Section 8 in Philadelphia

19 Replies

Does anyone here have experience to share with Section 8 rentals in Philadelphia? I am looking to purchase a 3-bedroom in the Kensington section of the city (north of Lehigh). any advice or experience (good or bad) would be greatly appreciated.

Thanks,

Rob

Hey Rob, 

I have a few years experiance working in investment real estate in philadelphia and here are just some pro's and con's I have found with not only investing myself, but what I have heard from my clients. 

Pros;

1.) Reliable on time payments

2.) High Allowable rent increases 

3.) Fill vacancies faster

4.) Lower vacancy and turnover rates

5.) Potential for Higher rents 

Cons; 

1.) The bureaucracy can cost time and money, and delay new Section 8 tenants moving in. Worse yet, local housing departments often require extra steps in the eviction process, delaying eviction of non-paying Section 8 tenants. Which, in turn, means months of unpaid rent.

2.) Delayed Initial Payments-Sometimes your first payment can be delayed 2-4 months so you should account for months with no cashflow even after you get a tenant

3.) Tons of Inspections-This is the top reason many landlords do not accept Section 8 vouchers. An entire year of cashflow could be wiped out from repairs you have to complete from the high number of annual inspections.

4.)Tenant Quality- Without being said, yu get a lower quality tenant when using section 8

5.) Property damage- This one stems from the point above. With a lower quality tenant, you are at a higher risk of them damaging the property. 

Hope this helps! Feel free to connect with me and ask any further questions you might have!

@John L Desimone , thank you. That is very helpful. In an area such as kensington, a few blocks north of Lehigh, between Frankford & Kensington Ave, do you see the possibility for market-rate tenants yet? I think that area has a lot of growth ahead of it, but right now, I assume my best option is section 8. What are your thoughts?

@Robert Palladino to answer your question. Yes I do. Kensington is one of my favorite pockets, in terms of appreciation and am already seeing signs of it trending in the right direction. Neighborhoodscout.com has Kensington ranked #2 in appreciating neighborhoods behind only a small pocket in the east part of Northern Liberties(E Girard and N Del Ave). My office is out of Northern liberties and Im submerged by new builds and constant new construction. Think of what these areas looked like 10-15 years ago. 

 Section 8 is not a bad route to take considering the current condition that Kensington is. I think your head is in the right place and that is the appropriate play. You can always sit on it until you see more rapid growth and then rehab it up to market value. 

Originally posted by @Matthew Tierney :

@Robert Palladino

I’m getting around $975 for a 3 bedroom in Harrowgate and around $830 for 2 bedroom (section 8)

 Oh wow, that's good to know. I was thinking it would be a little more than that with Section 8. I was really just basing my assumtions off of of this: 

http://www.pha.phila.gov/media/178215/payment_standards.pdf




@Robert Palladino

So I have had an overall good experience with Sec 8 in 19134 . I would get plenty of inquiries from tenants off of GoSection8.com that’s the only site that I would advertise on . I do a $40 app fee that covers a credit and background check and schedule everyone to see the house at the same time on Sunday mornings due to a lot of people just don’t show up. Then I would give them an application to take home and fill out and I would pick up at their existing home and that would let me get a good look at how they were living and how they take care of a house

@Robert Palladino

My houses have been under a two year lease with PHA from before that chart came out but I have also never applied for a rental increase .oh yeah and my two bedroom houses I have tenants with one bedroom vouchers but I really like the tenants so I don’t mind leaving money on the table

@Robert Palladino Those pockets are definitely on the path of progress. You have Kensington Courts as the flagship development that is pushing the gentrification North of Lehigh, a feat many did not think was possible for Kensington. The good news about the pocket that you are investing in is that it is not oversaturated with competition (I'm looking at you, South Philly) and you'll be able to get in at a price that will surely keep you cash flowing. Section-8 has its stigmas, sure, but I would NEVER write it off. Just as @Matthew Tierney stated, some of the best tenants come from this pool and you are guaranteed rent from the city which, at the very least, gives you some predictability in your books. If you haven't already gotten S8 approved, it isn't a tough process. It's paperwork and a course away. For this property, will you be east or west of Frankford Ave?

Hey @Jimmy O'Connor , thank s a lot for the feedback, much appreciated. I am in agreement on a property on E. Birch Street, between Frankford Ave & Kensington Ave. It's in eye-shot of Jasper Lofts (fortunate), and also the new Project Home building (not so awesome.... maybe). I get mixed opinions on being so close to the Project Home site. I personally don't think it will have a negative affect. 

This doesn't sound exactly what you are looking for; but Section 8 isn't limited to certain neighborhoods & the percentages change given the neighborhood - meaning that neighborhoods like Rittenhouse Square, Society Hill, Fitler Square, ect are all candidates also; but very few landlords, in these Philadelphia neighborhoods, would ever consider doing Section 8; so the demand goes way up. This allows you to pick and choose from a greater pool. Hopefully to increase your tenant quality.

Originally posted by @Robert Palladino :
Originally posted by @Matthew Tierney:

@Robert Palladino

I’m getting around $975 for a 3 bedroom in Harrowgate and around $830 for 2 bedroom (section 8)

 Oh wow, that's good to know. I was thinking it would be a little more than that with Section 8. I was really just basing my assumtions off of of this: 

http://www.pha.phila.gov/media/178215/payment_standards.pdf


 Good Morning Robert, thanks so much for this article, I will keep this as a reference for Section 8.

@Sam B. I would think, the best property management companies only operate in the better neighborhoods, and tend to have a minimum rent per door.

@Sam B. ,

Because of COVID, I was unable to peruse Section 8. I attended the first information session, but the following week, the city shut down. For me, surprisingly, that ended up being for the best because I ended up getting a lot of interest in the property, and was able to get good tenants in there for $1,195/month even though the neighborhood is less than desirable. I think that they appreciated that the house was clean and well put together. Being pet friendly also helped. I think a lot of people who are being priced out of East Kensington are starting to move North of Lehigh, in my opinion.