Section 8 tenant for a Newbie

7 Replies

Hi all! 

I'm new to BP, but am loving all the info and comments here. 

My husband and I are looking into our first rental property purchase (SFR in Texas), where the long-term tenant of 7+ years is under Section 8. Section 8 pays about 80% subsidy on the market rent. I'm wondering if we should steer clear of a Section 8 tenant for our first property. I know there are more rules and paperwork, and not that I'm not willing to learn the ropes, but I have a feeling it might be a bit too much to chew off for our first deal.

Thoughts? Steer clear on this for our first property?

I too had been under the impression that section 8 tenants are not terribly desirable. In talking to a seasoned pro yesterday he said they are just like the rest of the tenant pool-some good and some bad. "Look at them as any other prospective tenant". 

Your tenant has been in that property for 8 years! Have a look at the place-or have someone else do that-and check out the condition as best you can. I personally do not have any section 8 tenants; but might be open to that in the future. Best of luck

Thanks for your input @Bjorn Ahlblad ! Do you think such a long-term tenant is an advantage or disadvantage? It seems like he or she would not have a great impetus to move out, but then again, they are month-to-month, so what's to stop them I suppose. 

The numbers work out so well, so it's hard to pass up on this deal, but then again, I don't want our first experience to be one we regret!

Be careful buying a Sec8 tenanted property.  Some of the sec8 field offices are ridiculous to deal with and have extremely strict rules when it comes to landlord / ownership changes. 

As part of your due diligence, you need to call the sec8 case manager to make sure the subsidy really is what the tenant says it is, and also find out how to submit all the proper transfer documents within the allowed timeframe from closing.  Missing these deadlines can trigger a mandatory moveout and repayment of sec8 funds back to the office.

There's nothing really "wrong" with sec8 tenants, but they definitely take a different level of management. 

Blair Poelman, Broker in Utah (#9299425)

If the numbers work and the tenant has not trashed the place, he/she is an asset-at least in my view. Month to month is better than a lease anyway, it is easier to replace than evict, and way more pleasant. All investments carry some risk; but it would seem two of your main bases are covered. Let us know how you are making out.

@Maya Kherani I also inherited a section 8 tenant. You can raise the rent to market every year. The tenants don’t care because they don’t pay it. Also, they tend to stay a very long time. At least I could in Washington, Texas may be different. I think it all comes down to tenant screening so meet the tenant and trust your judgment.

What @Blair Poelman said about dealing with the housing authority is correct. It’s a very tenant friendly environment. They see you as the greedy landlord and the tenant as their client. They are there to protect them. There was an annual inspection that was kind of ridiculous. They had me fix things that were purely cosmetic like scuffs in paint,even though the tenant caused the damage. So make sure this tenant is taking care of the property or you will have a minor remodel once a year.

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