Possibly acquiring section 8 tenants, what do I need to know?

7 Replies

Hello BP!  Got some stuff brewin' I'd like some insight on.  Possible 6 unit property I have been entertaining. My main questions involve the fact that many of the current tenants are Section 8 and on leases.  If I were to purchase this property, do I need to do any additional paperwork for the section 8 tenants as their new landlord (ie resubmit paperwork/get approved)?  Also, I am planning on raising rents slightly as leases expire/attrition of tenants.  Is it difficult to raise rent on a section 8 tenant?  What paperwork would be involved?  Thanks!

I did not actually own a property with a section 8 tenant in it but I can tell as a rehabber of a property that had one in it before I took it over that the place was trashed. Section 8 tenants can cost much more in maintenance and repairs compared to non section 8 tenants. You will never have a problem with rent payments from the government, which is the bonus, but you're also dealing with the government, so raising rents will not be as easy.

The local HA/CDC that administers Section 8 will perform an annual physical inspection of the property, but it's not hard to pass. 

Our local HA won't raise rent more $15 per year. Not sure if yours has a limit. It's not hard to get the rent increase, but you need to show that the Sec. 8 rent is in line with your other units and it can't go over the max Sec. 8 rent for your area. If you call the HA they should tell you what the limit is. None of it is too much extra paperwork.

If your Section 8 residents are Seniors then you should be fine, if they're not, then expect the extra costs Jamie mentioned.

Expect high water bills.  Section 8 tenants have a lot of sec 8 type friends.................hahahaha.  They take a lot of showers.

Is tehre a book Slumlords for Dummies.......would be popular here-methinks.

Originally posted by @Sarah Miller :

Hello BP!  Got some stuff brewin' I'd like some insight on.  Possible 6 unit property I have been entertaining. My main questions involve the fact that many of the current tenants are Section 8 and on leases.  If I were to purchase this property, do I need to do any additional paperwork for the section 8 tenants as their new landlord (ie resubmit paperwork/get approved)?  Also, I am planning on raising rents slightly as leases expire/attrition of tenants.  Is it difficult to raise rent on a section 8 tenant?  What paperwork would be involved?  Thanks!

 All I had to do was submit a W9 and my contact info so they start paying me.

We had a section 8 tenant who rented from us for 9 years.

What @Casey Kleinhenz said above is our experience as well. There are easy annual inspections and limits on how much the rent can be raised.

Our county housing authority caseworker told us to use our normal criteria (credit check, background check) to screen. Our tenant had an "A" credit rating when she applied and was very good at first.  The problem came when her kids graduated high school and she didn't want to move to a smaller place.  We finally got her to downsize and she moved out 2 years ago. Her caseworker was wonderful in helping me making the point that she no longer needed all the space of our large unit.  Without the subsidy, she really couldn't afford it anymore.

There's nothing inherently different about section 8 tenants. Some are good tenants and take good care of the place and pay their part of the rent on time. Some don't. When your current leases are up for renewal, and when there is turnover, use your standard screening criteria -  if/when their subsidy rate changes, they may no longer qualify and you don't have to keep renting to them.

If rent payment is via direct deposit, then the former owner's bank account should stop being paid the rent, and the new owner should set up to receive the direct deposits into their own bank account.