Section 8 rents in Louisville

Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes

Hello all,

I'm thinking about investing in some low income properties in Louisville. Particularly the Portland neighborhood. My question is what is the max rent you can recieve for a 2/1 or 3/2 SFR house on section 8? I called the local HUD office but they weren't much help. From what I've heard it varies from house to house but I just want to know a average to see if would be worth my time going the section 8 route.

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Pedro Martins

Rental Property Investor · Louisville, KY · Member since 2016 · 48 posts · 55 votes

@Fredie Robinson, as I understand the FMR numbers you posted are the correct numbers, however you have to take into account that they are supposed to include utilities. There is an information packet that you can get at the HUD office that explains the calculations.

I do not have actual section 8 experience, though I considered it. As my mentor (who is heavy into the low income area) puts it - "I don't want section 8 because I don't want another boss"

FYI - I have a 3/4bed 1bath in Portland - about 2100sqft - i put in new flooring and paint so it's decent - rents for $795.

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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
This is what I found online for the fair market rent:
The Final FY 2018 FMRs for All Bedroom Sizes
Final FY 2018 FMRs By Unit Bedrooms
Year Efficiency One-Bedroom Two-Bedroom Three-Bedroom Four-Bedroom
FY 2018 FMR $578 $656 $821 $1,119 $1,259
FY 2017 FMR $551 $629 $793 $1,085 $1,230
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Greg Stierle
La Grange, KY · Member since 2017 · 5 posts · 3 votes
8y
Those numbers look high to me. I would think $650-$700 for a two bedroom, 750 to 800 for three bedroom if you have central air.
Section 8 has been increasingly obnoxious in Louisville demanding more and more. I think rent is higher with section 8 in West Louisville but for many people it is not worth it.
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Jordan MoorheadBusiness Member
Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
8y
Let me know if you figure out what the rents are. I’ve considered section 8 over there.
[email protected]512-888-9122
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Greg Stierle
La Grange, KY · Member since 2017 · 5 posts · 3 votes
8y
2&1’s rent for $533 - $608
3&1 for $648
Some people likely get more. Many non-section 8 get much less. Unless something changes in Portland there is little room for equity appreciation. They are classic $30K pigs. Read the discussion here on BP before diving in.
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
@Greg Stierle nothing has changed in Portland. Still no appreciation but I can't get 2% in my area like I can down there. I have worked that area for years as a cable installer so I know most of the good/bad parts of Portland. I was thinking $800 for a 3/1 would be a good section 8 estimate but that's just a guess on my part. I'd like to hear from some people that actually have real section 8 numbers for that area.
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Pedro Martins
Rental Property Investor · Louisville, KY · Member since 2016 · 48 posts · 55 votes
8y
@Fredie Robinson, as I understand the FMR numbers you posted are the correct numbers, however you have to take into account that they are supposed to include utilities. There is an information packet that you can get at the HUD office that explains the calculations.
I do not have actual section 8 experience, though I considered it. As my mentor (who is heavy into the low income area) puts it - "I don't want section 8 because I don't want another boss"
FYI - I have a 3/4bed 1bath in Portland - about 2100sqft - i put in new flooring and paint so it's decent - rents for $795.
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Michael Morris
Investor · Louisville, KY · Member since 2017 · 11 posts · 3 votes
8y
those numbers are correct but you have to subtract for utilities. I was in property management for a little in the west end, Portland, south end area. Usually about $690-725 for a 2 bed and $800-850 for a 3bd. I have my own duplex in west end and I personally get $724 for my 2/1 and get $863 for my 3/1
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
Thanks for the providing the real world numbers and giving me your insight on the section 8 market.
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
@Michael Morris @Pedro Martins
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
8y
If S8 requires landlord to include utilities it is a bad decision to invest in S8. They are irresponsible at the best of times, give them free utilities and you will go bankrupt. AC for welfare tenants is ridicules...let them sweat.
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Jody SchnurrenbergerPro Member
Investor · Asheville, NC · Member since 2017 · 506 posts · 404 votes
8y
I've been looking into Section 8, myself. I could totally be wrong, but my understanding (even after reading the management agreement of the PM I was going to use) is that the HUD numbers include utilities, but we don't have to provide them. We just need to account for them in our estimates of what we can charge. Again, I could be wrong. I got my Section 8 estimates from the PM I was going to use. Even if you don't plan to use a PM, maybe just tell them you are thinking of getting into it and want to know what you can expect as rent. When I did, they asked for an actual address of a property I was looking at and gave me an estimate based on what else they manage in the area. (They are the only PM in the whole city that handles Section 8 rentals.) That's how I got my numbers and found that, if I can find a place that doesn't need too much work, but is still a good deal, they numbers work WAY better than my $100k+ properties. Good luck! :-)
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
@Jody Schnurrenberger I believe that's the same here in KY. You don't have to include utilities but you must account for them. I think I'll try one section 8 and see how it goes.
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Account Closed
Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
8y
Sorry this is kind of a personal question, but how is the area around Slevin St & 27th, in Portland area of Louisville?. My grandma and mother grew up there, and when I remember it, it was a nice little hood. Now it looks pretty rough on streetview. :(
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Travis Curtis
Louisville, KY · Member since 2014 · 4 posts · 4 votes
8y
A little bit of a side note, But would it be beneficial to try to lower the energy bills in these units? Those old houses have no insulation, Balloon framing, and Most Hvac systems are poorly retro fitted. Unless its been through a city funded weatherization program where some of these problems are addressed. Is there a way in which you would you be able to show this to a Section 8 inspector with a couple of months of bills compared to the local neighborhood gas and watt usage to increase your rent?
What I've found most helpful in any situation where I may need a little guidance is traveling down to the office of (Code violations, Zoning, Permitting, Demolition,ETC ) grab as many info packets as possible. Ask if anyone in the department is available to chat with hopes to get a chance to pick someone's brain who's experienced in that position, and is relieved to see someone making an effort to do things the right way.
Also, If your going to start investing into that area. Make a stop by the vacant homes administration website.
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Chuck B.
Investor · Louisville, KY · Member since 2011 · 279 posts · 248 votes
8y
For a three bedroom, one bath house in Portland or Shawnee you can rent them section 8 for between $845 and $910 a month. The maximum rent you can receive is based on a formula that is not published to the public. You do not have to pay utilities. The neighborhood is taken into account but generally speaking the nicer neighborhoods in town will rent higher to a market rate tenant and the lower end neighborhoods will frequently rent higher to section 8. Section 8 will put you through a lot of hoops and pain to initially rent the property and can be quite onerous during the yearly reinspections (failures for basic, non life-threatening issues and tenant-caused issues are extremely common).
Good luck!
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Chuck B.
Investor · Louisville, KY · Member since 2011 · 279 posts · 248 votes
8y
@Travis Curtis - You make a good point about energy efficiency. If your rental is very inefficient the tenant will not stay. No one wants to high utility bills. And make no mistake about it there is a lot of competition for section 8 vouchers, if you want the best tenants you will have to have a nice property.
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Michael J.
Rental Property Investor · Louisville, KY · Member since 2008 · 342 posts · 123 votes
8y
I would be cautious about doing Section 8 in Louisville. It used to be a very good sec 8 program but it has declined fast and they are ramping up the fines and penalties, inspections etc. I hear about landlords being “harassed” by sec 8 inspectors on a regular basis to the point several people that have rented sec 8 for years and years are considering not doing anymore sec 8 properties. The sad thing is the tenants are really the ones who suffer from out of control city officials.
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Paul Passafiume
Prospect, KY · Member since 2017 · 39 posts · 13 votes
8y
I have a couple of Section 8 properties, but they are way under paying me. One of my units only pulls 495 and I even pay water on it, but tenant pays LG&E. The people who run Section 8 are simply ghetto. There's no nice way to put it. They don't answer calls. My property is in rapidly gentrifying Shelby Park and is a large 2/1 but they I only get $495. I've been too lazy to fight them because my other rents are higher and the cap is 18% still.
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Adam Shelley
Investor · Louisville, KY · Member since 2014 · 39 posts · 49 votes
8y
Any updates on this thread? @Freddie Robinson did you ever take the leap? Curious, because, of course those cheap houses are intriguing! :)
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
@Adam Shelley yes I did make the plunge and while it’s a money maker, it’s in a bad area and I wouldn’t make that type of purchase again. Also the section 8 inspections are kind of ridiculous. They make you fix petty stuff that you wouldn’t normally have to do with a normal renter.
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Scott A Smith
Jeffersontown, KY · Member since 2017 · 11 posts · 3 votes
8y
Interesting thread. I'm a Louisville native and noticed some well-known investors in town scraping up properties in Portland and wondered why, despite the rock bottom prices. I still wonder why. I think it might be because the city is somewhat tapped out due to the high property demand of the last few years that there really isn't much left but to go into areas that are presumably gentrifying, but actually aren't, or if they are, not at the pace that other cities would.

Louisville is growing a bit, but still has a pretty strong reputation as the opposite of a transient town. Most people here are natives and have been here most, if not their entire lives - or if you're like me, a boomerang who spent 17 years here, then 20 years away before moving back.
Not to dissuade any out-of-state investors completely, but I'll attempt to provide a clearer picture of the opportunity:
As a East End resident for the time I've been in Louisville, the city has had a reputation that anything west of 9th street downtown was to be avoided. This would include Portland. Natives also have an unwavering opinion about New Albany and Jeffersonville, Indiana as well due to older, once valid reasons that have long been dispelled about southern Indiana.
Curious what some on this thread would rate the Portland area as? I can't see it as anything above a C- (on the A-D scale), but would love to hear opinions. With as strong as the Louisville market has been over the last 3 years, and the gentrification of all of the cityburb areas East of downtown (Smoketown, Germantown, Butchertown, etc), you'd think that Portland would have been gentrifying already given its proximity to downtown and a reputation that wasn't as bad as neighboring Russell and Parkland neighborhoods. The Falkner Gallery is helping Portland, but the incident there last year really set the neighborhood back, in my opinion, reinforcing those old native opinions that Portland really wasn't that much better than their West End neighbors.
Add in the responses above of how tough the S8 inspectors are now here and it really makes it tough to consider investing anywhere in the West End, even if the numbers presumably "work".
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
@Scott A Smith The property I am talking about is actually in Portland. It is a complete war zone in my opinion and wouldn't advise anyone investing there yet unless your game plan is to hold it at least 10 years and see what happens. 60-70% of the properties are either boarded up or in really bad shape. I've had to call the cops numerous times to get the bums out of the shed on the property and good luck on getting decent renters down there. I wish I would of stuck to my own rule of staying east of 7th street but the numbers looked too good to pass up. Just to give you an idea of the numbers, I bought a 2/2 camelback in pretty good shape (new roof/windows/electric) for 21k. S8 has approved $723 in rent. I had to fix a few things, put in central air, and termite treatment. So I have roughly 3k in repairs so far. I would love to see more investors come to Portland and maybe turn it around but with all the projects getting demolished, those tenants are needing places to stay and a lot of them are headed towards Portland. Good luck if you do take the leap.
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Scott A Smith
Jeffersontown, KY · Member since 2017 · 11 posts · 3 votes
8y
@Fredie Robinson I don't believe I'll be looking into Portland. If I stay in the Louisville area, I will probably look at New Albany or Jeff for opportunities.
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David D'Errico
Rental Property Investor · Louisville, KY · Member since 2015 · 221 posts · 106 votes
8y
It’s definitely a street by street consideration.... but there are still good areas. We have two right now and a third we are closing on soon in Portland and the West End. I don’t do Sec 8 but my rents are:
19th & Lytle - 2/1 shotgun $600 (one of the rooms is really small) Purchased for $19,500 minimal repairs need
21st & Duncan 2/1 shotgun $650. Purchased for $12k, with about $3k in repairs
Coming soon 38th and River Park
3/2 $25,000 needs about $5k in repairs
Will rent for approx. $900
@Kevin Nalley what’s your opinion
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Fredie Robinson
OP
Investor · Shepherdsville, KY · Member since 2016 · 87 posts · 48 votes
8y
Just an update on my end. So the house failed for minor stuff the first inspection. So I fixed a few gfci outlets and a new sprayer for the sink. I called the applicant and told them to have a re-inspection done since the landlord can’t request that on the S8 program. Side note: While I was waiting on the first inspection to take place, I went ahead and installed central a/c since that is one thing the applicant requested. Now back to yesterday, I get a letter from the S8 office and it said the applicant no longer wants to proceed. So after waiting almost a month for this process to take place and I’m putting in nice amenities like central air, I’m left with a vacant property and am starting back at square one. I’m not to happy with the S8 program at this point.
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Final FY 2018 FMRs By Unit Bedrooms
Year	Efficiency	One-Bedroom	Two-Bedroom	Three-Bedroom	Four-Bedroom
FY 2018 FMR	$578	$656	$821	$1,119	$1,259
FY 2017 FMR	$551	$629	$793	$1,085	$1,230

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Section 8 rents in Louisville

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The Final FY 2018 FMRs for All Bedroom Sizes