Section 8 investment amid funding cut?

Question

I'm interested in long term rental and potentially Section 8 rentals. With the potential funding cut to HUD, how would this impact investor? and with this uncertainty, would it be recommended to pursue S8 as a new investor?

I was exploring landlord friendly states such as OH, AL and TN

Jimmy Lieu · Answer

Great question — and welcome to BP Hiyun! I totally get the concern, especially with all the recent talk about potential HUD funding cuts. While it’s something to monitor, Section 8 (or the Housing Choice Voucher Program) has been around for decades and has historically remained pretty stable even through different administrations. Even when budgets are tight, Section 8 tends to stay funded because it serves such a large population and plays a key role in housing stability. That said, there can sometimes be delays in inspections or voucher processing during budget negotiations, so it’s smart to build in some flexibility if you're relying heavily on that income.

That being said, Section 8 can still be a great play for newer investors — especially if you're investing in cash-flow markets like Ohio, Alabama, or Tennessee. I live and invest in Columbus, Ohio and own 10+ rentals here — including several Section 8 properties. The rents are predictable, tenants stay longer, and the housing authority deposits rent on time every month (even when market tenants might not). Columbus is also a landlord-friendly city with growing demand, lots of new development (Intel, Google, Amazon, etc.), and it’s still possible to find homes in the $130K–$180K range that cash flow and hit the 1% rule. If you're going to pursue Section 8, just make sure you’re buying in solid neighborhoods with good schools and amenities — not just going for the cheapest zip codes.

Overall, I wouldn’t let the funding concerns stop you — but like any strategy, go in educated and with a solid local team (agent, PM, etc.). Happy to connect and answer any questions you have about Section 8 or investing in Ohio!

Michael Goldberg · Answer

I think its still a totally safe investment opportunity. With cuts to HUD there are still many ways that the section 8 program will continue to thrive. As others have said I would continue to focus on buying good properties, but know that section 8 will not go away. Happy to talk section 8 with you, I focus on Ohio investing.

Travis Biziorek · Answer

Hey Hiyun — great question. I’ve got a few Section 8 rentals in my Detroit portfolio and have helped many other out-of-state investors navigate that strategy as well.

I’ll start with the good: Section 8 can be a powerful tool for reducing rent risk. When done right, the guaranteed government portion of rent helps smooth out income and can make underwriting a lot more predictable — especially in a lower-income market. I’ve had tenants stay 3+ years, pay reliably, and take great care of the home.

But there are definitely tradeoffs.

Section 8 requires more paperwork, more red tape, and annual inspections. Placement can also be slower — initial approvals often take longer than placing a market-rate tenant. And while fair market rents (FMRs) can sometimes look enticing, you need to be cautious. Just because HUD publishes a $1,400/month number doesn’t mean you’ll actually get that for your unit — they’ll still evaluate based on actual comps in the area.

There’s also the tenant quality conversation — Section 8 tenants span a wide spectrum, and if you buy in a rougher area, you’ll generally attract a lower-quality pool. That can mean higher turnover, more repairs, and more headaches. In my experience, the key to making Section 8 work is targeting solid C/C+ class neighborhoods that have decent housing stock and aren’t saturated with problem tenants.

As for the funding cut concerns — it’s something to watch, but Section 8 isn’t going away anytime soon. There’s too much political pressure and demand, especially in major cities. I wouldn’t let that be the reason not to explore the strategy, but I also wouldn’t build your entire investing thesis around it either.

And if you’re looking at landlord-friendly markets with low entry points, Detroit may be worth exploring. I started there in 2019 and built a 12-door portfolio before moving back to California. There’s still good opportunity — especially for BRRRR deals — if you understand the neighborhoods and have the right team in place.

Hope that helps! Let me know if you want more detail on how I’ve structured things.

James Mc Ree · Answer

The Section 8 cut will likely cap approved rents/payments and make the waiting list longer. They will probably abandon their initiative to open wealthier neighborhoods to S8 tenants.

I recommend you focus on getting a great investment and don't think about S8. It is just a payment vehicle. Get a great tenant after you get a great property. You won't know whether you will get a self-paying tenant or a subsidized tenant at the time you are buying a property unless it is already occupied.

Section 8 properties tend to have a longer startup time to get a tenant into them, but the tenants tend to stay longer. They also have a little more overhead for dealing with the local housing authority's regulations. Payments come in like clockwork.

Overall, I prefer self-paying tenants over S8.

James McGovern · Answer

If the feds cut HUD the government in blue states will step in and fill the gap