Rent-to-Own or Section 8?

4 Replies

We just recently purchased a foreclosed property in Kansas City. Since we live out of state, we couldn't decide what's the best strategy for us to proceed forward. Anyone here doing out of state investment? Does rent-to-own work for you? Is it less or more trouble? We also thought about turning it into a section 8 housing to ensure cash flow, but, we know the stigma with section 8. Would any long-distance investor do section 8? What's your thought?

What do you mean by turning it into section 8 housing?  Any house can accept a tenant who is on section 8.  Renting to someone who is on section 8 has very little difference than any other person.

I haven't ever done a rent to own.  But I currently have some section 8 tenants.

A section 8 tenant with a good background is no different than anyone with a good background.  Similarly, anyone with a bad background is no different than a section 8 tenant with a bad background.  I have no issue with any legal source of funds sent to me as rent.

I might add that if a section 8 tenant is evicted they are dropped from section 8 for 5 years.  That is great motivation to follow the rules.

I do a lot of SEC 8, some rent to owns, and some land contracts, and of course, regular straight renting. The strategy I choose depends on the house. I generally rent to own houses I don't want to fix up at the time and don't have my heart set on keeping as a long-term rental. If it's a houses I absolutely hate, I'd rather sell it on a land contract. We have a deed in lieu of foreclosure signed at the time of closing that says if the buyer defaults we can avoid the regular foreclosure process and just record the deed-in-lieu to terminate the contract. Psychologically, a Tenent/buyer will have the most commitment to the property with a land contract, a little less with a rent to own, and the least if they are just a tenant.

We prefer to have a SEC 8 tenant in a rental in a low income neighborhood simply because they stay so much longer than non-SEC 8 tenants.  People are always afraid of higher maintenance with SEC 8.  High maintenance comes with buying in low income neighborhoods, no matter who you choose as a tenant.

I wrote a blog about my experience with SEC 8 vs. all the crazy rumors you hear from people who have never even tried it.  Here’s the link if you want to check it out.

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

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