Duplex purchase - Inheriting Section 8 tenant

22 Replies

Hey All,

I'm purchasing a duplex in Columbus, which is fully rented. One of the tenants is Section 8. Just curious if anyone whose been in a similar situation has advice. I'm already following up with Columbus Metro Housing Authority. Just want to make sure I'm fully in compliance and don't let anything fall threw the cracks once I'm officially the landlord.

Thanks!

Originally posted by @Rory Coyle :

Hey All,

I'm purchasing a duplex in Columbus, which is fully rented. One of the tenants is Section 8. Just curious if anyone whose been in a similar situation has advice. I'm already following up with Columbus Metro Housing Authority. Just want to make sure I'm fully in compliance and don't let anything fall threw the cracks once I'm officially the landlord.

Thanks!

 @Jaimin Doshi , @Harman N. , @Allen Tracy , @Mitch Deminski , @Donny Thompson , @Art Mimnaugh

Section 8 is great for out of state investors. Guaranteed rent and they even do inspections for you.

Read over the Sec 8 lease provided by the housing authority in that location.

Also, search online for minimum health/safety/physical requirements of the property/unit.  Make sure those items are up to code and you'll have no problem with the Sec 8 inspections.

In my experience, the owner or manager should inspect the unit AT LEAST 2x/year--Sec 8 or not.

Good luck, Mr. Landlord!

Both duplexes I have in Columbus came with an inherited tenant each and then my property management company brought in a section8 tenant for each property so I have two now.  So far the inherited tenants are falling a little behind in rent while the section8 tenants are staying current.  Both section8 rentals had the representative argue on the price and bring it down a little when I think the pricing we had was fair and was below what was listed on GoSection8.com.  The tenants so far have been good and the money keeps coming in so that's definitely a plus.  The biggest downfall so far is I wish all of the money went through my property management company to make bookkeeping much easier.  Much more difficult when some rent is going to property management which has awesome bookkeeping tools and some is coming directly to me which I have to keep track of.

Originally posted by @Allen Tracy :

Both duplexes I have in Columbus came with an inherited tenant each and then my property management company brought in a section8 tenant for each property so I have two now.  So far the inherited tenants are falling a little behind in rent while the section8 tenants are staying current.  Both section8 rentals had the representative argue on the price and bring it down a little when I think the pricing we had was fair and was below what was listed on GoSection8.com.  The tenants so far have been good and the money keeps coming in so that's definitely a plus.  The biggest downfall so far is I wish all of the money went through my property management company to make bookkeeping much easier.  Much more difficult when some rent is going to property management which has awesome bookkeeping tools and some is coming directly to me which I have to keep track of.

 Interesting my sec8 rent in toledò goes to the property managers

@Rory Coyle

I bought a duplex in the Dayton, OH area last year and inherited a section 8 tenant. Someone with the housing authority for the county was able to help guide me through the process of inputting my paperwork when I first took ownership. Since my tenant had already been there for a year, their lease was running month to month at that point. I looked over the lease and liked it as is, so I just kept it in place month to month. About 4-5 months after buying the property the annual inspection came up, and I was contacted by the office about what to expect and how to prepare (tenant most likely will know what to do and how to make sure it passes). Everything has gone very smoothly so far. In fact, when I rented out the other unit I ended up filling it with another section 8 tenant because I had such a good experience.

Section 8 is big on health and safety. The housing association that covers the area you are looking to invest in should have more info on their official inspection checklist which is what you want. 

@Rory Coyle this is great to hear - congrats!  I only do Section 8 rentals and highly recommend them.  They are the most stable and profitable rental niche out there when done right, in my opinion.

I've purchased some units with S8 tenants in place and I'd recommend submitting the new owner paperwork to the Housing Authority immediately following the close of the purchase.   Then follow up relentlessly until the office confirms they've made the switch in their system to make you the landlord.  Also don't panic if the first payment gets messed up - the HA will fix it and pay you in arrears (this shouldn't be a problem but just in case).

If you haven't already, I'd recommend requesting the most recent "notice of change" or annual recertification for the S8 tenant (a document that comes from the Housing Authority) that lays out how much the tenant pays and how much the HA pays.  As well as a ledger for both.

Lastly, I'd also recommend finding out the last time a rent increase was requested and what your HA office's process is for those. In my experience, a lot of landlords miss the opportunity to raise rents for S8 and it's usually a very easy process.

Reach out if I can help further!

Almost forgot, like someone else mentioned, it took a few months before I received any payments from section8 as they're backlogged right now in getting every set up and paid out but I did receive all back payments (another reason to have good reserves set aside).  I'm not sure if it's the same for inherited tenants though.

@Rory Coyle - One more thing that hasn’t been mentioned - Make sure the seller notifies the Housing Authority of the pending sale just after they receive their last payment.  The HA will then put payments “on abatement” IE hold, until you apply as a new payee.  Also, have the seller create a document called an Assignment of Leases, assigning all rights to the leases with the tenants to you.  This will all you to keep the existing leases in place and just submit as a new payee, which will be a faster route to you getting your first payment than if you had to start their paperwork from scratch.

Congrats on your purchase @Rory Coyle ! Must be very exciting for you. I will be closing in on a single fam which already has a section 8 in place. Generally, I'd ask your broker (or if you have seller's contact info) to get proof of payments for the last 6 months. If they've been up to date, you should generally have no issue with inheriting section 8. Just make sure you fill out everything accurately on the "ownership change packet" form and it should be a smooth transition. 

Also +1 to @Patti Robertson 's reply, definitely good advice! 

@Mikael Winkler my manager didn't give me the option for the payments to go to them.  The checks are made out to me so far and my manager said we'll soon be setting up direct deposit between them and myself.  I guess I better ask them about the option of payments going through them.

Originally posted by @Allen Tracy :

Both duplexes I have in Columbus came with an inherited tenant each and then my property management company brought in a section8 tenant for each property so I have two now.  So far the inherited tenants are falling a little behind in rent while the section8 tenants are staying current.  Both section8 rentals had the representative argue on the price and bring it down a little when I think the pricing we had was fair and was below what was listed on GoSection8.com.  The tenants so far have been good and the money keeps coming in so that's definitely a plus.  The biggest downfall so far is I wish all of the money went through my property management company to make bookkeeping much easier.  Much more difficult when some rent is going to property management which has awesome bookkeeping tools and some is coming directly to me which I have to keep track of.

Is it always the case that Section 8 sends the money directly to the owner, or is it just the local Section authority? Though having a reliable rent stream outweighs the inconvenience, that is pretty annoying that not everything goes through the PM.