Section 8 rental property

[Lian Shi]

Hi group, 

     I saw a deal in my REIClub mailing listing, the asking price is 16.5K, needs some work, mostly clean up and comestic. Section 8 rental is $1245-$1500. It's a few minutes away from Baltimore Downtown. 

    I have been seachimg how Section 8 works, and just don't understand how can a house rent for that much money while the house is worth of less than 20K?

     Any knowledge is appreciated.

[Amanda Davis]

Section 8 is a government housing program run by Housing and Urban Development (HUD) and is administered by a local housing authority (HA). The housing authority sets the market rent for the area, generally speaking the market rent that the HA sets is higher than the rent you could get for the low income neighborhoods ( and lower than you can get for middle class areas). So if you are investing in low income areas, you can make a lot of money renting to the section 8 tenant.

Before you make a offer on the place, get a copy of HA section 8 inspection list. So you will have an idea what work it would take for this unit to pass a section 8 inspection.