Section 8 Tenants????

Question

I'm looking at an investment property with section 8 tenants. To all those who have had experience with this:

1. What are the pros and cons of section 8 tenants?

2. Once I own the property can I rent to non section-8 tenants?

Thank you!

Mark Ainley · Answer

@Keegan Darby I have tons of info on this from over the years as we deal with it a lot here in Chicago.  I will send you a DM with some links and info I have created over the years.  Anyone else interested in talking section 8 especially here in Chicago or Cook County Housing Authority (HACC) reach out.  BP Podcast 72 us about section 8 here in Chicago too.

Martin Neal · Answer

@Keegan Darby Pros of section 8 tenants: average length of stay is 10 years and rent checks is always on time depending on status of the government.

Cons: inspections can be annoying if you don’t know how to deal with them. Tenants will do tenant things such as normal or sometimes excess KC wear and tear, moving in extra family members.

To be completely honest, they are just like any other tenants. You still need to screen them properly. I’ve done section 8 for years and have no regrets.

John Warren · Answer

@Keegan Darby the pros are fairly obvious in that the rent is "guaranteed". The cons are also pretty obvious. You have to deal with the government on a regular basis, and you often times are accepting a tenant who would not otherwise qualify. There is often times a mindset that is prevalent in the S8 world that comes from having a "free ride". This is obviously a generalization, and I have also had some awesome voucher tenants. The best ones seem to come from programs that partner with section 8 like a veterans program, rapid re housing program, etc.

Once the tenant leaves, you can normally rent to whoever you would like. I personally prefer market rate tenants in my properties here in Chicago area because I can get great tenants who qualify. With a C or D class property sometimes it makes sense to mix in some section 8 though to mitigate risk.

Karen F. · Answer

Our experience is that any tenant who came with a voucher plus the assistance of any agency, or who had been in a homeless shelter, was an absolute nightmare.  Domestic violence, bedbugs, mental illness, aggressive and violent behavior, criminal behavior including drug dealing, illegal pitbulls to guard the drugs, prostitution, prostitution of their children,  illegal occupants, wouldn't pay their portion of the rent, filth, destruction of the property.  They have emptied out entire buildings with their horrible criminal behavior.  Let's just put it this way - it instantly became obvious exactly why they had wound up in a homeless shelter, and exactly why they had needed the assistance of an agency (as opposed to just their Sec 8 voucher) to get housing - it was that their issues made them un-housable.

Some straight Sec 8 tenants have been okay.  Rarely, they're fantastic.  In my market, often Sec 8 will pay a little over the going rate, which is good, because the unit needs to be vacant to be inspected, so we often wind up with a month's vacancy between tenants with Sec 8.  If they're okay or good, and you provide decent housing, they'll stay and stay.  But good luck getting the housing authority to raise the rent they will approve.  Often we've had to threaten eviction before they'll approve a rent increase.

If you decide not to renew with Sec 8, Sec 8 will stop paying you, BUT THE TENANT MAY NOT LEAVE!  We've had this happen, too, that we had to evict the non-paying Sec 8 tenant with whom we didn't renew the lease, and Sec 8 wouldn't pay us, even though we couldn't get the tenant to leave.

Expect annual inspections with the need to make repairs that don't seem to make any sense.  Once an inspector required that we re-point the foundation, which was in perfectly fine condition.  And you will have to repair at your own expense all the tenant-caused damage in order to pass inspection.  One tenant's teenagers loved to kick out the spindles on the porch fence.  Year after year we would have to replace them, and year after year the kids would destroy it.

So, unless you know what you're doing in respect to Sec 8, I'd be wary.  At the very least, join the local LL association, and find locals who are used to dealing with the housing authorities in your area, to give you some advice.  The fact is, in our C/D area, we have about 1/3 Sec 8 tenants, and we make it work.

Anna Sagatelova · Answer

I would be wary of any broad advice on the matter, as Section 8 programs cons can really vary by the PHA you'll be dealing with.

Nathan Gesner · Answer

Guaranteed payment from the government, but that doesn't mean the Tenant will be timely with their portion of the rent.

Expect a lot more paperwork, most of it repetitive and unnecessary. I swear they do it just to reduce the number of applicants. You're also subject to inspections and higher standards, but that's not a big deal.

My real concern? I don't like most of the Section 8 tenants and I have a problem with the general concept of free housing for years on end. I'll spare the details but almost all of my Section 8 renters were capable of working. Many of them did work and were paid under the table. Many of them snuck in unauthorized occupants. Many of them violated rules like the no-pet policy, communicated only when it benefited them, and were eventually removed from the property. I would say at least half of them did not get their deposit back but they didn't care because someone else paid it for them.

Long story short, I stopped taking Section 8 completely last year. It's not worth the additional problems.

Patti Robertson · Answer

If you search BP for SEC 8 you will find hundreds of thousands of posts.  The topic comes up ALOT.  My poor fingers got tired of typing the same thing over and over, so I put my tips and tricks in a blog post. Here’s a link if you want to check it out.

https://www.biggerpockets.com/...

David Green · Answer

Listen to podcast 356 about Joe Asamoah (https://www.biggerpockets.com/...)who has built a great portfolio of section 8 rental properties. Many of the things people complain about with S8 tenants can/does happen with any other tenant.  Proper screening can root out many problems and having systems in place for the tedious inspections.

Dick Rosen · Answer

@Keegan Darby, we typically avoid Section 8 tenants only because of the red tape that comes with them such as annual inspections, trivial repairs and the fact that the Gov't will not agree to all of your terms but you do have to agree with theirs.

Regarding the tenants, they are typically just fine and in some cases can be great tenants. I always insist that they deal with the annual inspections. You do not have to keep renting to Section 8 after they are gone. When Section 8 prospects call us we tell them that we will accept Section 8 as a portion of their income but they still need to meet our income criteria.

And a huge pro right now, Section 8 is paying rent, even if the tenant lost their job from Covid.

Section 8 Tenants????

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