Which is better, renting to a regular tenant or Section 8 tenant paying higher rent? I have (2) fourplexs, one is fully rented by regular tenants, and the other is fully rented by Section 8 tenants, in Las Vegas.
I would have to say Section 8 tenants because I get rents on the first of each month, and since they are Section 8 tenants, I tend to get higher market rents, by 20%. The negative is the paper involved, and snail pace being a government agency. Also, since tenants get free money, they tend to stay longer, and keep the place up to par or they will lose award from Section 8.
Also, let's say your have the normal repair issues for either normal tenant or Section 8, then going with Section 8, you will get the money direct deposited to your bank account on the first, as opposed to chasing them down and having them give you all kinds of excuses.
I'm not very familiar with Section 8 yet, but it was my understanding that the tenant does pay a portion of the rent themselves. Do you have much issue collecting the portion of the rent from the tenant? What type of neighbourhoods are your properties located in?
It's a personal decision but I never rent to anyone on welfare. I prefer hard working individuals that actually contribute to society.
Section 8 is awarded by how much their reported income is, by tax returns or pay stubs, etc. Most awards are split, tenant pays portion (20%) and Section (805), for example. I have two that are paid 100% by Section 8. The most my tenant paid was $130 of $725, and they did not have trouble with $130 per month.
My properties are located in C neighborhoods. ROI is about 14% annual.
My other 4plex is normal rents in C neighborhood, but about 1 mile from the Las Vegas strip. Most pay by the 5th but occasionally have to chase them down. ROI about 10-14% annual.
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