Section8 in North and South Memphis?

Question

Hey guys!

I am under contract for 3 properties, however there is one thing about it, one of them, its located in South Memphis zip 38109 (Mallory area).

I know I know I live in Memphis, I know that the area is bad, however I am feeling that the market it pushing investors towards the hoods of memphis because it is getting expensive (even Frayser is getting crazy expensive which I find crazy), I did a few visits in that specific neighborhood and I honestly didn't feel it was really really bad as the rest of South Memphis, I am really not worried about tenants paying on time in my rentals because I always focus on Section8.

Was wondering what are peoples insight in regards to investing in those areas with section8 tenants? Would love to hear someone experienced enough with section8 in the bad hoods to give some opinion?

TIA

Alex Bekeza · Answer

@Mario Am Property Management will make or break these types of deals.  Do not attempt to self manage.  Work with a professional 3rd party PM who already manages dozens or hundreds of S8 units and is on a 1st name basis with the local case works/housing authority folks. You may even want to just call the S8 office directly and find out who their favorite PMs are.

Patrick Drury · Answer

@Mario AmI own a few rentals that I rent out via section 8 in Columbus OH. I would recommend it. The hardest part about section 8 is getting the process down, like what to do and when. Sometimes they also just change the process and don't tell anyone. A big part of renting to section 8 tenants is screening them. Just because they have a voucher doesn't mean they are the right tenant. The same goes for average Joe's. Just because they make enough income doesn't mean their application is perfect. Did you do a background check? A big part of tenants treating properties badly is because people didn't screen the tenants adequately, so don't make that mistake.

Momi Rapozo · Answer

No personal experience...but honestly I've heard good things about section 8 because you are really guaranteed to get paid. People talk about bad experiences with the tenants not taking care of the property, but, that could happen with anyone. Best of luck! If you have any deals to share, I am looking for my first property, I would love to see them.

Jamie Parker · Answer

Memphis can be a street by street city. While most of the investors I have spoken with have advised against 38106/26/114. I havent heard the same about 38109. Section8 helps getting the most rent, If you the tenant does not destroy the property. You are in good shape.

Remington Lyman · Answer

I like section 8 rentals. They are great for cash flow!

Herbert Lewis · Answer

@Mario Am

I don't have experience with Memphis Section 8, but Baltimore Section 8 is excellent if you can get through the inspection. Most of my rentals are section 8, and I prefer it. During the pandemic, I had no issue with getting rent on time. I also find that most Section 8 tenants stay longer in the unit, which is a plus for landlords.

Cherie Ganesh · Answer

You're definitely guaranteed to get your rent but should probably check to make sure of the cost of insurance.  We've even seen insurance on our Berclair houses continue to increase more than ever the last 2 years.  Does the section 8 program provide any repair/replacement funds if house is trashed?  I would hope that if a section 8 tenant trashes a house and you report it to Section 8 folks, the voucher would be taken away from the tenant.  There are some areas in that zip code that do show a pride of ownership by residents.  If none of the houses are maintained, I think I'd have concerns about the area . You should probably check out crime reports for neighborhood, not just by zipcode.

Section8 in North and South Memphis?

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