Section 8 / HUD Intro

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

1d

Section 8 tends to be C class or below. I see it often in the urban core. Suburbs it's rarer that investors do it. It can be done out of state. Having a PM that understands Section 8 is key but even then it can have it pains. I see many target 4-5 bedroom homes and do section 8. They can get above market rate due to it's size. These are typically older builds (1900-1950)

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Divin KanyamaBusiness Member

Accountant · Seattle, WA · Member since 2025 · 254 posts · 85 votes

1d

Hey @Brian Fraser , Section 8 can work well, but I would treat it as a rental strategy—not a reason to compromise on the property or neighborhood. Start with the same fundamentals you would use for any investment: employment and population trends, crime, schools, property condition, realistic maintenance costs, and long-term resale demand. Then verify the local housing authority’s payment standards, inspection requirements, approval timeline, rent-reasonableness rules, landlord responsibilities, and current waiting-list dynamics before underwriting the deal.

The typical process is to buy the property, complete any repairs, identify the applicable public housing authority, and market the unit to voucher holders. After selecting a tenant under your normal screening criteria—applied consistently and in compliance with fair-housing and local source-of-income laws—the tenant and landlord submit the tenancy approval paperwork. The housing authority reviews the proposed rent, inspects the unit against its standards, and, if approved, executes the housing-assistance payment contract. The tenant generally pays an income-based portion, while the agency pays the remaining approved amount directly to the landlord. Annual recertifications, periodic inspections, repairs, and rent-increase procedures then become part of ongoing management.

This can be managed out of state, but the property manager is critical. I would look for one who already manages voucher units with the same housing authority, understands inspection failures and paperwork deadlines, has reliable maintenance coverage, and can provide references from remote owners. Before closing, ask the manager to review the property and your underwriting, confirm likely approved rent rather than relying only on advertised "Section 8 rent," and model vacancy, repairs, management fees, utilities, and inspection delays conservatively. The biggest ROI advantage is usually dependable demand and a subsidized portion of the rent—not automatically higher rent—so strong acquisition discipline and local execution still matter most.

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Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

1d

"Simplicity" does not apply to S8. First, and perhaps foremost, is the fallacy of "guaranteed rent". It is not uncommon for tenants to, at some point, stop paying "their" portion of it. You need to be clear on what the local cost to evict over that issue is, to weigh the value of forcing the issue. Another fallacy is that tenants will cooperate and follow contract terms because they are "afraid" of losing their Program voucher. Certainly, some are, mainly the elderly, but most do not filter their actions with that thought at the forefront. On the flip side of that, if you complain to the Housing Authority about serious behaviors by the tenants, the HA may well terminate them from the program. That just leaves you with the problem of needing to evict, AND having zero income until sometime after that process has completed.

It is critical that your housing meets the standards for the S8 inspections, since tenants are not allowed to move in until the property passes. To accomplish that, you need to meet the standards as detailed on their checklist such as this. You will want to know the Fair Market Value, according to S8, which can be found here, by zip code generally. You should also review the actual HAP contract, Tenant Addendum, and other documents that are largely standardized across all Title IX subsidy programs, found here. You need to read the HAP contract to determine if their terms are acceptable to you, since you have a great deal of new responsibility under their contract. Certain Metro areas do have additional programs and restrictions. The paperwork, the inspections, the re-inspections when you fail the first one, and the annual re-inspections (where owners are often held responsible for clear tenant damages) all take time. You will not see first rent payment within 6 weeks or more typically. The time between a prospect viewing a property, getting approved, property getting approved, and final paperwork complete so tenant can move in, is easily over a full month...of zero rent. Often the tenant gets the security deposit money from a charity, so that may, or may not be paid prior to move in. Either way, the tenant has very little skin in the game.

The key is thorough screening of all adult occupants and determining their true debt to income ratio for all living expenses and debt. You cannot just apply a multiplier to "their portion" of rent to determine a minimum income level. Additionally, you must examine all areas of their life to determine if Bad Habits are their norm, or if they largely act responsibly.

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James Mc Ree

Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 934 votes

1d

Don't think of your real estate strategy as "investing in Section 8". Think "investing in residential real estate."

You can acquire a Section 8 tenant after you have purchased a property, made it available for rent and selected a Section 8 tenant. Notice the sequence: you invested first, marketed your property, then selected a prospect who happens to be subsidized by taxpayer dollars. Everything about this is identical to every other tenant you will vet except for who is paying the whole rent. You need to make sure you have a good tenant who can afford to pay the rent without destroying the place, just like every other tenant. Some municipalities allow landlords to decline Section 8 applicants.

The process is fairly straightforward. After selecting your prospect:

Complete a Section 8 (S8) application and contract with the prospect. Send some readily available docs to prove you own the property.
S8 evaluates the tenant and your property to render a decision. They will tell you how much rent you are approved to charge in year 1 and the subsidy.
If you agree to proceed, an inspection is scheduled which is similar to a municipal inspection. You have to address any issues to get paid.
Tenant moves in.
There are annual S8 inspections in addition to any other inspections on the property. S8 is only involved going forward to (dis)approve annual rent increases, new leases and eventually lease termination.

It is a little more bureaucracy up front that can cost you a month of rent because it is slow. You are likely to get a long term tenant who will be rougher on the property than other tenants. S8 tenants are usually living paycheck-to-paycheck. Don't be surprised if there is payment drama with their portion.

I've had 4 S8 tenancies and still have 2 going back 11 years. Three of them are excellent. One almost burned the house down. S8 takes no responsibility for damage S8 tenants cause, so don't think you can hold them accountable.

It's easier to manage a traditional tenant versus S8. You do have a little more power over S8 tenants in that they can lose their voucher if they leave owing money. That would leave them homeless as compared to a traditional tenant who might leave and you can sue them for whatever they have. S8 tenants rarely have much to sue for, so that won't work, but they definitely understand homeless. Unfortunately, you can't get dollars from a stone, so if they don't have it, you are still stuck.

Overall, I am happy with my S8 experience. Like anything else, there are occasional issues. The key is to properly vet the tenant up-front whether traditional or S8.

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Arman AhmedPro Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 917 votes

20h

Quote from @Brian Fraser:

Hello,

I'm interesting in hearing from anyone who has experience with section 8/HUD rentals and what that process looks like from start to finish. I've originally shied away from this type of investment as I'm investing out of state and have been trying to invest in newer builds due to the relative simplicity.
Would someone with experience in this type of investment be able to shed some light on what the section 8 rental process looks like? From working with a broker/looking for deals to getting it rented and working with a property manager.

My main worries around this strategy are:

- Ending up purchasing lower quality properties with little appreciation over time in not as desirable locations.
- Being out of state (every person who've I've seen online doing this strategy is very active in person) can this be executed correctly while being out of state and using a PM?

- Not fully comprehending the ins and outs of section 8 and not being able to maximize the rental benefits (from my understanding this is where you truly maximize your ROI)

I appreciate your thoughts!

Best,

Brian

Section 8 can definitely be done out of state, but I’d put a lot of weight on the neighborhood and PM rather than chasing the highest rent. A good local PM who knows the inspection and voucher process can make a huge difference. If you’re open to the Midwest, the Midwest market is worth looking at too, especially if you want to compare lower entry prices with areas that still have rental demand.

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James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

2h

Section 8 has made me a millionaire. But make no mistake about it, dealing with those animals that live in your properties is war every single day.

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Section 8 / HUD Intro

Section 8 / HUD Intro

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