Pros vs. Cons of Section 8 in Indianapolis?

Question

Good morning! My Property manager reached out to me asking if I would be willing to lease to Section 8 tenants in one half of my duplex. I have zero experience with section 8 tenants and have done as much research as possible to make my decision. just wanted to see what opinions you all may have or hear about your experience with section 8 tenants.

Thank you in advance for your input!

Rocky DeFalco · Answer

Ryan, Thank you for your input. I was leaning towards allowing section 8. Your input has put confidence in that decision. That was the biggest benefit that came up time and again was the amount of time that they stay in the property reducing turnover. Thank you again.

Orhi Tahi · Answer

Rocky how was ur experience w section 8 in indy so far ? Do you mind recommending me the PM you worked with ?

Orhi

Kellan Martz · Answer

Just a few additional words of encouragement. I am an attorney for affordable housing developments throughout the country. Many of our projects have Section 8 vouchers on them. Our developers have all noted that HUD has gotten much better with this program in the last decade and it more depends on the local housing authority being good or bad. I see someone above said the Indy housing authority is pretty good, so that's a plus. I also have helped place tenants in section 8 properties as a volunteer with nonprofits etc. and agree that they tend to stay pretty long. Good luck.

Rocky DeFalco · Answer

@Adam Sankowski thank you for taking the time to respond. I appreciate the input and think I will move forward with Section . Thanks again!

Adam Sankowski · Answer

Hey @Rocky DeFalco I don't know if this is helpful at all but I invest in Indy (non section 8) and in KCMO (section 8).  I only invest non-section 8 in Indy because I love my PM and they don't really work with section 8.  I was nervous as well with my KCMO house (I know, totally different market but still) and I've had some hiccups but I really like section 8.  You feel like you're helping someone and they do stay a long time.  I was nervous at first too but I'm glad that I did it.  Of course you could get a nightmare... but you can always get that regardless...  Also you can look at it as diversification with one side of the duplex section 8 and the other not.

Only thing that popped up for me and it might not ever again is that when Trump shut down the government a while ago it included HUD and I was getting nervous that payments would be delayed.  It all passed by but for a moment it just made me realize that you are really reliant on the government for your $.  I love section 8 but I don't know if I would want a full portfolio of those rentals too having experienced that and sweating it out for a bit.

Rocky DeFalco · Answer

Ron, Thank you for the input. i like the car check thats something quick and easy to see as a indicator of how they maintain their lives/ belongings.

Ron Patton · Answer

Following off of what Ryan said, if you have those B/B+ neighborhoods that is huge for section 8 renters. At the end of the day everyone just wants a safe place to be able to lay their heads each night. This is especially so with renters with children. I find many of those residents tend to stay for long periods of time because it is so difficult to find properties that will accept their voucher. With you being an out of state investor, I assume based off your Denver location, it is vital that your property manager does their due diligence beyond just getting a rental verification. I've seen situations where landlords will literally tell you anything you want to hear in order to get that resident out of their property. So take those with a grain of salt. Maybe take extra steps like walking the prospect to their car and glancing into it, while that is not a 100% indication that they will be a good resident, it definitely helps. I find most times if people take care of their car, they'll take care of their home.

Ryan B. · Answer

I've had about 10 Section 8 tenancies in Indy.  9 have been good, 1 was the worst tenant I've ever had.  The bad one was just a mean and manipulative person, but she didn't trash the place.  Now, my properties are near the top end of what you can afford and still qualify for Section 8... So, YMMV if you are renting for under $1000/mo, where you'll find the bulk of Indy Section 8 tenants.    Most Indy Housing Authority case workers are pretty good and can now get a tenant approved for move-in within a month of submitting the paperwork.   A few years ago, it was taking over a month to get the move-in approval.  In general, it is tough to find landlords that will take Section 8 (at least at the level of house I provide, B/B+) and so you'll get plenty of interest.  They seem to stay a long time too.  So far, I've only had one tenant leave (in addition to the horrible one that I refused to renew) and that was because she started making enough money that Section 8 was no longer contributing anything.