Section 8 in Milwaukee, worth it or not?

Question

Curious what other landlords in Milwaukee think. Is Section 8 worth it for your rentals?

If yes, why? If not, why not?

Tomer Markovich · Answer

@Daniel DeBolt thanks for sharing, that's a real answer. A good tenant and a good PM make more of a difference than the program itself. Are you still working with both property managers, or did you make a change on the market rate one?

Daniel DeBolt · Answer

I bought two single family homes in Milwaukee two years ago and the one with a section 8 tenant has worked out by far the best. Despite being cheaper and in a neighborhood not as good. The nicer market rate one was a nightmare in comparison. Credit may be entirely due to my property manager for that one (I had two) and the particular tenant. Selecting both carefully is important, though I left it to the pm. Your mileage may vary.

Leo Stein · Answer

I manage a mix of rentals and the Section 8 ones work fine when the house is ready for the inspection before the housing authority walks it. Check smoke detectors, GFCI outlets, peeling paint, handrails and working windows, because small fails cause re-inspections and lost rent days. Screen exactly like any other applicant, and remember the voucher only covers part of the risk. The tenant still needs a clean history and a reliable income. Ask your authority for their current payment standard by ZIP and bedroom count, and how long approvals are taking now. If the deal only works at the top rent, pass. General info, not legal advice.

James Jones · Answer

Exactly right, Tomer — if it only works at the higher rent, it was never a deal.

Randy Schell · Answer

Section 8 can feel like a lot of paperwork up front, so it makes sense to wonder if it is worth the hassle. One idea is to ask the local housing authority what a typical inspection looks like before deciding, since knowing that ahead of time takes a lot of the guessing out.

Randy, Bunklow

Rosina Persaud · Answer

Run the numbers on operations, not the program name. In Memphis we run 236 doors, mostly single-family and heavy Section 8, and Section 8 3BR+ rents here run $1,395 to $1,950. The program works when three things are true. First, the house is inspection-ready before the housing authority ever sees it — walk it the way an inspection will. Second, screening stays the same as for any other applicant: verified, repeatable income and a story that matches the paperwork, not just a credit score. Third, one rent payment method written into the lease, same at every house, so collection never becomes a story. If the house cannot pass cleanly or the rent does not cover the turn, pass. The voucher is not the risk. A sloppy system is.

Tomer Markovich · Answer

@Marisol Gallegos good question. On our Milwaukee rentals Section 8 has been paying above market so far, usually $100 to $200 more than the open market. Existing leases are fine, but lately on new units their offers are lower than what we used to get, so we're watching it closely.

@James Jones agree, the deal has to work on its own first. With the lower offers we're seeing on new units I wouldn't buy a property counting on that extra $100 to $200. If it only works at the Section 8 rent, it's not a deal.

James Jones · Answer

In Memphis, yes — if the numbers work before you ever think about the voucher.

I buy 3BR single-family under $100K, rehab it on a BRRRR, and I need rent that clears the 1% rule. Section 8 pays $1,395 to $1,950 for 3BR+ here, so a 3BR that would struggle at market rent can work on the program. That is the whole test: does the payment standard in your ZIP clear 1% on your all-in cost?

Do not buy a house that only works if everything goes perfect. Inspections and paperwork are part of the deal — price that time in on the front end. Run Milwaukee's payment standard for the exact ZIP and bedroom count against your all-in number first. If it does not clear 1%, pass, no matter how cheap it looks.

Marisol Gallegos · Answer

@Tomer Markovich I think Section 8 can be worthwhile, but it really depends on the property, the local payment standards, and how well the numbers work. The guaranteed portion of the rent can make cash flow more predictable, and there’s often steady demand from qualified tenants. On the other hand, inspections, paperwork, rent limits, and property requirements can add time and expense.

I’d look closely at the numbers and the local program before deciding. Also, for Milwaukee landlords, do the approved payment standards generally keep up with market rents in the neighborhoods where you invest?

Section 8 in Milwaukee, worth it or not?

Section 8 in Milwaukee, worth it or not?

Investor-friendly agents in Milwaukee, WI

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