Section 8 tenant thoughts
Investor · Center Moriches, NY · Member since 2016 · 86 posts · 32 votes
How do people feel about section 8 tenants??
I have 3 SFR properties in Section 8 with no real issues. Vetting tenants is essentially the same as regular tenants, but expect lower credit scrores, bankruptcies, etc. People who qualify for S8 are poor. There is no getting around that. Try to get a feel for the stability of the tenant's current situation and recent past.
You will probably find a lower standard of care than you might apply to the property. I encourage my tenants to actively report everything that needs maintenance. Some folks have gotten used to low quality landlords that don't fix things and think that is normal. I had a tenant (not S8) that thought it was OK to let the faucet leak and run across the basement floor. Education is a wonderful thing - make sure your prospective tenants have some and motivation. Try to get a look at how they are living in their current home. That is what yours will probably look like.
You will probably experience more drama in rent payments, but that isn't guaranteed. Regular tenants have drama too. In my case, the 3 properties are paid for by HUD at 33%, 75% and 85%. That makes late payments less impactful on e, but still emotionally draining. It is not at all uncommon for 1 of my 3 properties to be late as the tenants are trying to stretch their checks to meet the end of the month. This month, all 3 were late.
HUD does have a maintenance standard that is higher than the local government where my properties are. It is not at all unreasonable and I like it. You get a month to fix whatever they find. For example, the local government rental inspection walks through and finds no issues. The HUD inspection the next day finds a water stain on the ceiling and fails the property. I have to fix the leak and stain. That doesn't bother me because it wasn't there when the tenant moved in. I want to fix it and appreciate the extra set of eyes. Others may see that differently.
There is no additional paperwork except the initial rental contract. HUD will only approve market rent and rent the tenant can afford which can be a limiting factor for you. The direct deposit on the 1st of every month is a wonderful thing!
Those are some quick notes. Good luck!
I have 3 SFR properties in Section 8 with no real issues. Vetting tenants is essentially the same as regular tenants, but expect lower credit scrores, bankruptcies, etc. People who qualify for S8 are poor. There is no getting around that. Try to get a feel for the stability of the tenant's current situation and recent past.
You will probably find a lower standard of care than you might apply to the property. I encourage my tenants to actively report everything that needs maintenance. Some folks have gotten used to low quality landlords that don't fix things and think that is normal. I had a tenant (not S8) that thought it was OK to let the faucet leak and run across the basement floor. Education is a wonderful thing - make sure your prospective tenants have some and motivation. Try to get a look at how they are living in their current home. That is what yours will probably look like.
You will probably experience more drama in rent payments, but that isn't guaranteed. Regular tenants have drama too. In my case, the 3 properties are paid for by HUD at 33%, 75% and 85%. That makes late payments less impactful on e, but still emotionally draining. It is not at all uncommon for 1 of my 3 properties to be late as the tenants are trying to stretch their checks to meet the end of the month. This month, all 3 were late.
HUD does have a maintenance standard that is higher than the local government where my properties are. It is not at all unreasonable and I like it. You get a month to fix whatever they find. For example, the local government rental inspection walks through and finds no issues. The HUD inspection the next day finds a water stain on the ceiling and fails the property. I have to fix the leak and stain. That doesn't bother me because it wasn't there when the tenant moved in. I want to fix it and appreciate the extra set of eyes. Others may see that differently.
There is no additional paperwork except the initial rental contract. HUD will only approve market rent and rent the tenant can afford which can be a limiting factor for you. The direct deposit on the 1st of every month is a wonderful thing!
Those are some quick notes. Good luck!
I am a Section 8 tenant now, as a low income disabled senior. I used to be a property manager.
That said, if I had a rental property, I would avoid Section 8 tenants if I could. And the reasons is not so much the tenants, but the paperwork hassles.
As a landlord who accepts HUD vouchers (Section 8), you still have the right to set your own tenant criteria. The really nice place I live in now in San Jose, CA, required really tough criteria. I had to prove that my credit score was acceptable, that I had not only good references from my current landlord, but the 2 previous ones. I had to prove that I'd graduated from college, because I had deferred student loans, and students aren't allowed in their properties.
I had to have personal references, too. And I had to come up with a month's rent (nearly $1300) in security deposit, because HUD doesn't subsidize security deposits. And if my credit hadn't been good enough, they could have charged me twice that much.
I had to have enough money to travel back and forth to interviews with the property manager, and the housing authority interviews, too.
So, my point is that - you can be really picky, even if you agree to accept Section 8 tenants.
But, if your property is the type of property where nobody in their right minds would rent it - unless they had absolutely no other options - then don't buy that property in the first place.
If it's too late for the above, then try to be super picky. If you still can't fill the place with decent tenants, then sell the property and save your sanity and your money.
Depends.
Are you looking to manage these properties or have a property management company manage them?
If your PM is comfortable with it, then I would say its a good idea.
The good and bad facts on working with Section 8 tenants:
Good:
1. Guaranteed rent from the government
2. Less turnover b/c once a tenant is in, they don't like to move and risk loosing their housing voucher
Bad:
1. Lower quality (based on credit score) tenants.
2. Government now can restrict and cap your rent increases
3. Government will inspect your property annually and most always find some items they will require you to repair.
4. Tenant has a paid-for built in advocate with HUD should they get in a dispute with you.
5. The HUD lease supersedes your lease in cases of discrepancy.
We recommend to our clients to NOT worth Section 8 housing unless the rental market demand is very slow.
Thanks for the input. Thanks Sue the problem is not the property it is in very good condition and a descent neighborhood. I was wondering cause my friend says the section 8 tenants have been hisd best for the past 15 years. He likes having the government backing and guaranteed check every month especically if they break the lease. He also liked the annual inspections. So i was just looking for other points of view/experiences.
@Chris Berry - I wrote a blog on exactly this subject. You can check it out at the link below.
@Hugo Alves - Just to clarify, SEC 8 approves the rent amount and dictates what portion will be paid by HUD and how much the tenant will pay. The tenant cannot pay one penny above this number. Side deals are a direct violation of both the landlords and the tenant's contract with HUD.
https://www.biggerpockets.com/blogs/9232/55313-intro-to-section-8---your-perceptions-vs-my-realities
I'm right there with @Cody L.. They may start off fully paid for by the housing authority, but it's far from sunshine and timely payments. Your units will get roached out fast. Go look around for some small section 8 apartments listed for sell or rent, then go drive by, and let us know what you think!
I'll buy them and clean them up, but we wont participate in the program.
I worked as a federal employee for 30 years (NOT in this program). I know what idiots we can be. Inspectors can be lazy louts who are just working toward retirement or they can be so picky they fail rentals for the smallest of issues, including dirty drip pans on the stoves and mildew around the tub. Guess who gets to address these? Not the tenants. It's the landlord who ends up cleaning the tenants ranges and scrubs out their bathtub; typically while the tenants sit in the living room and watch TV (ask me how I know).
It's not a two partner job. It's a one partner situation. I've heard tales from landlords whose inspections failed due to a pulled thread in a carpet now being a "trip hazard".
No thanks. I retired from federal employment and never looked back. I'm never having my rentals held hostage by housing inspectors.
Gail
Background: 24 years as a landlord having done 100's of section 8 tenants.
Despite what others are saying here I can assure you that rent payments are NOT guaranteed and I can assure you they aren't guaranteed to be on time either. This is 100% dependent on the local housing authority and of course being in the Atlanta market the multiple authorities we deal with are filled with inept government workers and corruption.
The question you should ask yourself is knowing what you know about the government; do you want to be in business and co-manage your property with them?
If you like deadbeat entitled tenants section 8 is great.
If you like extra annual inspections where you are forced to do unnecessary repairs/improvements then section 8 is great.
If you don't mind having your carefully crafted landlord friendly lease rendered worthless from the HAP addendum then section 8 is fine.
If you don't mind your rent payments being paid at the whim of the government then section 8 is great.
If you love government waste, fraud and ineptitude then section 8 is the way to go.
This is an on going topic, as a private landlord I would avoid if possible, If the owners of a building apply for funding for rehab the loans may be tied to lower interest rates if they rent to section 8 renters for a given number of years. That's how many of the larger complexes get funding to buy and rehab buildings,, that the normal small investor can not afford.
Section 8 like other government programs has difficult aspects to it to manage, the people on section 8 are like a bushel of apples, some good some rotten to the core, and when mixed together the entire bushel tends to go rotten if the rotten apples aren't tossed out of the bushel.
LOTS of paperwork and inspections and the inspectors are just as complicated as the tenants sometimes.
@Chris Berry, are you saying that the housing authority will pay the rent if someone breaks the lease? That wasn't the case with me. The tenant broke the lease and move into another section 8 property!!!
I make sure they work at least 20 hours/week, unless they are over 60.
I tend to avoid them for my rental. I fail to see any benefit by renting to section 8. The way I see it is increased risk but no increased reward. I also rent in NYC which heavily favors tenants so my risk is two fold.
I worked as a federal employee for 30 years (NOT in this program). I know what idiots we can be. Inspectors can be lazy louts who are just working toward retirement or they can be so picky they fail rentals for the smallest of issues, including dirty drip pans on the stoves and mildew around the tub. Guess who gets to address these? Not the tenants. It's the landlord who ends up cleaning the tenants ranges and scrubs out their bathtub; typically while the tenants sit in the living room and watch TV (ask me how I know).
It's not a two partner job. It's a one partner situation. I've heard tales from landlords whose inspections failed due to a pulled thread in a carpet now being a "trip hazard".
No thanks. I retired from federal employment and never looked back. I'm never having my rentals held hostage by housing inspectors.
Gail
I had one tenant that failed inspection because one of the burners on the stove didn't work. Now if this tenant would have simply submitted a work request we'd likely have fixed it. They never requested a fix because they never used the stove. But even though they never use the stove, the inspector failed us.
So out of spite, I said "I'm not fixing it". So they said "Fine, then you're not getting your check from us" So I said "Fine, then I'll evict your client for non payment of rent".
The worst part of section 8 is when they don't pay and you go to the tenant and say "Here is your 3 day notice, I didn't get rent" and they say "Not my problem, go call section 8". Yeah F you, YOU go call section 8 and get me my money. Like I have time to deal with the government and call 1-800-section 8 and di*k around on voicemail to get someone to say "uh er can I please have my money?"
Forget all that.
I won the bid for a property at a foreclosure auction. It came with a Section 8 tenant who had been there for 12 years. The first few months were great. The tenant would pay $150 of the rent and the Housing Authority would pay the remainder of the $700 monthly rent. All was well until the tenant got a job. Boom, she was bumped off section 8 and then because she made minimum wage, was struggling to pay rent. She has been late the past two months, but eventually paid and included the late fee. She told me it takes her 2-1/2 weeks pay to make the monthly rent, and is really stressed about it. I'm not sure what to do. I don't want to evict her since she is such a long-term tenant, but I can't subsidize her rent for this property. If anyone has any suggestions they would be welcome. I don't think I will do Section 8 in the future.
Since everyone is venting about section 8 on this forum I guess I will too. I was curious about Sec8 and decided the go to the briefing they have for potential AHA landlords. I was okay with renting out to them because I thought I had a great property and would not have a problem rehabbing it to their standards. Inspection time rolled around and the Inspector told me I had one of the best units they have seen in a while. I FAILED inspection because the pine straw wasn't thick enough. Seriously! I decided that if I am to do this and put up with it I would get more involved with system to get a better understanding of their mind set. Still working on that. Rent does come in and I did vet the tenant thoroughly. Because of that I have a good tenant and a so so system to deal with. I did have to fight for my rent determination amount just to get it to the comps in the area. It wasn't much of a fight but it needed to be done. Now they have a feature on their website to have a rent determination before you get the tenant. Before I had to get the tenant approved before I would find out what the rent would be. I am now rehabbing another home and am going to receive a rent amount higher than the comps in the neighborhood. So I'll give another shot.
@Andres Rivero - I am trying to map out a game plan for my next investment, and a good friend of mine who is an experienced realtor wants me to consider Section 8 because he has a client who is an investor making very good money off of it. Like you, I took to BP and did a search for Section 8. This thread came up, and it gave me some great insight: https://www.biggerpockets.com/forums/81/topics/136...
No matter where you look, you're going to find both horror stories and success stories. I think the best thing to do would be to talk to as many people as possible who rent to Section 8 in your market, because I think a lot of it comes down to the market and your own personal preferences.
It's hit or miss. I luckily have some older section 8 tenants who get subsidized close to 100% of the rent, so it works pretty well. The housing authority's I'm dealing with are "ok" too. I can imagine it going the other direction really quickly if you get "negative" section 8 tenants and a poor Housing Authority.
They are a crap shoot,
Often blame the world for their hard knocks in life, have very low social skills and all have inflated scenes of entitlement. Obviously a generality but the only ones I have ever had were inherited and ultimately ended up have to evict ever one.
I would never rent to any of them by choice and any I inherit in the future I would make every effort to get rid of sooner rather than later.
It really falls on the amount of vetting you do on your potential tenants. Fortunately, in my market we have more recipients than landlords. I am currently receiving 5 calls a day for applications. I have my work cut out for me interviewing and calling so called employers. Some good and some, well....you know. Rentmarketplace.com helps with the online application process. All I need is a full name and email for each adult. I prefer someone with a job that is trying to make it in life while taking advantage of some government help to get to their goals.
@Chris Berry - In a low end neighborhood, my preference is SEC 8. I wrote a blog on the subject.
https://www.biggerpockets.com/blogs/9232/55313-intro-to-section-8---your-perceptions-vs-my-realities