Section 8 still a housing surplus?

10 Replies | Baltimore, Maryland

So I have noticed on gosection8 and a few other posts in this forum that Baltimore has a huge surplus of section8 housing and too few tenants (at least compared to the number of units available, looks like 235 right now.) Is this still the case? Has anyone had luck with section 8 as an investment?

I've been hearing that as well. That there is more inventory than there are vouchers currently available. However, I've also heard that the government is lowering their voucher amounts so that they can provide more vouchers to more families. I was thinking of getting into that area (Section 8 housing) myself, but it doesn't seem to be a guarantee anymore. However, I speak from absolutely no experience.

@Michael Randle is 235 listed a huge surplus? I don't know. 13,000 vouchers 235 listings that is 1.8%. That doesn't seem like an oversupply to me. How does that compare to other time periods?

@Melanie Hartmann yes I do section 8 housing and we are happy with the program. Yes section 8 rents are coming down. The high rents in Baltimore are not economically reasonable.  It is not unexpected that their rates are dropping. I laugh when landlords complain. Section 8 has been overpaying for years. 

Buy based on what is a reasonable expectation for rent, not on the highest rent you have ever heard about from section 8.

That makes a lot of sense. I primarily/ultimately want to get into multi-family complexes and am unsure as to whether I should aim for some (section 8) SFH in Baltimore City to build up my capital/equity.

@Melanie Hartmann it is my belief that it is a poor time to buy multi family. Multi family prices have been driven up to levels that certainly don't work for me but also don't seem  to account for the risk people are  taking. Prices are high and  cap rates are at historically low levels.  

When cap rates return to historical norms, values will drop unless net operating income increases. Also as interest rates rise to historical norms, owners will be at severe risk as adjustable rates reset. 

In Baltimore right now I believe you can get better returns in terms of cash flow, sweat equity by renovating, and potential for appreciation with the right choice of SFH. (I am not talking about $30-$50K neighborhoods.)

I finally had enough capital for a down payment on a duplex in Baltimore County (based on the prices I had been eye-balling for the past few years) but they all seem to have very recently gone up in price about 25-35% in the areas I had planned to target, so I'm having a hard time moving forward with finding a property to purchase.

I work in Baltimore City and have seen various areas improve over the past few years. I just am not familiar with what areas are good to get into right now. I don't have enough capital to purchase in the areas that are hot right now. Do you know of any zip codes, blocks, or streets that seem promising currently but are on the lower end for purchase price? 21217 seems to have some promising areas, but the differences in value are so drastic from block to block so I wasn't sure of how to determine which might be a good spot.

I have been looking off and on for a property for the past 6 months but haven't been able to move forward with anything (either odd things have happened with the sellers or someone else swooped in just before me). It's been frustrating finally being ready to pull the trigger but not having any targets to hit, haha!

Originally posted by @Ned Carey :

@Melanie Hartmann it is my belief that it is a poor time to buy multi family. Multi family prices have been driven up to levels that certainly don't work for me but also don't seem  to account for the risk people are  taking. Prices are high and  cap rates are at historically low levels.  

When cap rates return to historical norms, values will drop unless net operating income increases. Also as interest rates rise to historical norms, owners will be at severe risk as adjustable rates reset. 

In Baltimore right now I believe you can get better returns in terms of cash flow, sweat equity by renovating, and potential for appreciation with the right choice of SFH. (I am not talking about $30-$50K neighborhoods.)

You are definitely right. I was thinking about the same thing, in fact, I am making an offer on a SFH today. It is going to be my first SFH rental because it is crazy time for multi-families.

I agree with most of what has been said in this post. I have been having some trouble getting some of my units rented recently, particularly MF units. I now chose to focus on SFRs with forced appreciation opportunity. I have invested in different parts of the city (Belair-Edison/21213, Morrell Park/21230, Barclay/21218, Upton/21217) and have not yet nailed down my #1 target area, and am seeing the benefits of investing in 100k+ neighborhoods.

@Antonio Lulli First off I don't know who that is in your photo on your profile, hair color looks weird, anywho, Antonio and I were just having this conversation last week.  If you make your units look cheap and dated, guess what, no one is going to what to live in there.  If you put stainless steel appliances, tiled floors in the bathroom and kitchens, finish the basement, and put granite in the kitchen and are in a half decent neighborhood, your units will rent a lot quicker. Takes me an average of about 2 weeks to find a housing voucher in the city. Only place I've had a problem renting out was because I put to high of a rent on it. @Michael Randle , surplus means nothing, if you don't have a good boots on the ground team, you will lose all your income anyways, good luck.