Investor · Mounds, OK · Member since 2015 · 22 posts · 1 vote
I am buying an eight unit complex. It only has three units rented, drastically under market I might add. Two of the tenants are section eight. All of the tenants have been there for 16+ years. All of the tenants take very good care of the place.
My question is whether I have to allow new tenants to be section eight. I'm bound to these two contracts already in place, but don't necessarily want to have to do more unless I decide to down the road.
You can't legally deny someone because they are "section 8" prospects..you can, however, deny a tenant for other speculations, such as bad credit report, poor rental history etc..
I don't see why you wouldn't want to rent to section 8 prospects though? If you already have two tenants, that means your rental unit has been approved..your tenants are screened (since they have to be screen through the housing authority) and you get to promote your rental place for free? Most Section-8 friendly rentals get rented quicker than non..and it's just a little extra paper work for you, plus the random inspections..which scrutinise the tenant more than the landlord in my opinion..
You can't legally deny someone because they are "section 8" prospects..you can, however, deny a tenant for other speculations, such as bad credit report, poor rental history etc..
I don't see why you wouldn't want to rent to section 8 prospects though? If you already have two tenants, that means your rental unit has been approved..your tenants are screened (since they have to be screen through the housing authority) and you get to promote your rental place for free? Most Section-8 friendly rentals get rented quicker than non..and it's just a little extra paper work for you, plus the random inspections..which scrutinise the tenant more than the landlord in my opinion..
One of the simplest ways to avoid section 8 tenants is to look up your FMR (Fair Market Rent) and charge rent that is above it. If they cannot afford their portion of the rent, they cannot qualify. They usually know their own limit. For your sake, I hope you're getting an amazing deal on an empty 8-plex.
I'm sure you know your business better than we do, but the question is why is there only 3 of the 8 units currently occupied? Is there something wrong w/ the owner or the property? I see too many times where investors treat bad properties like many women treat bad men. They can "fix" them.
Good luck
BTW, I LOVE Section 8. I know the rent is going to be paid and if they do something wrong, they loose their voucher which is more valuable to them than it is to anyone.
No you're not bound to accept new Sec 8 tenants, neither are you bound to keep the ones you have once their lease is up. Sec 8 is a voluntary program and you absolutely can refuse to accept it in all but a few states. Those states have "income source" as a protected class and as far as I know are only the west coast (CA, OR, WA) and the new england area (MA, CT, VT, NJ ect)
@Account Closed In most states you are not required to accept Sec 8, and as such if you choose not to you could deny processing an applicant that is using a voucher.
The property has had por management for quite a while now. The owner is out of town and he got burned by the third party (they took off with rent, records, etc.) he tried using as management. He's owned it since '76 and used to manage it himself when he lived here.
I just put a bid in on a Section 8 property. It is a 5 unit apartment but only 4 are currently Sec 8 Certified. I have been told by the Sec 8 rep in my area that once a section 8 propertiy is purchased the new owner does not have to apply for section certification, thereby making it impossible for that new owner to accept section 8 funds.
What if the old owner forwarded the rental funds from section 8 to the new owner? And the new owner accepted the funds? Is the new owner now contractually obligated to the tenant and section 8?
You can't legally deny someone because they are "section 8" prospects..you can, however, deny a tenant for other speculations, such as bad credit report, poor rental history etc..
I don't see why you wouldn't want to rent to section 8 prospects though? If you already have two tenants, that means your rental unit has been approved..your tenants are screened (since they have to be screen through the housing authority) and you get to promote your rental place for free? Most Section-8 friendly rentals get rented quicker than non..and it's just a little extra paper work for you, plus the random inspections..which scrutinise the tenant more than the landlord in my opinion..
You make some good points here!
With you already having the property; or atleast a few units approved, for Section 8, what is your thought process on not using Section 8 tenants moving forward?
My personal experience is that non section 8 tenants don't play well with section 8 tenants.
Frank
I've never considered this before. I'm assuming that the tenants are only finding out they the other is/is not on Section 8 from talking with each other, but I'd be surprised it tenants had an issue with another tenant because they are on Section 8. Or is it more due to the stereotypes around people on Section 8/the other tenants are paying a considerably lower amount every month?