I recently posted an Ad for my 3br for $2000 in Brooklyn, NY. It is a 2 family house. My PITI - 3000. I am currently getting 1700 for the 2 br unit. I have 2 potential tenants. A Section 8 family with a smoker for 1900 in which section 8 will cover 1600 and tenant covers 300. I have another family interested with good credit 35x rent income. But is only willing to go up to $1800. Should I rent to section 8, rent to family for $1800 or keep looking. The apt has been on the market for a month and a half. It is in a appreciating working class neighborhood in Brooklyn.
It's a saying in Real Estate - the first offer is most likely your best offer a large percentage of the time. I can't answer the question but you should decide on one. A month has passed with no rental profits.
Updated over 3 years ago
Mike I also forgot to mention as a landlord you want to know the "Fair Housing Act" http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws/yourrights
Do you have any other property with Section 8 Tenants?
Are you in need of the money from the rent, being that it has been on the market for a month in a half and not rental income is coming in?
Here is what it all boils down to..
$100 extra rent a month compared to a tenant that smokes and is on section, You definitely have a guaranteed $1600 coming in from the government each month the $300 is not Guaranteed..
$100 less to a tenant with a Great paying job, Great credit score, None of the rent is guaranteed but with the high credit score their is a great chance you will be paid each month and you can't guarantee that they won't smoke in the home..
I would go with the tenant that isn't a smoker.
The quality of the tenant wins out over the extra money in my experience.
Section 8 is often a bureaucratic mess and it very well will take a month for them to do the inspection and get the person in. So you might lose more in waiting than the $100. And the smoker will probably smoke inside, so plan on repainting. I would probably go with the non-Section 8. But it's a judgement call of course.
Did you mistype or does the nonsmoking market tenant really make 35x the rent. If so I'd easily go with them.
Smokers will cost you more money. They will smoke indoor or bring the smoke smell into the unit on their clothing and other things. To clean up a unit after a smoker usually costs us about $2000. That is why we no longer rent to smokers.
Section 8 is great for landlords in some cities and not so good in other cities. It really depends on how well the program in run. Most are run through a local housing authority. We've had a great experience with it. It has been good to us and to our tenants.
So the question for me would not be Section 8 or Lower Rent. It would be smoker or non-smoker. I would decide by the quality of the tenant and overall picture, not by their source of income. I would also be willing to accept below market rent for a really good tenant.
Well, it depends... I'm always on the hunt for a long term tenant; which equals less turnover and vacancies. With my experience, I have noticed that those tenants with great jobs, cash, and good credit scores tend to lease for a year, maybe two. Afterward, they tend to get a mortgage of their own and buy a home of their own.
With section 8 tenants, they tend to be longer term tenants... I screen them as usual (rental application)... You want to know who's going into your unit. I also ask their counselor/ case manager about their rental history (the good the bad and the ugly) since they've been on the program. Section 8 usually keeps a file on all of their recipients. Those section 8 tenants who have been on the system longer tend to have a more accurate report of their tenancy. Ialso take note of how their car looks every time I meet with them... If it's clean, they may be neat and clean as well. Another thing I do is visit where they currently live, unannounced. Or better yet, when they turn in their rental application, ask if it's ok for you to go check out their current residence... RIGHT NOW!!! Drive over to their current home and whatever condition you find the property in, is more than likely what yours will look like as well. My experience so far with section 8 has been pretty good... And they tend to be long term tenants... Especially if your unit is not in a typical section 8 part of town - lower end... And may be worth forfeiting the extra month's rent for them... You'll make it up in the long run. Be sure to take plenty of pictures and a video walk through of the unit before they move in... And try to include them in the video so you have proof of the condition of your unit upon transfer of the unit to them. Hope this helps...
I entirely agree that with only a small % difference in rent between the two, I would definitely be choosing on the basis of smoker v. non-smoker, and leaning to the non-smoker. You're in NYC and in a rising neighborhood. You should be able to re-rent quickly if there is turnover.
Hi, Andrew Syrios is right. I manage a property in Brooklyn like you. I have two Section 8 tenants(one through NYCHA and one through a state housing agency). The one through NYCHA took months to get her in because I needed to get a form from NYC govt. Also, NYCHA didn't ask me for the form from jump. Having said that, I have a great tenant and great credit risk given the government guaranteed payments. I should also say that I am in East Bed Stuy and literally had 30-40 people see the apartment and turn it down. But, given the real estate boom in BK, in little over a year, the apartment has gone from almost unrentable to being underpriced. Good luck.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!