I'm trying to decide on Section 8 rentals, yes or no?

46 Replies

@Tracie Janoska

I have a few section 8 tenants.  Some are fantastic and some are terrible, but I could say the same with non section 8 tenants.  You can still require a security deposit and background and credit check.  It’s up to you.  If your building is not approved you need a tenant who is a section 8 voucher holder that wants to rent your property and then the process can begin.  Lots of paper and an inspection must be conducted.  Go to www.hud.gov/sites/documents/52... 
They will also review your lease.  They will conduct an evaluation and calculate how much the tenant is responsible for their portion of the rent.

Tracie'

I used to feel the same way. But I have properties in an area that there are high evictions and couldn't figure out how to control it. I accepted 1 section 8 tenant and released that they weren't any worse than the market rent tenant. There are a couple of things that you have over a section 8 tenant. You do your inspection once every 3 months or once every 6 months however you feel comfortable with. If their not taken care of the property, dirty destructive you give them 10 days to clean it up or fix what they did. You notify section 8 by sending them the letter and in 10 days if not cleaned up you evict them per your lease. The apartment will be cleaned up because section 8 tenants if evicted, will lose their voucher.

Also section 8 tenants live in their units longer and that means fewer vacancies. After getting more section 8 tenants, we went from being in court with a couple of tenants a month to maybe 1 every 4 or 5 months. And when you take a section 8 tenant to court, they usually will pay or take care of the violation and not need to be locked out. We have a few hundred units now and have the majority of them filled up with section 8.

I hope this helps. Any questions feel free to reach out to me.

@Solomon F. Hello. My partners and I are just starting up our REI business. We will buy and hold our properties for Section 8 rentals. But I am also interested in this HUD VASH program you speak of. I'd never heard of it! We're also super big supporters of veterans, really interested in it's processes and guidelines. Any info would be hugely appreciated!

Originally posted by @Tracie Janoska :

Hi there, I'm just starting to get into small multi family.  Should I do section 8?  Sure, the state does autopay $1200 per month. My concern is what if the tenant trashes the property, I have no recourse. I wouldn't be able to get money from the tenant for repairs as they are section 8 and don't have the monetary to begin with. Thank you for sharing your opinion...Tracie

I absolutely love Section 8. One of best decision I ever made

 

As other people have said there are pros and cons. I bought a duplex last year and one unit had a regular tenant and the other side had a section 8 tenant. The section 8 tenant actually kept her unit in great shape. Working with County Housing Authority  was painfully slow and time consuming, for whatever reason they kept sending the rent vouchers to the previous owner and we had to work with him to get our money back.  The renter in the other unit has not taken good care of the unit she is renting and I am glad her lease is ending sometime around April. So section 8 or not, it depends on people you are renting to. Setting up section 8 renters can be some work early on, but if you find a good renter then it will probably be less work than a regular renter. 

Just had a section 8 tenant move out of a multi unit on January 31st.  During previous inspections by both us and the section 8 folks he was told to clean up his act.  The home was disgusting.  He wouldn't comply so section 8 terminated his voucher.  No voucher, no money so he moved out.  I have never seen a more disgusting scene.  Human feces everywhere.  Ripped carpeting, empty pop bottles strewn everywhere, damaged walls and destroyed appliances.  I have bought dozens of foreclosures and never seen one this bad.

Yes, we pre-screened the tenant but this was his first home after moving out from his parents.  Bottom line: a complete gut that will cost twice as much as we collected in rent over the past few years for the unit.

If your considering accepting section 8, I would advise you ask yourself this question.  How do people generally take care of things they are given and don't have to work for?  Just check out any large public housing complex in any major city and the answer will be glaringly obvious.

Yes, there are good people on Section 8 who have good intentions.  There are also those who just want a free ride.

I'm down to two section 8 tenants left and won't be getting approval for any future property.  My take on this is if your property is substandard you might have to accept section 8.  I improve all my property when I acquire it.  If it's occupied on my purchase, I'll renovate when the tenants move out.  This keeps me full of folks with decent jobs and credit scores.  I sleep better this way.

@Tracie Janoska you still get to screen the tenants and there are plenty of good section 8 tenants so I don't think you should be to concerned about them trashing the place. The thing to note is that you need to pass the inspections so may have slightly higher maintenance costs. If there is a large differential between section 8 rent and market rent in your area then I would go for Section 8.

@Tracie Janoska

What if a regular tenant were to trash your property? Most of my tenants are Section 8 and the average length of residency in my rentals is 8 years. One lady has been there going in 17 years. What if you have a regular tenant that doesn’t pay you for 2-3 months? If your Section 8 tenant doesn’t pay and you evict them they lose their voucher. More of an incentive for them to follow the rules, but each market is different. Just my 2 cents

Section 8 is great in Michigan however there are also so many tenants in good rental areas.  I have had Section 8 tenants for the last 30+ years - let me know if you need anything on them.

@Tracie Janoska

Certain areas / buildings can do great with S8 tenants. I have about (25) S8 tenants in apt units. They are just like the financial responsible tenants. S8 tenants trash units and no recourse? Try “regular” tenants...good luck recouping damages from them! S8 tenants don’t want to lose voucher status so in essence they are in better behavior to avoid breaking their lease. There’s a waiting list to get S8 vouchers in a lot of cities.

You screen ALL S8 tenants as you would for regular tenants. Same rules apply. No discrimination.

I like C+ areas / C+ buildings and mixed tenant categories (S8/Financially Responsible). Keeps my occupancy 90%+ at all times! Oh ya, guaranteed rent on the 1st never hurt either!

You’ll have problems from a variety of tenant classes just avoid D/F properties, section 8 or not! Invest in areas where you feel safe!

@Tracie Janoska l think for the most part you want to put the best tenant possible in our property. And you do that by establishing a good screening process. Every time we place a tenant in our property we take a chance even sometime we do the best screening you might still suffer a loss. A loss is part of being in this business. I have had many section 8

Tenants and most have worked out great but I have had a few not work out at all. I have also had good and bad non section 8 tenants. I set my criteria and my goal is find the first qualifying tenant that wants to rent my unit. I hope this helps.

I have a property on Section 8. Its just like any other property. Have a solid lease. I write in a visit every 6 mnths. But just cause its section 8 doesnt mean they will trash it or you have no recourse. Most are good tennants as they dont want to be removed from the program. If they dont have all of the downpayment, maybe write it up to where they pay monthly. But GET IT IN WRITING! That has nothing to do with section 8, its the tennant on the deposit. Its a guarenteed deposit every mnth and I dont have to chase the tennat.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here