Is Section 8 Housing as bad as people say?
Rental Property Investor · Virginia Beach, VA · Member since 2017 · 61 posts · 25 votes
Is Section 8 Housing as bad as people say?
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Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes
8yOriginally posted by @Mathew Zorn:
I have a rental home in zip code 23513 and wanted to know if it's worth switching the home to section eight? I understand that section eight makes those that qualify pay for a small portion of the rent and section eight covers the rest. My concern is will they damage the home, who pays for the repairs (homeowner, section eight, or the tenant), how will that affect the neighbors, will section eight tenant be responsible for all utilities as well? If anyone has any stories to share as well as any other information that would be great!
You will always get two diametrically opposing views on section 8. Its one of the most polarizing real estate conversations. I am very much for it. The county/city pays you on time.. Always..The first month might be delayed due to administrative reasons, but from then onwards its like clockwork.
I have 1 Section 8 tenant right now, whom I have vetted like anyone else. They are good people. They pay their own utilities. No issues. They stay long term unlike 1 or 2 yrs for some other tenants. Eventually, I plan on making all my properties, at least in the state of Virginia, Section 8 properties.
Also, the county/city does yearly inspections. The tenants are at the mercy of the the city/county approving them for the next year. If they are found in violation of rules like authorized pets, authorized guests, drugs, damage to the property, they could lose their vouchers. Once they lose the vouchers, its not easy to get reinstated. There is always a huge waiting period. Huge demand for housing and not enough supply.
97 Replies
- Rental Property Investor · Virginia Beach, VA · Member since 2017 · 61 posts · 25 votes8y
@Chinmay J. you are very true in every word. Just need to take the next step in getting a second rental.
- Accountant · Hopwood, PA · Member since 2015 · 125 posts · 92 votes8y
While I agree that the ultimate determination on S8 depends on your ability to effectively screen, I do have to pass on a story from my father in law. About 20 years ago he was renting to a guy on S8. Dude got drunk one night and fired off a couple of rounds from his handgun putting a couple of holes in the roof of the place. The next day he notified the housing authority that there were holes in the roof and they stopped paying and wouldn't resume paying until my father in law fixed the holes! My father in law evicted and immediately dropped out of the S8 program.
- Investor · Libertyville, IL · Member since 2015 · 11 posts · 10 votes8yI bought my first rental property 12 years ago. And in that property I’m on my 3rd tenant all of which have been on the section 8 program. I’d say the biggest benefit i personally see is lower turnover. My first tenant only moved because she had another child and needed more space. My second tenant would still be there if her son wasn’t being severely bullied at school and it was so bad needed to move simply for a new school and new start. Very sad story. Biggest downside though......I’ve personally found it hard to know when the move out date will be. Both times it took an extra month or two for old tenant to move out. And both times I had someone lined up to move in. Between the extra paperwork and some owners not accepting section 8 there are fewer places for them to move into. Overall: -12 years -3 section 8 tenants -No vacancy (we’ll technically a total of ~14 days) -Normal wear and tear -Normal repair phone calls -No loss that I wasn’t able to deduct from security deposit Like many have mentioned on this thread finding a great tenant comes down to screening the person and that has nothing to do with if they have a voucher or not. Why limit your prospective tenant pool? There are plenty of hard working people bettering their lives on the program. Keep an open mind.
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
Originally posted by @Tom Gimer:
Originally posted by @Cara Lonsdale:
Ug. Sometimes I wish BP had a screening process for people who are authorized to advise other people on the forums. Okay. I'm done venting....
Best to get your answers straight from the authority who governs the program.....
Not sure who/what you're referring to.
Fed funds are involved but since they are spent at the local level I imagine every state, county, locality has a different process. Probably why we are seeing so many different responses on this.
I was just reading some of the responses to other people's posts and sometimes I think people don't think before they start typing. No names specifically... Just a thought that popped out and led my fingers to type.
I like posts with actual experience or knowledge behind them... A little meat on the bone. Lol :)
Originally posted by @Thomas S.:
"The tenants take good care of my properties because they do not want to loose the free government assistance."
Welfare/charity is one of the underlying weaknesses in our society. At one time being on welfare was consider a embarrassment/shame. Today it is a aspiration that many strive to attain and hold on to. Landlords that live off of these tenants are indirectly perpetuating a system that encourages people to be leaches on society. Yes there are those that for medical reasons, mental primarily, deserve to be on assistance but that number is tiny compared to those that simply view the system as a free ride.
It is natural for hard working citizens to view these people as suffering hardships since from our perspective it would never be a life style of our choice. The real shame of it is that for the majority it is a voluntary life style choice often passed on from generation to generation. We know this because the majority of us have worked to overcome hardships in our lives so as to not be them. They work to not be us.
I would never chose to rent to any of them, not only as a business decision but also as a moral decision. They should be in government housing.
I'm not from Canada, but here in the US, these things are tracked. The majority are off government assistance of any type within 3 years, and what we call "welfare" down here (TANF) over 60% are off of in one year - and this study was done DURING the great recession!
I wonder, we consider healthcare for poor and old people "government assistance" down here and everyone else has to pay their way, do you feel your doctors in Canada are indirectly perpetuating a system that encourages people to be leeches on society, because healthcare is even provided to the "able" up there?
It is a shame that this voluntary life style choice has been passed on from generation to generation. Next time you see the Dr, pay cash like many hard working Americans do unlike Canadian leeches.
A side note, we have a system that GUARANTEES 4% of people will be unemployed, at a minimum, at every given moment. How exactly is it their fault when their number gets called? My momma was one of those "leeches" who took all the welfare money and now she has 3 grown, successful, contributing children. Maybe we would have been better off if society put us out on the streets? (Oh, and college ain't essentially free down here either. Is there anything Candians' don't think the government should provide them?)
Or maybe we can just leave the social commentary off BP.
- 8yWard ConvillePro MemberRental Property Investor · Hattiesburg, MS · Member since 2012 · 49 posts · 42 votes
I have had nothing but good experiences with section 8. The biggest benefit to section 8 is that if you keep the unit in good shape the tenants typically do not move. Cost of vacancy and turnover can kill your profits. Our section 8 tenants on average stay for more than 5 years.
There is more paperwork on the front end and the hassle of an annual inspection, but in general these are minor inconveniences in exchange for the program paying all or part of the rent to you on time every month. Also, you can request a rent increase annually if the market or property specific factors support it.
We have begun to market vacancies on Craigslist and specifically state that we welcome Section 8 applicants. We routinely get a qualified applicant in a matter of days.
From my experience, many of the horror stories that you hear about Section 8 come from landlords who have little or no experience with the program.
- San Diego, CA · Member since 2017 · 8 posts · 2 votes8y
Like many have said, there are a lot of benefits to Section 8 tenants- they tend to be lower turnover, you're always paid on time and payments are insured by the government.
In my experience as a former property manager, Section 8 has different and additional paperwork - you use their lease agreement, and repairs become complicated as they have specific requirements such as how many inches from the ceiling a smoke detector can be placed. Your property manager will have to relay all of that to the handyman, and in my experience, handymen get annoyed as they don't see the logic in those specific requirements. Additionally, Section 8 does yearly inspections ( a good thing in my opinion) and will send a repairs list to you that sometimes involves very trivial repairs (cabinet hinge loose, etc). Overall, I don't think these slight annoyances should mean that you preclude an entire class of potential tenants, but they're something to consider.
The one thing that I will say is a very real drawback is that Section 8 has to review and approve your proposed rent increases - and they will not approve anything more than a $25-50 increase. In some markets, this might be totally fine. In my market of San Diego, with rents increasing hand over fist, this meant that our Section 8 properties (especially because these were longterm tenants), were always hundreds of dollars under market.
I got a chuckle reading your post. You may want to consider sticking to subjects you know something about.
Canada is definatly not one of those subjects.
It was funny though.
Originally posted by @Thomas S.:
I got a chuckle reading your post. You may want to consider sticking to subjects you know something about.
Canada is definatly not one of those subjects.
It was funny though.
I also laughed at your post, probably for different reasons.
I can't imagine you know less about Canada than you do the United States, maybe you could take your own advice?
Originally posted by @Brittany Bailey:
Like many have said, there are a lot of benefits to Section 8 tenants- they tend to be lower turnover, you're always paid on time and payments are insured by the government.
In my experience as a former property manager, Section 8 has different and additional paperwork - you use their lease agreement, and repairs become complicated as they have specific requirements such as how many inches from the ceiling a smoke detector can be placed. Your property manager will have to relay all of that to the handyman, and in my experience, handymen get annoyed as they don't see the logic in those specific requirements. Additionally, Section 8 does yearly inspections ( a good thing in my opinion) and will send a repairs list to you that sometimes involves very trivial repairs (cabinet hinge loose, etc). Overall, I don't think these slight annoyances should mean that you preclude an entire class of potential tenants, but they're something to consider.
The smoke detector thing is actually part of most residential codes. It is just ignored by everyone who isn't a perfectionist.
As a tenant too, I think landlords should go through their entire house and make sure there are no problems, including loose hinges. That's what I do when I'm going to sell or rent a place I own. And I don't want tenants "fixing" anything - half the time that makes it worse!
- Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes8y
@Matthew Zorn I think it's all about the tenant screening process at the end of the day.
Let's not forget that these people are just people too looking for shelter for themselves and their family. Do we hear a ton of horror stories about Section 8? Absolutely, but are they great Section 8 tenants out there, of course. Realistically, this is the general rule for people around the world (good and bad).
So, vetting your tenants should lead you to secure a decent tenant.
Hope this helps. Good luck. Thanks! - Ola
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
HUD will tell you that you need to screen the tenant just like any other tenant, and take a security deposit just like any other tenant. The only thing that is different is that HUD pays for a portion of their rent, so when it comes to evaluating income, you have to figure in the HUD component.
In terms of the inspection, it is similar to an FHA appraiser inspection. They are inspecting for habitability. They also evaluate whether the property is in the same condition as other comparable properties getting the same rental rate (Fair Market Rent) If you use the link I provided you previously, you can find the chart for your area for FMR amounts, which is the MOST you can charge for the unit.
There is also a utilities component. So, if tenants have this voucher, then you will need to provide the Tenant the utilities. So, make sure that the voucher amount will cover the amount of utilities that the Tenant will be using.
There was mention of different jurisdictions, and so forth. It is not my experience that HUD changes it up for different areas. So, I am not sure what any of those posts are referring to.
HUD is a very simple, yet oiled machine for all of their processes. Anyone who has ever worked with HUD in any capacity would know that. If you have ever bought a HUD house you would understand that HUD works in uniformity any chance it gets. It is no different for the section 8 program. This way, they can have asset managers and field managers who can cover multiple states with the same processes.
If you are looking to offer section 8 housing, you don't need to do anything until you have a prospective tenant. Once an acceptable tenant (not just ANY section 8 tenant, do you due diligence!) is secured, there is an addendum to add to the lease for the section 8 program. That, along with the lease and the tenant's section 8 voucher are submitted to HUD for approval. HUD sends an inspector out. Then you're approved and the lease runs like normal. HUD has the right to come out at any point to inspect the property, and will on occasion.
At renewal, if you plan on raising rents, you have to submit the proposed rental rate at least 60 days in advance of the rate taking effect, for approval (I would suggest 90). The rate will still need to follow the criteria for FMR.
I hope that helps. Honestly, everything you would need to know about the process is on that link I sent you.
Originally posted by @Ola Dantis:
@Matthew Zorn I think it's all about the tenant screening process at the end of the day.
Let's not forget that these people are just people too looking for shelter for themselves and their family. Do we hear a ton of horror stories about Section 8? Absolutely, but are they great Section 8 tenants out there, of course. Realistically, this is the general rule for people around the world (good and bad).
So, vetting your tenants should lead you to secure a decent tenant.
Hope this helps. Good luck. Thanks! - Ola
The worst horror story I've heard recently is that youtube kid who rents a house in Beverly Grove for 14k a month and totally destroys the place.
Never heard of a Sec 8 person causing damage to a multi million dollar property.
Originally posted by @Thomas S.:
It depends entirely on your local administrative system. In my jurisdiction I would leave my units empty indefinitely before I would rent to anyone on government assistance. Every person on welfare in my area has a inflated scenes of entitlement, scamming the system and basically a waste of skin. Obviously that is only my own opinion based on our welfare system.
Biggest issue would be that you can not collect damages from someone that has no money and does not care.
This is the biggest difference I've found between Ontario and most US (and maybe other Canadian) jurisdictions.
Ontario: Person gets ODSP (Disability) or Welfare, signs form directing them to direct funds to the landlord. Landlord has to sign off saying "Yes this is what their rent is". Tenant pays for a month or two, directs the government to not pay the landlord but to pay tenant so they can in turn pay landlord, government says "Okay no problem".
Doesn't pay, Landlord calls worker, who replies "we can't discuss anything, it's protected information, evict them if you haven't been paid" (while STILL sending tenants money usually). Tenant continues to get supplement/money, and landlord gets stiffed even if reporting tenant.
You go to evict the tenant, who will ask for delay after delay of the hearing, finally get an order and evict them, and since they're on assistance you can't even garnish the bank account. Difference with Section 8 and (I believe) others is that they actually care to make sure that the landlord is in fact getting paid.
Another reason for this of course would be so that landlords do not get a "sour spot" for those on assistance and continue to rent to people on assistance, as if you've had 3 out of 4 tenants skip out there's a lower chance of renting to someone on assistance given the government's reluctance to follow through on payments the second a tenant says "Don't pay the landlord, just pay me".
- Specialist · Candler, NC · Member since 2017 · 49 posts · 42 votes8y
I have done a few section 8 rentals, and I have zero negative experiences. Like others have stated, you still fully vett the tenant and rent is always on time. Some things just get a bad rap, sometimes earned sometimes not. In my cases, all were either a single working parent struggling to get by (and trying hard), or a disabled person. All quiet, great tenants. I know there will be other varying experiences from BP members, but for me it was positive. There are many potentially good tenants out there who need and receive financial aid, and often they are passed over because of the negative stigmas. Good luck!
- 8yLinda LabbePro MemberInvestor · North Bay, Ontario · Member since 2015 · 709 posts · 263 votes
Love section 8 do a lot of them longer term tennants and payments to the bank on time and slightly higer rents. There are bad apples everywhere with proper screening you can stay away from them. more then willing to chat and pass on what we have learnt
- Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes8y
I have Section 8 tenants and some that are not Section 8.
Pro's....They take care of the rental....they don't "bother" you about useless stuff, most of their rent is paid by the county.
Con's.....If you don't prescreen them the same way you would any other tenant (Minus the income requirement) then you are asking for trouble.
If you inherit someone that's on the program, immediately have them fill out an Estoppel and make sure County transfers payments to you so they don't keep going "accidentally" to the previous owner. Other than that you should be good to go.
@Gagan P. Yes that is our system to a T. Any landlord up here that rents to welfarians, equilivant of your S8, is taking a extremely high risk. They are arrogant and have a very high level of entitlement. Everyone I have dealt with I have had to get rid. As a result I would never approve any applicant on any form of government assistance. They have difficulty finding landlords that will accept them as a result of the bad reputation. Our government relies on private landlords to house them and as a result has changed the regulations attempting to force landlords to accept welfarians. Because our government has made them a protected class it is impossible under the law to collect when they stop paying rent. They can usually stay rent free for several months without penalty and without effecting their eligibility to collect welfare.
They do not pass my screening criteria.
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes8y
For anybody thinking of refusing to rent to Section 8 or others on public assistance, check your state's fair housing laws - especially before making statements on a public forum like BP or Facebook that might come up in a Google search, should a state agency or discrimination lawyer decide to go after you..
While public assistance is not a federally protected class, it is here in Massachusetts. I have also heard others say that in their states "source of income" was also a protected class.
I can only speak for Mass, but I can tell you that the Mass. Commission Against Discrimination takes these things VERY seriously and the fines can be crippling.
In fact, my $1M E&O policy limits payments for Fair Housing claims to $250K.
@Charlie MacPherson Interesting point, sir.
In addition to whether source of income is a protected class, state law would also dictate whether that is income or not.
Based upon a quick search of states relevant to me, it would appear many LLs can refuse to accept vouchers.
Gimer Law517 Reviews- China, ME · Member since 2014 · 3k+ posts · 4k+ votes8y
@Tom Gimer As "source of income" isn't a protected class in MA, I'm not able to add anything other than to say it's worth checking the laws in whatever state an investor is in.
In MA, the specific protected class is stated two ways on the state website. It states that anyone receiving public assistance is protected, then it also states that anyone receiving section 8 is also protected.
You cannot refuse to rent to someone for either of these reasons, but if a landlord doesn't want section 8 renters, they just don't get the property inspected for section 8 approval.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes8y
Here is a great little map on where Source Of Income is a protected class. Note that Texas is red, in that it has a state law making it illegal for counties/cities in Texas to make it a protected class. The map is updated as of 2016....however I can not attest to it's complete accuracy, and I do note that it leaves off the City of Annapolis MD, where Source of Income is a protected class, they simply call it "lawful income" in Annapolis.
District Invest Group545 Reviews Bingo. Mind you I've had tenants on welfare before (in Ontario), and a few that were good. But it's still well below the 50% mark once the "well I deserve the money, my landlord doesn't, AND I can live rent free for 2 months while they evict me" sense of entitlement kicks in.
Section 8, meanwhile, has very strict criteria as mentioned in this thread, including "eviction for non payment", "damages", and a whole list of criteria that makes them automatically ineligible, whereas Ontario doesn't really care. The change to the rent increase limits clearly reflect that, as if the situation of a lack of housing in the 90s that led to the government saying "okay, no increase limits on new housing, PLEASE build rental housing".
- Schaumburg, IL · Member since 2017 · 38 posts · 49 votes8y
@Tookie Nemchak Section 8 is a nationwide federal program from the Department of Housing and Urban Development ((HUD)as in HUD1). It's available in every corner of America. If the is no independent agency handling it, check first with the human services departments in larger cities and then with the township governments. BTW- townships also handle general assistance in most locations!
Hope this helps! Holler if you hear me.
Best regards,
Mark
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