Broad questions for anybody who has experience with low-income housing!
My wife and I are looking at purchasing a low-income housing unit as our first rental investment. The history that comes with it is the current tenant has been there for 3 years and the seller hasn't had a problem collecting rent from her in that time period. The property is in a shadier part of town and there are definitely some minor rehabs at the next tenant turnover, but the current tenant seems to keep pretty good care of the place as is. She just renewed her application for low-income approval from the state, which guarantees at least 60% of the rent to be automatically paid by the state. The seller's REA said there is very little turnover with tenants and that the demand for low-income housing far exceeds the supply, which also decreases the vacancy rates.
What experiences do you guys have with the Section-8 rentals and any advice for a newbie jumping in with 2 feet?
Thanks in advance!!
Tenants seem to take less care of the property on average. Most people don't value free things. The direct deposited portion of rent is nice. Depending on your area, you can charge about market rent to section 8. Which will help alleviate the costs of the (on average) lesser taken care of property. I'd get a verification of rent rolls, date the tenant paid. Copy of bank statement section or something similar.
Awesome! Thank you for your insight! Are you allowed to ask for those documents while under contract in Montana?
I would 100% get the documents while under contract and would make the offer contingent upon confirming them. I would request an estopple from the existing Tenant to confirm the terms of the lease the seller is telling you. Last thing you want to find out is the tenant has a long term lease at rates well below market - then you are stuck.
If you go online section 8 will tell you what your place will qualify for based on the number of bedrooms. There are inspections and standards you will have to adhere to for you to qualify.
I don't have any personal experience with this but have been reading and researching a ton and the above is what I believe to be true but with the disclaimer to do your own research.
Good luck - my wife is from Bozeman and we have been looking for a place there for the past year +. Slim pickings and high prices.
Hey Justin, thank you for the awesome advice! Yeah, real estate in this area is ridiculous. We have had to look outside of our town to find somewhat reasonable prices. A 500 ft2 apartment was listed for $1/2 million recently!!