Does anyone utilize Section 8 Housing on their properties?

Question

Just wondering if anyone is utilizing Section 8 on any of their properties and how they feel it is working for them.  I understand the pros and cons of taking this route but wanted to hear from someone that has actual experience with it.

What Property Manager do you use if you don't manage them yourself,  What are your struggles and successes you have had... etc.  Any information about your personal experience would be greatly appreciated.

Bob Collett · Answer

@Dimitri Metropulos I have used Section 8 in a small percentage of my properties with good success. For all of the “pros and cons” of Section 8, the horrible response time of the CMHA staff and lead time to get anything done is the main drawback. Words cannot describe the inefficiency of their people and systems starting with trying to get someone to answer the phone.  It is faster to get in the car, drive 30 minutes, take a number and sit for an hour in the waiting room to ask a question... than to call them on the phone.

James Wise · Answer

Section 8 has it's pros & it's cons

Pros

• Rent is guaranteed.
• Rent is typically higher than cash paying tenants.
• Allows investors to consistently get high rent on houses in riskier neighborhoods.

Cons

• Dealing with CMHA (Section 8) is a pain. They are slow, have employees who are clueless and you will often get a different answer to a question every time you speak to a new person.
• The process of getting a tenant moved into a house takes a long time. Typically the tenants are dirt poor so they don't have money to pay a hold deposit while you go through all the red tape and inspections.
• Inspections are inconsistent. You may have one inspector site 5 items. You fix all five and the follow up inspection results in a different inspector siting something totally different, thus starting you back at square 1.
• The annual inspections are a pain because the tenants will break stuff while living there and you'll be forced to fix it or loose your payments.

All in all I think the pros outweigh the cons if you are in a risky neighborhood. If you've got a nice B class property with a solid cash paying tenant base it's not worth the additional red tape dealing with CMHA (Section 8). However if you're in the hood where evictions and non payment of rent are an everyday occurrence that guaranteed government cheese is mighty nice.

Bob Collett · Answer

@Diana Duncan

Yes, Cmha provides an extensive check list of inspection items,  including items that are automatic fail (example: each window that is designed to open, must be operable, have working window locks, and have screens)

Overall, the inspection itself is not so bad... it’s getting to that point. Unfortunately, they will not pre’inspect. You must first get a tenant. Also, you do not get to know how much the rent will be until you go through the entire process... then at the end they say take it or leave it.

Bob

Brian Garlington · Answer

@Bob Collett   @Dimitri Metropulos

I have Section 8 tenants in my rentals here in the Bay Area and it has soooooo nice. They have all been in the units at least 10 years and they show no signs of wanting to move. We have the annual inspections through Section 8 and then every few months I see them as well. The big thing is screen, screen, screen.

I also have some rentals in Cleveland. As Bob Collett has said the CMHA is slooooowwww. But I believe it will be worth it because once the Section 8 tenants get into a property, they typically are much more low maintenance than non-section 8 tenants, and of course most if not all of the rent is guaranteed because it comes directly from the housing authority, straight into your bank account, like clockwork on the 1st of every month.

Dawn Anastasi · Answer

I have 2 Section 8 tenants currently. However, I find it hard to get any more because the Rent Assistance program (Section 8) doesn't want to pay market rents in my area.

Diana Duncan · Answer

@James Wise Do you know if the CMHA provides general guidance notes on what the requirements are at inspection so that you can attempt to take care of these issues before they arrive?

Mark Whittlesey · Answer

One thing to remember about S8 is that it's a Federal program administered on the LOCAL level.  I have done S8 in 4 difference cities. One I would never, ever, EVERY do business with unless the entire staff turned over. Another did an inspection, re-inspection, tenant move-in and payment within 3 weeks. A third took 2 1/2 months to get me my first payment (though of course they did pay all the past rent that 3rd month and from then on everything went smoothly). So... YMMV depending on your local housing agency.

Dimitri Metropulos · Answer

@Brian Garlington @Bob Collett @Mark Whittlesey @Bill Pate @Dawn Anastasi

Do you guys use the Section 8 benefits to invest in developing areas and get a fair market value for rents to increase your ROI?  I was looking at developing areas on the east side of Cleveland and obviously they have a higher risk to balance out the higher ROI but if S8 gives a fair market value for rents the Cash on Cash returns for the properties are great.  Just curious if anyone utilized this risk/reward tactic to ensure on time payment in an otherwise location that would be hard to get not only an on time payment but a rent check high enough to make it worth it.

Thank you for all of your input!

Diana Duncan · Answer

I live in hope that if and when the time comes and I decide to dip my toes in the S8 waters the FL HA's will fare a little, a smidgen better :)

Does anyone utilize Section 8 Housing on their properties?

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