Is Section 8 Worth It?

Question

I know slum lording can be very lucrative but is it actually worth it? My boss is considering buying apartments and turning them into Sec 8 housing and I've been left with task of deciding if it is actually a good idea or not. I've done all the research for the county we will be doing it in but I want to hear other thoughts and opinions before making a final decision.

Thank you.

Patti Robertson · Answer

A true slumlord would never be able to pass a SEC 8 inspection.  Just sayin'.

Scott M. · Answer

In my opinion you are asking two very different questions with your subject and your first comment.  Is Sec 8 worth it and Is being a slumlord worth it.

First:  Is Sec 8 worth it is yes.  A lot of great tenants have Sec. 8.  While others views may differ in our portfolio there is very little difference between the key metrics with Sec 8 VS market tenants.  But your millage may vary as will others.  People may chime in with a Sec 8 horror story, no doubt they exist.  If you have been in this biz long enough and with enough homes you will have a horror story about both types of tenants.

Second:  Is being a slumlord worth it?  No offense, but come on, don't be slumlords.

You thinking Sec. 8 = being a slumlord is the main issue here.  Provide a good place for people to live and that investment will pay off long term regardless of the type of tenant.

Jennifer Donley · Answer

Account ClosedLike the other responses, I cringe when people equate Section 8 with slumlording.

I'm a Section 8 specialist and absolutely not a slumlord.  I've attached a photo of one of my Section 8 properties prior to tenant move in.  This is admittedly one of my nicest properties but we rehabbed it to fit the area.

In general I have good tenants who care for their property and are easy to work with.  One of our strategies to attract the best S8 tenants out there is to rehab our properties to be one of the nicest in the neighborhood and it works very well.

Like @Patti Robertson said, most S8 inspectors won't let you have awful properties.  But you can repair/rehab to just get by and my experience is that the  nicer the property, the easier it is to attract good tenants and the crummier the property, the harder it is to attract good tenants.  So you can choose the route you want to go.

Bottom line, you can do Section 8 successfully without being a slumlord.  You must (as always) screen meticulously AND you need someone on your team who is detail & process oriented.  If you don't have this person, Section 8 gets tough to manage well.

Don't be a slumlord, Section 8 or not.

Stewart Beal · Answer

There is no reason you have to be a slumlord to accept Section 8.  We rent to about 400 Section 8 voucher holders, we screen residents and ask for rental references, most of the time it works out just fine.

Alexander Szikla · Answer

Section 8 has guidelines and standards for both tenants (they must be employed, pay their rent on time, etc.) and landlords (there are annual inspections).

If you plan on being a slumlord, you really shouldn't get into real estate and Sec 8 simply won't fill your units (or they will with the absolute worst tenants imaginable).

Andrew Syrios · Answer

Generally yes, although I wouldn't call it lucrative. Just make sure that you are screening tenants just as you would for market rent (other than the income qualifications, of course). Some landlords go easy on Section 8 tenants because the rent is assured, but then they get bad tenants who trash their units.

The only exception is with badly run Section 8 offices. For example, we don't take KC vouchers because it's just so difficult to work with them (at least in our experience). But we will from Lee's Summit, Independence, Belton, etc. So you just have to be cognizant that there is a lot of red tape and sometimes, with certain branches, it's too much.

Tony Kim · Answer

Wow, very nice!

I've said this so many times before but it deserves to be repeated. Most of my best tenants are Section 8 as these are the tenants who tend not to trash my units nor secretly start subletting or moving in other family members. Rent is also generally higher and payment is never late. Also, if a unit looks like it's being run like a slum-house, then it's either in abatement or well on its way to abatement. Like any other unit that you're trying to rent, tenant screening is very important.

With that said, I think it's important to find out how well your local district administers the program. Based on what I've heard about other areas, the slowness of the program can take a lot of patience. Luckily, in my area it's run very well and I couldn't do without it. We also have programs that place formerly homeless people or homeless veterans which I always try to use when there is a vacancy...they've turned out great.

Brian Garlington · Answer

Did you really say "slum lording" can be very lucrative?  You already have the wrong mindset to get in this business. Oops, I'm sorry...."your boss" has the wrong mindset for this. Your clickbait title worked though by mentioning Section 8 but this was pretty poor execution "AJ".

Mark Wright · Answer

If I may segue into a separate aspect, does anyone know what certifications are necessary for HUD as a property manager/landlord for Section 8?  I'm sure it varies by state, but I'm potentially seeing if I could at least start as a property manger and then purchase a complex I currently work at.  (My company is leaving by the end of the month and there is no one else lined up.)

Andrew Syrios · Answer

Good point on property managers, I didn't even think of that. How has your experience with KC Section 8 been?

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