Section 8 Housing: Great Idea or dangerous in the current market?

Clearwater, FL · Member since 2019 · 5 posts · 6 votes

I'm operating in the Tampa Bay area of Florida, and I'm considering purchasing property for section 8 rental. I did a forum search, and some of the Section 8 questions were a few years old, so I would refresh it. In our current market, do you think S8 is a good idea, why or why not? I'm new to the investment business, so any insight is always appreciated. Thank you.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

I have 2 section 8 houses. I love the program. I don't have to worry about rent as the government is direct deposting all or most of it into my bank account.
Tenants have taken care of my houses as they don't want to lose the free government money and they tend to stay a long time.
Section 8 in my area pays 110% of market rents.

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
I have 2 section 8 houses. I love the program. I don't have to worry about rent as the government is direct deposting all or most of it into my bank account.
Tenants have taken care of my houses as they don't want to lose the free government money and they tend to stay a long time.
Section 8 in my area pays 110% of market rents.
29 Reply
Michael Valerio
Wholesaler · Saint Petersburg, FL · Member since 2012 · 88 posts · 37 votes
6y
@John Underwood raised two very good points. One thing to consider would be the fact that if things do actually get as bad as some of the "gloom and doom" predictors are suggesting, the potential tenant pool for S8 rentals would increase (as more people would be forced to apply for subsidized housing).
2 Reply
Carl Millsap
Investor · Midwest · Member since 2019 · 338 posts · 226 votes
6y
@Craig Hormes We've had several S8 tenants and the program continues to get better in our area.

1. Tenants are now responsible for fixing damage they caused. There is an annual inspection, and the program use to make LLs fix holes in the wall, replace ceiling fan globes etc. that were created / missing because of the tenant. If the LL didn't fix within 10 days and get a re-inspection the payment was put on hold. Now the tenant has to fix the holes and replace the globes etc. or risk losing their benefit.

2. You can get regular rent increases with 60 days notice.

3. As @John Underwood said the government is depositing the rent on the 1st like clockwork.

4. They tend to stay a long time, and for the most part maintenance calls are rare (it helps to tenant proof the unit).
9 Reply
Matt Leber
Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes
6y
@Craig Hormes section 8 is great in these economic conditions. Your risk of not collecting rents is reduced because the government is paying you directly based on the Tenant’s income. If they lose their job for more than 30 days, the govt pays a larger proportion of the rent. If they have a job, the govt still sends you a majority of the rent. We just placed our first section 8 tenant in March right before the virus ramped up and I couldn’t be more thankful for the program.
7 Reply
Craig Hormes
OP
Clearwater, FL · Member since 2019 · 5 posts · 6 votes
6y
@Matt Leber did you buy as an LLC or under your own name? I'm looking at finance options. How's Orlando market doing in all this?
1 Reply
Karl B.
Rental Property Investor · Erie, PA · Member since 2015 · 1k+ posts · 2k+ votes
6y
I didn't have a good experience with Section 8 in my market. I had one inherited Section 8 tenant who smoked in the unit despite not being allowed to. Last May she overdosed on fentanyl and died. She wasn't a terror or anything - friendly enough to me despite not getting along with the other tenants.

The second Section 8 tenant at a different multi-family was a terror. She wasn't inherited so it's all on me. Not only was she not nice but she didn't take care of the property in that there was garbage in the yard, cigarette butts, etc. I should have dropped the hammer earlier but didn't so again, my fault.

Several times she wouldn't show up to her Housing Authority meetings/inspections and payment was freezed. She almost got evicted several times and paid me the $35 late fee almost every month.

They froze her account yet again and I evicted her. She didn't even show up to the eviction hearing on time (she showed up almost 10 minutes late after the verdict had been issued in my favor). Her voucher is still frozen (at least it better be as she owes me money and The Housing Authority is aware of this).

So to say Section 8 is guaranteed money and Section 8 tenants are afraid of losing their vouchers may be true in a lot of cases, but certainly not all.

Though my biggest annoyance was with the Section 8 Housing Authority; they were inept. They always seemed to be confused, kept bad records, etc. When I tried to raise rent for the apartment (where the lady later O.D.'d) the inspector claimed $450 for a one bedroom in my area was too high. After the tenant passed away I renovated the unit after it was emptied out and now I get $590 a month from a really nice couple.

Some people on BP claim Section 8 in their area pays more than market rate; do your due diligence to see if this is the case. I'm sure some Housing Authorities are run well but the one in my market is not.
10 Reply
Davin Cole
Member since 2017 · 1 post · 0 votes
6y
@Karl B.
0 Reply
Matt Leber
Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes
6y
@Craig Hormes under personal name. We don’t have rentals in Orlando, we just live here. We invest in Brevard County and Duval County. The market seems steady in terms of real estate prices (so far). Collecting rent has been a little harder due to the virus but we’re getting by OK.
1 Reply
Matt Leber
Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes
6y
@Karl B. That’s unfortunate that you’ve had a rough experience with your local housing authority. Our experience in Central Florida has been pleasant thus far. I thought they would take forever to process paperwork just due to govt process but instead they expedited all our paperwork, inspections, and even April payment due to the virus.
The zip code I bought our sec 8 house in is one of those areas where the housing authority pays more than I think I could’ve gotten otherwise. I thought it was a stretch to rent the 4/1 1100 sq foot rental in C- neighborhood at $1200/month. But the authority will pay me up to $1467 for that same house. They don’t care that its small sq footage or only has 1 bathroom. They only care that the house has 4 legal bedrooms as I advertised it. Guess I found a little niche.
10 Reply
Lisa Larson
Realtor · Member since 2020 · 7 posts · 16 votes
6y
@Craig Hormes
I have had several Section 8 tenants over the years and have learned a few things.
My properties are always really nice so I expect them to be taken care of.
I always pull a background check, including criminal and evictions and call all references, just as I would with any tenant. Ask the previous landlord what the condition of their place was when they left. Drive by there current place and see the condition.
Let the tenant know that you inspect the property and do so once it twice a year.
Do a walkthrough 60 days prior to renewal and if there is anything that needs to be cleaned up or repaired that is a result of the tenant, I let them know it needs to be taken care of or I won’t renew.
It is really hard in my area for a tenant to find someone willing to take Section 8, so they usually don’t want to move if they don’t have too.
Most people on Section 8 are good people, but there are always a few bad apples, so just do a really thorough job at screening.
13 Reply
QuoVadis Gates
Investor · Chicago, IL · Member since 2019 · 32 posts · 13 votes
6y
Great idea, the federal government hasn't shut down so the program is funded; and even if the federal government does shut down the program will most likely still be funded for 3 months. The last and longest recent government shut down was 2 and a half months, rent was on-time both months.
Market rent is uncertain because of the continuous lose of jobs during this downturn.
4 Reply
Bernardino Graziano
North Royalton, OH · Member since 2016 · 41 posts · 48 votes
6y
@Craig Hormes
Hello Craig, I have one tenant on section 8 here in Cleveland and it has been very difficult to deal with them. Lots of phone calls and emails not answered. They screwed up the dates on the contract and tried to blame me. Thank god I saved every email I sent them. It might work for you in Tampa, I wish I never did it here in Cleveland.
0 Reply
Michael Ablan
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Craig Hormes - My section 8 tenants are my favorite tenants right now. Direct deposit into my bank account unless the government shuts down, and lately the government has proven they're willing to print endless money.
1 Reply
Ricardo L Knight
Rental Property Investor · Reading, PA · Member since 2019 · 76 posts · 43 votes
6y
@Craig Hormes it’s fantastic!
0 Reply
Cody DeLong
Gorham, ME · Member since 2018 · 280 posts · 186 votes
6y
@Craig Hormes
Works great for me up here in Maine. I have 3 section 8 in my 11 unit and a SFH that's Section 8. All rent gets direct deposited and tenants take care of the places as to not lose their voucher.
Had only one issue in the past due to an abusive ex BF who now has a restraining and no response order on them. Hasn’t been an issue since
2 Reply
Brian Garlington
Realtor · Oakland, CA and a Real Estate Investor with Multi-Family Units and a Self Storage Facility · Member since 2016 · 2k+ posts · 2k+ votes
6y
Are you kidding? I may be biased in my opinion but I will say Section 8 rentals are some of the safest types of rentals you can have. All of my rentals in the Bay Area and half of them in Cleveland are Section 8. Yes it was a little bit of a nuisance for me and my PM to deal with the red tape of the Housing Authorities, but I sleep WELL knowing my rent is guaranteed by the government. I read somewhere that supposedly 1/3 of people did not pay rent this month?............And you still can't even ......think about .........trying to .......wish you could..... start .......to hope ........to think about evicting them? That my man is what the "Dangerous in the current market".
8 Reply
Ramon Flores
Rental Property Investor · Los Angeles, CA · Member since 2016 · 172 posts · 122 votes
6y
I have always been afraid of section 8, but after hearing out other investors and after all that is happening with the virus... I am very much open to section 8. Thanks for the info guys!
3 Reply
Stephen KeigheryBusiness Member
Rental Property Investor · New Orleans, LA · Member since 2018 · 716 posts · 555 votes
6y
@Craig Hormes Government paid rent is a pretty good option in this climate of high unemployment and not being able to evict tenants.
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1 Reply
Tony Kim
Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes
6y
Originally posted by @Craig Hormes:
I'm operating in the Tampa Bay area of Florida, and I'm considering purchasing property for section 8 rental. I did a forum search, and some of the Section 8 questions were a few years old, so I would refresh it. In our current market, do you think S8 is a good idea, why or why not? I'm new to the investment business, so any insight is always appreciated. Thank you.

Pandemic or no pandemic, when I acquire properties locally, it is always with the mindset of how a Section 8 tenant would fit in with the property. Section 8 is a very nice hedge not only against the kind of environment we are in now, but it is also great protection against the some of very tenant-friendly laws we have here in California.

As with all things however, everyone's mileage may vary. My experience has been great...and I also rent to people that were homeless through various programs, like Los Angeles' HIP and VASH. But of course, not everyone will have positive experiences with Section 8. However, I can't help but think this has less to do with Section 8 and more to do with tenant screening. One of the earlier posters that had issues with the program mentioned he was renting for 500 or so dollars. But IMO, any property in any part of the country that rents for that amount is risky and tenant screening becomes that much more critical.

Also, don't hate me for saying this but Section 8 recently approved a rent increase for one of my units which went into effect this month (Tenant's portion did NOT increase). Of course, I began the paperwork for the increase long before we knew about Covid 19. I also received all my April rent...most of it electronically on the 1st. My point is that Section 8 operates with little regard to how the economy is doing.

Another poster also mentioned that if the economy were to turn bad, HUD might run out of money. That is also highly unlikely. Regardless of how the economy is doing, the amount of people waiting in line to get Section 8 benefits is extremely long. It takes several years from the time you submit an application to get to the point where you actually receive your voucher. Recession or no recession, there is a crapload of people waiting for their Section 8 application to get approved. If funds start getting low, they can simply stop issuing new vouchers.

The only downside with Section 8 is that there is somewhat of a learning curve for how the program is administered in your area. The program is federally funded by HUD, but each city administers their own program. Most of the basics are the same though. It took me a little while to learn all the nuances and the most efficient way of getting a Section 8 tenant placed into your unit. It takes time....longer than a regular tenant, but once you get a someone placed, you will be set for a long time. Make sure you submit requests annually for rent increases.....and yes, all of my section 8 tenants pay at or slightly above market rate.
3 Reply
Justin Tam
Member since 2019 · 5 posts · 2 votes
6y
@Carl Millsap is that a NY State thing?
0 Reply
Anthony Liguori
Rental Property Investor · NJ (new jersey) · Member since 2019 · 113 posts · 16 votes
6y
@John Underwood
Which market ?
0 Reply
Anthony Liguori
Rental Property Investor · NJ (new jersey) · Member since 2019 · 113 posts · 16 votes
6y
@Carl Millsap
I was possibly looking into some out of state investing and upstate ny was on my list. I saw multi units were pretty cheap. How’s the market out there for rentals ?
0 Reply
Anthony Liguori
Rental Property Investor · NJ (new jersey) · Member since 2019 · 113 posts · 16 votes
6y
@Michael Ablan
How’s the market over there in upstate ny?
0 Reply
Anthony Liguori
Rental Property Investor · NJ (new jersey) · Member since 2019 · 113 posts · 16 votes
6y
@Ricardo L Knight
I was possibly looking to invest out if state in PA. Looking at possibly Scranton. What do you suggest. Looking into multi families
0 Reply
Anthony Liguori
Rental Property Investor · NJ (new jersey) · Member since 2019 · 113 posts · 16 votes
6y
@Cody DeLong
I was doing some research on Maine and saw houses were good prices. How’s the rents and market out there ?
0 Reply

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