Section 8- Good or Bad? What do I need to know before buying?

Question

I am interested in some section 8 housing. Is there any underlaying information about section 8 housing that one should know before going down that road? I feel like it is a great investment, though I'm not sure if I'm missing something here.

Kenneth Garrett · Answer

I don’t get the section 8 dilemma.  You still need to screen tenants and yes it can be a hassle to work through the housing authority and you are subject to an inspection.  Maintain your properties, build a working relationship with the inspector and housing office and you should be ok.  Section 8 tenants tend to stay in one location, so you could have a long term tenant.

Andre Taylor · Answer

@Kenneth Garrett and @Patti Robertson hit it right on the head.  Screen section 8 tenants just like you will screen a cash buyer....there are good sec 8 tenants and bad ones no different then cash renters. Don't get me wrong some section 8 employees can be difficult but hey what business you haven't went into where there was some disgruntled worker. have good process in place to really screen tenants and when to deal with any that goes bad.... believe me....whether its section 8 or cash... some good tenants can go bad over night on you.  All in all nothing wrong with section 8.

Patti Robertson · Answer

In order to be successful with SEC 8 you need to really understand the rules and allowances.  When done well, you can use the HUD rules to your advantage to ensure you get paid.  Just like with every tenant group, there is a small minority of SEC 8 tenants that will create damage, and if landlords never file agains them, future landlords will never be warned.  The majority of my personal tenants are SEC 8, because I buy where I can get the best return for my investment dollar.  I also manage a lot of SEC 8 tenants for other landlords who understand the risk and rewards.  The best reward is long lease terms.  The maintenance issues will be had regardless of the tenant if you are investing in low income neighborhoods.  There is a ton written about SEC 8 on BP.  To save my fingers from typing, I collected my experiences and tips in a blog post.  Here’s the link.   https://www.biggerpockets.com/...

Kenneth Garrett · Answer

@Nick Troutman

Section 8 tenants are like all tenants.  You need to screen them.  Don’t let the fact that the government is paying the rent sway you.  Screen them.  The tenant pays 30% or less depending on there financial situation. If the tenant doesn’t pay there portion you can evict.  The housing authority will not assist, but you need to inform them on notices.  I have had a number of section 8 tenants, just like every tenant some good some not.

Stephen J Davis · Answer

I had 22 units all section 8. Guaranteed payments....BS. They held rent on about 8 units one month because they did not pass inspection. A tenant had knocked out the window in a fight and they failed me on that unit. All 8 had tenant caused problems and they still penalized me. The other problem was I had to carry a gun to pick up the rent. Made a lot of money but not worth it. I only allow section 8 in about 10% of my units, no more. I meet them to see if they are real or intergenerational section 8 participants. I won't lease to the latter. Do not let section 8 control your portfolio.

Charles Worth · Answer

@Nick Troutman its a business is how I would put it. There are a ton of regulations to deal with for section 8. Like any govt agency its a pain in the rear to deal with and there are issues. Let me put it another way. If you setup a Dr. office would you try and bill insurance by yourself without any training? Ok its not that bad but hopefully you see my point.

The second issue as noted are the tenants. You almost need special training to deal with them too and select the right ones and even then you will have hits or misses. I do not agree on the intergenerational comment. The worst tenants I had were ones who did not really deal with section 8 as much before. They expected the same level of service and care as normal tenants. This is really hard to do with section 8 because you basically fix things to the point they pass section 8 but if you do more you can many times be pouring money down the drain because you are going to need to do it again once they move out.

The third is upkeep. Don't keep up your place right and you won't pass inspections and/or your tenant will report you. Either way you are looking at lost rent.

Lastly, I would note that, at least where I was tenants many times had a portion. Good luck collecting that. Dealing with tenant portions was its own unique hell. They know evicting is not worth it over $100 bucks a month.

With all that being said, at least if you own in a bad area, the other options are worse. Market rate tenants were much worse for me and if they don't pay you don't get $1 while evicting them. On section 8 they pay up until they are out.

Kiwi Mills · Answer

...."The other problem was I had to carry a gun to pick up the rent"

Matt M. · Answer

Without a doubt!

@Cat Williams

Cat Williams · Answer

@Matt M. Happens all the time with non-section 8 too. So many people are just plain slobs.

Matt M. · Answer

@Nick Troutman

My experience with sec 8- inspections are relatively easy if the property is in good shape, tenants tend to stay long term, but when they leave, don’t expect broom clean or anywhere near it

Section 8- Good or Bad? What do I need to know before buying?

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