Would you rent to Section 8 for $85 more a month?

20 Replies

Lots of people say it does depend on the area, I can only speak for my tenants.

I love section 8 personally. guaranteed payments and increased rent?!?! I would take that deal.

The most important part (as always) is your screening process. Bad tenants don't get a chance, regardless of price. It's not worth a lousy tenant for an extra $1000/year, but there are plenty of good tenants who use S8

Originally posted by @Neal Ward :
I have a property in Atlanta for rent at $1500 a month, but Section 8 is will to pay $1585 a month. Is it worth going through with it?

 It is really only something you can answer. I have had a few good and a lot of bad Section 8 tenants. My PM was the one vetting them though. So maybe if I had been vetting them myself it would have been better. Just expect issues and that you way are surprised when there are none. :-) My issues were all related to them being slobs, so clean up after they left was more than it should have been. 

In general, yes. But you have to screen the tenant to make sure it's a good fit. Section 8 pays in full, on time, every month. What's not to like?

For my area (San Diego), every single section 8 tenant our company gets (always inherited from owners, we don't rent to section 8 if we are managing) has given us more headaches then they are worth. Even if the government pays 95% of the rent, they inevitably have issues coming up with the 5% they owe. Now I'm sure it's not that way with all section 8 tenants, but that has been our experience.

The other side that a lot of people don't think about, is at least in San Diego, it can be a more difficult process to remove section 8 tenants without just cause. Although, San Diego is getting more strict on what you can and can't kick tenants out for anyways, regardless of whether they are section 8 or not.

Hope this helps.

I wouldnt make that decision based on $85 more. If I am not renting to a certain tenant, section 8 or not, I will not do it for 85 more. Also, remember it's more difficult to increase rents for section 8. That said, section 8 tenants are great diversification mix to have in any porfolio. I want 25% of my properties on section 8. They are usually good people when properly screened.

It’s more of a problem with the tenant than it is the program they are in . There is good and bad tenants in the section 8 program . Screen them and do your best to mitigate getting an idiot in there . Section can be great . Direct deposit on the first every time !

Think of it this way ...Having that section 8 voucher is a powerful tool for them . It means they got Uncle Sam taking care of them every month . The idea of a violation or eviction causing them to lose that golden voucher is likely a terrifying prospect to these people and so it can be a powerful force in getting them to comply where a non section 8 tenant will care less

One question I'd have would be what the guaranteed portion from Section 8 is, for any particular tenant. If Section 8 is OK with the place going for $1585, but they are putting up, say around $1450 or even $1500, I"d be careful of assuming you'll get the tenant's portion of rent consistently. Of course you can boot them if they don't pay, but is all of this worth the hassle? 

I agree with what a lot of other folks have pointed out in terms of screening, and that will reduce some of your risk, but it really depends on your market. I am sure you can find some decent Section 8 tenants in Atlanta, just as you can here in Los Angeles where I am. In some really impoverished cities, might be tougher. $1585 vs. $1500 is a nice bump in your return, so if you can find a good Section 8 tenant, sure, do it. 

$85 a month is not worth dealing with a government entity. I'm also not a fan of the program because there's a high rate of fraud and it creates dependency. Personal opinion/experience.

@Neal Ward Personally, I've rented to section 8 tenants and have had mixed results. Some section 8 tenants that I've had are great since they are honest hard working people, they took care of my place and money rolled in like clockwork. However, I've did have some section 8 tenants that would complain about every little thing wrong such as a bad lightbulb which they would request someone to come out there and fix. Since I'm an out-of-state investor, the PM would hire someone to go fix that lightbulb and there goes $85 towards my monthly expense for the handyman to go out there to do the job. My advice is that if you are the one screening the tenant and don't mind to come and change the occasional lightbulb, then section 8 could work for you. If you aren't local, then it's a 50/50 toss up on the tenant that you will get.

Unfortunately Section 8 gets a bad reputation from the ridiculous actions of a few welfare kings & queens. There are six section 8 units down the street from us; 5 of those units are quiet, hard-working adults with young kids who behave BUT ONE unit has a family of the stereotypical section 8 tenants - they let everyone stay with them, there is trash all over their yard all the time, they usually have broken doors and furniture in front of the unit on a semi-weekly basis, and they even allow drug dealers to use their yard/corner for dealing. 

If you're going to have Section 8 tenants, make sure you screen the heck out of them and also under the eviction rules for Section 8 tenants in your area because some cities have more restrictive requirements to evict Section 8 here. Also understand the clientele of your neighborhood and ask yourself whether you're just looking for more cash or do you want to bring in quality tenants that can help improve your neighborhood/property?

If it was me, I would steer clear of Section 8 tenants. 

If you're going to have Section 8 tenants, make sure you screen the heck out of them and also understand*** the eviction rules for Section 8 tenants in your area because some cities have more restrictive requirements to evict Section 8 here.

Screen the tenant like you would anyone else and determine the risk/reward from there. 

If there are red flags that you would cause you not to rent to someone not in section 8 then don’t. 

The guaranteed money is nice and can be tempting but don’t overlook red flags for that. 

With that said I have one section 8 tenant and have never had an issue. I change the air filters personally every two months and the place looks like it did the day they moved in. 

 Good luck!

Mike

As people above have mentioned, make sure you screen the tenant and compare their screening results to your rental criteria! If they fit your requirements and there are no red flags in the screening, I'd say go for it. I wish you the best of luck!