for your area. If not, call the S8 office and ask.

Hope you didn't pay anything to an S8 "guru"!

Alex Olson · Answer

Know the rules, know the tenants, know how to get paid and know the repercussions. Section 8 is hear to stay.

James Mc Ree · Answer

I think you are making a mistake in switching over to Section 8 if you are successful with what you have/had now. You are excluding possibly the majority of available tenants to focus on the most difficult to manage and the ones who are most likely to leave your property heavily worn and damaged, all other things being equal. I don't know your area, so I can only write to my experiences in PA.

You don't really convert your property to Section 8 (S8), but rather sign a lease with a tenant who happens to be funded by S8. S8 goes with the tenant, not the property. All of the lease signing and tenant vetting is the same as a normal lease. The S8 process begins with the tenant sending the signed lease to the housing authority along with your application.

Regarding rent, don't expect to get the published FMR. You may get it, but the table shows the maximum they will pay. They are far more likely to pay around market rent regardless of what the table says. As mentioned above, have good comps.

Take a look at the S8 list of available properties so you have an idea of what your prospects are coming from. You can get that from your local S8 office. In my experience which was a while ago, it was a list filled with pits of despair. Those places were awful and barely habitable, but it is what S8 prospects are being offered. It is a very low bar for you to meet, but keep in mind that is also the level of upkeep some S8 tenants might have in mind. Landlord beware.

S8 will schedule an inspection for your property. You need to pass the inspection to get paid by S8. In my area, they actually require a little more than the local municipality and lately have been especially strict on cracked paint because they were recently sued and lost. You can get a checklist of what they look for from your local S8 office. Total turnaround time can be within the same month if you start at the beginning of the month, but don't be surprised if it continues into the next month.

S8 in my area outsources the inspections. They can be very thorough or not even superficial. The first one is likely to be rigorous. After that, it may depend more on the workload of the inspector. In my area, the inspectors are massively overloaded and often skip through a nice house quickly while telling me the last house they were in set them back 2 hours because there were so many violations. Lesson: Keep a nice house and inspect before the inspector.

Inspections then occur annually and you don't get paid if your property fails until you pass again. Try to avoid scheduling inspections for the last 10 days of the month as you will need time to fix the defects and get another inspection. They probably won't hustle out just because it's the end of the month and you won't get paid. In that case, you don't get the next month's rent until the following month assuming you pass in the next month.

Upon approval, S8 will tell you and your tenant what S8 pays and the tenant's responsibility.  They have a formula based on the property and its features as well as the tenant's income and expenses. The S8 portion will very likely arrive like clockwork on the 1st of the month.

One strong motivation for the tenant to pay is they lose their voucher if they are evicted or leave owing you a balance. So, threatening that means the tenant could lose something they waited years for and is very valuable too them. They are very likely to respond, but keep in mind you can't get dollars from a turnip.

My experience is wear and damage are higher with some S8 tenants and not at all with others, just like regular tenants. Some of my S8 tenants keep the best houses and my worst tenant is a regular tenant. The S8 group as a whole has a reputation for greater wear and damage, so don't be surprised. Vetting your prospects well helps, just like with a regular tenant. Some landlords have the mistaken impression S8 is responsible for damage expenses. They are not.

I recommend you pursue the best tenant for your properties and disregard how they pay your rent. Just like regular tenants, try to avoid S8 tenants who can barely afford your place. Regular tenants may have more of a support system when they have bad financial luck. S8 tenants often have less of a support system as family members might be in the same situation.

J. Mitchell Bernier · Answer

@Nicholas Stout Welcome to the section 8 space!

We have had voucher tenants in two separate markets and have found them to be our top performers overall. Nathan is right regarding timelines, need to plan for 60 days for anything you want. However; in Georgia if the semi-annual inspection finds something wrong, you have to get it done in 24hrs. So be prepared for that. I will say my personal experience has been better than Nathan's regarding the cleanliness of the home and overall tenant experience.

Our voucher tenants tend to stay much longer than our cash paying tenants. Like 3 to 5 times longer. Plus, in Georgia, the tenant can be kicked off the program if they trash the property or don't pay their portion. So, most treat that voucher as a golden ticket and will do just about anything to not lose it. There are outliers of course. We have had no trouble getting our rents increased as long as we have three comps to support it and send in our request in a timely manner, 60 days out.

One suggestion, go to your states housing page and find the inspection sheet they use and keep a copy of it when you walk your home. That way you can have everything checked off before the inspector comes. Also, take as many pictures as possible before the tenant moves in, again this protects you in case of damage caused by tenant.

This is a copy of the inspection sheet in Georgia we use: Housing Inspection Sheet

Good Luck!

Nathan Gesner · Answer

You'll definitely need more time to get things processed. I'm sure it's a little more efficient in larger cities, but my market requires up to 60 days to get approval.

Lower your expectations with Section 8 tenants. In my experience, a large percentage of them are fully functional adults that refuse to take personal responsibility for their lives, which is why they are receiving free rent from taxpayers instead of working for a living. They don't communicate well, don't take responsibility for their actions, do not clean or maintain homes well, and will shaft you when it's time to leave.

Other than that, it's a pretty good system.

Landlord getting into section 8 rentals. Any Tips?

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