I am purchasing an REO MFH which i just found out is all section 8 tenanted. From what i can see from the hall ways and the one apt i got access to, the owner nor the tenants maintained it well (mainly cosmetic). My question is, can i simply evict all the tenants in order to remodel the property to resell to an investor vacant? If so, how long is the process and what do you have to do/prove? I assume i would need a specific reason to do so? To my knowldge the building is not rent controlled/stabilized since its actually fairly new construction (5 years old)
If not, what other options do you have? Just cash for keys?
If anyone is familiar with what the going rate is for cash for keys in the queens/brooklyn market, i'd appreciate it.
Also, how do you go about finding out what the tenants have been paying in the past via section 8? I know this sounds odd considering i'm the owner now but i'm a silent investor in the purchase and this is being run by my partner who doesn't like to share his trade (yes this is not the ideal partnership!)
usually i would tell you the lease goes with the land. but since it was purchased reo, that changes everything if i'm not mistaken. my opinion would be contact section 8 about have they been making payments or were. See who is and isn't. those who aren't get them out asap. those who are, try to get them to want to leave with a cash for keys offer or contact L and I on yourself, get them to shut down your home for inhability..... ( i prefer to keep the money coming in. but they may force everyone out.)
also try talking to the tenants individually try to work something out. Even if it involves you paying to get them out because you want to rehab their current residents.
If you have the voucher number call up Section 8 and ask. If you had the prior owner's financials and it was direct deposit from Section 8, the voucher ID should match up.
Is the NYCHA or the state agency Section 8 program? There are definitely two Section 8 programs(I know because I have two tenants under different programs). I think there is one other.
I just did a bunch of research on this, and honestly, I think your best bet is to consult a New York lawyer who specializes in Section 8. I just Googled "New York Section 8 landlord lawyer" and a bunch popped up.
From what I read, you can only terminate Section 8 tenants for cause. I looked up the HUD rules for terminating tenancy, and everything was about "for cause" issues. I couldn't find any info on when a new owner inherits these tenants and doesn't want to participate in the program.
On the one hand, this would seem like there's no rule against offering them cash for keys, but it seems like the entire process of changing owners, must involve the PHA (Public Housing Agency). Payments stop once they know the property has been sold, until the new owner is verified and signs a new contract. And they have to sign off on all contract changes, so they may have to also sign off on any cash for keys offers, too.
At any rate, if I was you, I'd consult a lawyer first. Of course, you could always just call the PHA first, but they may not be on your side as far as helping you take another Section 8 property off the market.
@Matt Lane , Im a landlord who has section 8 and non section tenants.
Your first action should be to contact the city's Housing Authority ( you can google it or just go to the property, introduce yourself to the tenants as the new owner and ask for the section 8 phone # and case manager name(s)). When you call the Housing Authority, give them the address and apt # and they will put you in contact with the case manager(s) of all the section 8 tenants. Tell them you are the new owner and provide them with some proof. They usually ask for a copy of the deed.
Once that's done, you can ask them which tenant has a year lease and which ones are month to month. Note that when a new tenant moves in, the initial lease is 1 year. After that, the owner can either re-sign a 1 year lease or go to month to month.
With the proof of ownership, they should be able to change the paperwork ( read you will have to sign new contracts with them) and start paying you at the beginning of the following month. The sooner you contact them the better or they might keep paying the previous owner.
If you decide that you want them all out, you might be able to negotiate with the housing authority. Keep in mind that they might not be willing to do so until the lease expires which would be their right since the lease must be enforced regardless of the ownership. The tenants who are on month to month are easier to get out. The Housing Authority will just issue them a new voucher and they will need to find a new place. For the rest, you can find out how many months are left on their lease.
After you speak with the HA you should contact the tenants ( go to the property) and introduce yourself.
You do not need to consult a lawyer ( at least not at this time) and you do not need to do a cash for keys transaction which might be illegal for section 8. Good luck!
Thank you very much, this is very helpful! I have already met some of the tenants to inform them that we are the new landlord to which they responded that section 8 pays for them but I didn't know better to ask for their specific case officer.
Once again hanks for the clarity
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!