Section 8 interest - Need Help

[Vyacheslav Borodkin]

Just got the property in NJ and advertised it on Zillow and got a ton of interest. Lots of people asking if I would accept section 8. On my other properties I never got into assistance based tenants.  Can somebody set me up with right resources?  Does it make sense to rent to rental assistance tenants?  Asking for $2200 for a 3 br/2bath .  Would that even pass the rent limit bar?  Do I even want to deal with Section 8?  Please share your wisdom

[James Mc Ree]

There are 3 main considerations I can think of for dealing with Section 8 apart from the fact that you get a guaranteed rent payment every month:

1. Section 8 Inspection - You need to pass this before you get your first payment. It is a lot like a use and occupancy inspection, but a little more sensitive. You may end up doing some repairs you might not normally do, but I haven't found them to be unreasonable.

2. Section 8 Contract - You sign a least with the tenant and a lease with Section 8. The Section 8 lease is probably more onerous than yours. Read it carefully and be sure you agree with the terms. They aren't negotiable, but also not unreasonable.

3. Section 8 Tenants - In my experience, Section 8 tenants can skew to the "harder living" side of living standards. I have a small sample size, but that seems to be the general sentiment I've heard as well. You will likely have more turnover repairs to do and more drama. Difficulty can arise with any tenant demographic, but this demographic is often living on the edge of financial affordability and has no savings. Education tends to skew lower. Drugs and crime may be more of an issue. As a landlord, you will likely experience more volatility with this group than a wealthier and more stable demographic. That is probably the biggest consideration.

Overall, I like Section 8. Apart from the guaranteed rent payments, loss of a Section 8 voucher is a very compelling threat to bring a tenant into compliance, possibly more than eviction itself. There is an 8 year waiting list for a Section 8 voucher in my area. A tenant who would otherwise be evicted for non-payment of rent can find another place to live with some effort. They can't if they lose their voucher because they can't afford it and know they will wait forever for another. That's a compelling lever to pull if needed.

In terms of payments, I found they are generally in the ballpark of market rent, but I am only in 1 area. They are great in COVID-times since there is no question of affordability and they step in to help if your tenant loses a job. For example, one of my tenants lost her job and all income. Section 8 stepped in and paid 100% of the rent. That is a wonderful thing.