Section 8 Housing Requirements in Minneapolis

Lender · Anoka, MN · Member since 2019 · 30 posts · 6 votes

Before I choose any duplex properties in Minneapolis it looks like the recent reversal requiring (I'm putting it delicately) landlords to house Section 8 tenants was reversed.
I'm not keen on the idea of being forced to accept tenants just because they receive Section 8 vouchers.
Any current landlords in Minneapolis out there that are dealing with this? Doesn't this also necessarily force landlords to automatically have to renew their leases as well? And is this only for the City of Minneapolis proper or for the surrounding suburbs as well? I think it's only for the city proper.
If I'm going to be forced to house tenants and not be able to ever evict them or factor in cost of living increases due to improvements I'm just going to avoid the City of Minneapolis altogether.
Thoughts? Thanks.

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Bruce Runn

Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes

@Todd Dexheimer

I think Todd is hitting on the head.

The real difference will be the estimated 7,500 new section 8 voucher's that are on tap to be distributed as they opened the wait lists and are considering added that many families with vouchers. This will suddenly add a lot more people who are able to pay much more in rent to a very crowded rental market with already low vacancies. That will raise rents due to demand.

A lesser impact will be the reversal of the current section 8 ruling as it doesn't say you have to rent to section 8, but you have to consider them and can't use their source of income as a disqualifier. If you have different criteria and stick to them, you can still have those criteria. That being said, the newest "tenant's rights" ordinances being considered would make disqualifying a section 8 candidate much more difficult but again, you have to have established criteria you stick to and can validate.

Ultimately, getting good tenants is everyone's goal so the best of section 8 candidates should find more options.

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David BarnettPro Member
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
7y
I'm watching the developments in Minneapolis very closely. As of right now, I'm focusing my investments on the Saint Paul side of the Twin Cities. I'm very leery of investing in Minneapolis with the pending legislation (or even the talk of it).
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Gordon Olson
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Lender · Anoka, MN · Member since 2019 · 30 posts · 6 votes
7y
@David Barnett Even though you're out of town do you know if the requirements apply only to the city proper or the suburbs too?
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David BarnettPro Member
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
7y
I believe it is Minneapolis only, and wouldn't impact other Hennepin county cities/towns/suburbs. From what I was able to find in a quick Google search, the proposals are coming from city councilors.
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Naima Farah
Saint Paul, MN · Member since 2016 · 20 posts · 5 votes
7y
@David Barnett with the right local property Manager section 8 renters can be lucrative and long term benefits for the owner and tenant. Section 8 units must pass inspection at least 1 time a year for lease renewal or the tenant will loose the voucher, so they must keep it the house in a standard condition. Their is such a shortage in housing specially subsidized housing in the twin cities that it’s becoming absolute hit or miss for tenants using government vouchers to find great housing and maintain in a good condition. I see win, win for everyone. But with only a Great PM!
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Gordon Olson
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Lender · Anoka, MN · Member since 2019 · 30 posts · 6 votes
7y
@Naima Farah while I see you responded to David's comment I don't see comments to my initial questions. I'd like to know what you know about these please if you care to comment. Thanks.
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Todd Dexheimer
Rental Property Investor · St. Paul, MN · Member since 2016 · 3k+ posts · 3k+ votes
7y
I don't believe it affect single families and duplexes, however, with Minneapolis, I would not assume that won't change. Minneapolis is very anti-landlord and becoming increasingly more. It is, however, still a very strong rental market.
The good thing about the Section 8 requirement is that it should put pressure on vacancy rates, which are already low. This in turn will raise rents in the city and allow you to charge more money. Minneapolis thinks this will help bring housing to tenants, however, I suspect that it will end up causing an even tighter rental market and force market rate tenants to look in the suburbs and St Paul.
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Tim SwierczekPro Member
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
7y
@Gordon Olson the section 8 requirement was shot down. It was ruled to be unenforceable, at least as it was written. This means you do not have to worry about those requirements now. I would suggest that Minneapolis is very anti-landlord which is a con but there are pros. As people are scared out of the city it leaves a less competitive environment and those who learn to deal with it will prosper.

As to the other part of your question, Minneapolis ordinances are just restricted to Minneapolis. As far as I know, you only have City or State regulation, there are not other governing entities to worry about that cross city lines unless you are talking the State statutes.
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Account Closed
Rental Property Investor · MN · Member since 2015 · 186 posts · 149 votes
7y
Originally posted by @Tim Swierczek:
@Gordon Olson the section 8 requirement was shot down. It was ruled to be unenforceable, at least as it was written.

It was shot down and later re-enfoced again. See https://www.mprnews.org/story/...

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Account Closed
Rental Property Investor · MN · Member since 2015 · 186 posts · 149 votes
7y
Originally posted by @Naima Farah:
Section 8 renters can be lucrative and long term benefits for the owner and tenant. Section 8 units must pass inspection at least 1 time a year for lease renewal or the tenant will loose the voucher, so they must keep it the house in a standard condition. I see win, win for everyone. But with only a Great PM!

No thanks. Two of my section 8 experiences ended up with close to $10,000 EACH in repairs after "winning" with section 8. Never again.

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Account Closed
Rental Property Investor · MN · Member since 2015 · 186 posts · 149 votes
7y
Originally posted by @David Barnett:
I'm very leery of investing in Minneapolis with the pending legislation (or even the talk of it).

I stopped investing in Minneapolis until I see what happens next.

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David BarnettPro Member
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
7y
@Naima Farah As Pavel has also mentioned, I don't think the Section 8 program is a win-win. However, if that's the niche that you'd like to pursue, more power to you.
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Bruce Runn
Investor · Minneapolis, MN · Member since 2014 · 743 posts · 927 votes
7y
@Todd Dexheimer
I think Todd is hitting on the head.
The real difference will be the estimated 7,500 new section 8 voucher's that are on tap to be distributed as they opened the wait lists and are considering added that many families with vouchers. This will suddenly add a lot more people who are able to pay much more in rent to a very crowded rental market with already low vacancies. That will raise rents due to demand.
A lesser impact will be the reversal of the current section 8 ruling as it doesn't say you have to rent to section 8, but you have to consider them and can't use their source of income as a disqualifier. If you have different criteria and stick to them, you can still have those criteria. That being said, the newest "tenant's rights" ordinances being considered would make disqualifying a section 8 candidate much more difficult but again, you have to have established criteria you stick to and can validate.
Ultimately, getting good tenants is everyone's goal so the best of section 8 candidates should find more options.
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Amber Gonion
Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes
7y
@Pavel Ushakov that’s exactly what we have been telling our investors for a couple years. It has to be a really good deal if it is in the city of Mpls because of the uncertainty of what they will do next.
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Gordon Olson
OP
Lender · Anoka, MN · Member since 2019 · 30 posts · 6 votes
7y
@Account Closed Yup, I saw that. I was looking it up on YouTube and I saw the clip saying that Mpls. reinstated the ban on discrimination in June.

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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
7y
Just raise your rents above the section 8 limits, which they probably are already unless you have a really rough place in North Minneapolis. I don't think this will affect anything negatively for landlords. Section 8 isn't exclusively bad tenants either, just people that don't make a lot of money and have a need. I have several section 8 tenants that are great.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
7y
Personally I hope Minneapolis scares landlords away so I can buy some great deals! I met a NYC landlord in Havana while I was there who still buys rent controlled places, he's very wealthy because of his persistence to continue in NYC.
[email protected]512-888-9122
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Tim SwierczekPro Member
Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
7y
@Jordan Moorhead that’s what I’m saying

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Josh Brook
Realtor · Minneapolis · Member since 2018 · 35 posts · 39 votes
7y
@Bruce Runn is right on. This new requirement simply means that you can't can't use an applicants source of income as a disqualifier. If you have different criteria (credit score, eviction history, etc.) and they don't meet those, you can absolutely deny them.

Personally, I haven't seen many applicants apply with a rent voucher and also have a solid credit score so this shouldn't have a lot of impact.
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