Any tips for renting out to Section 8 tenants being first purchas

4 Replies

Hello BP I’m wondering if I could get any tips for my first rental property located in Houston, Tx. The property is being sold as is with Section 8 tenants still living in the property. Current tenants have been living there for 23 years. I’m looking to buy and hold the property with a 30 year fixed rate loan.

See if you have market rents if not start bumping them up every year.

If you ever have to get new tenants screen them the same as anyone else.

I wish all my properties could be section 8 properties.

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Section 8 has pros and cons.  Pro = Pays Rent, Con = deal with government and typically people that don't care about your property.  The good thing is that you have someone that has been there for 23 years.  That means they are mature, don't plan to leave and probably keep the house clean and livable.  All great things. 

But I remember that we once bought a property w/ Section 8 tenant already there and the seller continued to collect from Section 8 for 5-6 weeks after closing.  Make sure you are covered to collect the rents from Day 1. It is worth talking to your agent, the title company and section 8 office BEFORE closing to make sure you get paid.

@Josh Bakhshi is correct that unless SEC is aware there is a pending sale, payments will continue to the old owner.  To avoid this, schedule closing in the last half of the month, and after the seller receives the last payment he is supposed to get, he should send a notice to SEC 8 to put payments on abatement because of a pending sale.  If you like the seller's lease terms and his rent amount, you can include an assignment of lease agreement to sign at closing, saving you the step of having to create a new lease with the SEC 8 will need to see proof of ownership.  I've used a settlement statement, because your city/county records won't be updated in time for that to be used for confirmation. You will be given forms that will assign you as the new payee.

I wrote a blog about my experience with SEC 8 because the topic comes up so often on BP.  If you want to read it, click on my profile and look to the bottom right.