Experience renting to government/state sponsored programs

2 Replies

I am a new investor looking at buying my third property, second property in Philadelphia. I viewed the property and met with the current owner yesterday, and the property is in very good condition and is currently being rented out through a state run program (So similar to section 8 but at a state level). He has been participating in the program for about four years, and mentions that he has had a really good experience since he doesn't have to chase rent, gets paid directly from the program, and the program has also provided him security deposits that he would transfer to the buyer. He cannot choose his tenants though, the tenants he has right now seem to keep the place in good condition. His property undergoes an annual inspection by the state and so far he has remained compliant (The property is in very good condition although I do plan to do an inspection anyway)

I read Brandon Turner's book so aware of the general advantages vs disadvantages but would love a more personal perspective. A few questions for my more experienced landlords out here-

1. Can any of you share your experience working with these types of programs?

2. Are there any specific questions I should ask before getting myself into this?

3. Are there any suggestions on the purchase side you guys could make as far as things I should either include in my contract or make sure I look into during due diligence phase?

Thanks so much for the information everyone :) 

@Janine Covello I have 2 section 8 properties. They have been great but can be a pain to get started. If you can take over a property that is already setup (as I did with one of my houses) it is awesome. I can choose my tenants and screen them. However if they are in a government plan I am sure the government would not place someone in their program that they have not vetted and they generally require them to go through training classes.

So for all the positive reasons you already listed above this has been a great program for me.

Just do your normal due diligence on the property and you should be fine.

I would not hesitate to take on a Section 8 tenant BUT I have recently learned that I would not want to purchase another unit where ALL I get is Section 8 applicants. My rule has always been only to buy a place where I wouldn't mind living in it myself. My last purchase broke that rule and my first Section 8 tenant was ok but left the unit in a mess and now I've got it up for rent and only Section 8 applicants are interested in renting it. During the recession there was a time the city stopped giving out vouchers. That time could come again and I would have a very difficult time renting my place out without Section 8. 

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