Should I Accept Section 8 Tenants—Or Run the Other Way?

by | BiggerPockets.com

If you’re a property investor and you’re looking to get into Section 8 properties, there are plenty of gurus online who will happily tell you to RUN! Section 8 tenants are too unreliable, too desperate, too disrespectful, too, well, poor to be good tenants.

In the most respectful way possible, we’d like to tell those gurus to take a short walk over a long cliff. One of the Metro Detroit cities we do business in, the City of Detroit itself, is one of the most desperate urban areas of America, and we almost have to accept Section 8 there to find tenants. After dealing with Section 8 for almost 20 years, we can attest that it’s not nearly as bad as the gurus make it out to be.

The Bad News

Section 8 requires a lot of work—specifically, you have to deal with Section 8 applicants who never seem to understand the program, even after being on it for years. Also, housing counselors who are overworked and underpaid (and almost absurdly hard to get ahold of) must be constantly nudged to move their process forward. Then there’s annual property inspections and, oh yes, even more paperwork to get the rent payments coming in.

The Upside

If you can handle the paperwork and have a good followup reminder system, the extra time and effort can pay off, with government payments coming in like clockwork. If you screen the applicants correctly, you can also avoid some of the pitfalls associated with Section 8. Let’s go over some of those pitfalls we listed a bit more closely, so you have a better understanding of them.

rent to section 8

How Much Will Section 8 Cover?

The problems start when they call on your ad for a 3-bedroom you’re asking $1,000 a month for. You need to ask how much their voucher is for—and understand they really don’t know or care what it is! They’ll tell you with complete confidence that their voucher will cover the rent amount when it really doesn’t. YOU have to understand the Section 8 program so YOU can ask the right questions!

Related: 8 Myths About Section 8, Corrected: Here’s the Profitable Truth

For the record, the (most important) “right question” is, “What is the HUD-determined Fair Market Rent (FMR) for a unit with ‘X’ bedrooms in my area?” The answers are available here—if the applicant wants to pay more than the FMR, they’ll have to make up the difference, and either way, they’ll pay 30% of their monthly income as rent, with Section 8 paying the difference between that amount and the FMR.

But! There’s a hitch. Because FMR isn’t intended to cover “rent,” it’s intended to cover “total costs of housing (TCH),” which includes electricity, gas, water, sewer, garbage, and recycling costs. So if the FMR for a 2-bedroom is, say, $911 (which it is in the Metro Detroit area for 2017), and the tenant has $281 in utility bills and is paying $750 in actual rent, the TCH for them comes to $1,031. But because Section 8 only covers 70% of the TCH up to $911, the most it can contribute is $638, meaning that regardless of their income, the tenant must pay the remaining $393. Of course, because your tenant is virtually guaranteed not to understand that, it’s up to you to either explain it to them up front or risk having the tenant vanish on you when they fail to pay (because failure to pay means they’re booted off of Section 8).

Section 8 Applicants

Telling everyone that they need to be better at tenant screening is probably one of our favorite pastimes. But if you’re going Section 8, you have to take that warning as though your life depends on it. Master your tenant screening process, make no exceptions, and dot every single “i” and “j” and “ö” you come across.

Here’s the simple logic: If everyone is complaining that Section 8 tenants are low-quality, be picky! Choose only the tenants who meet the “strict version” of whatever your standing requirements are and delve deep into every one of them. If you avoid the “bad” tenants, you avoid most of what people’s Section 8 nightmare stories are all about—so screen like you’ve never screened before!

good-real-estate-note-deal

Related: How to Profit Big & Help Those in Need by Renting to Section 8 Tenants

Certification

You have to get certified by the HUD, and you have to re-certify every year. That means inspections, paperwork, and doggedness in the face of mindless bureaucracy. We’re not going to lie: It can suck. Filling out the forms and waiting for them to call you back is the easy part—the hard part is dealing with the Housing Quality Standards (HQS) inspections that happen every year. There’s a pleasant little booklet called “A Good Place to Live!” put out by the HUD that explains everything you need to do or have to pass the inspection, but it’s 20 pages long.

Here’s the short version:

  • All windows must be present and undamaged; ground floor windows must have working locks.
  • All exterior doors must have deadbolts and locks.
  • The floor, walls, and ceilings must not have any serious defects such as would indicate structural problems or present a danger to the tenants.
  • The ceiling and roof must not leak.
  • The paint on the interior walls must not be chipped or peeling.
  • A fixed water basin, flushing toilet, and shower are necessary in every unit.
  • No water leaks are permitted.
  • The kitchen and bathroom must have hot and cold running water and a hard-wired light.
  • The bathroom must have a window or fan that exhausts outside.
  • All electrical outlets must have cover plates (and function!).
  • Every unit must have independent heat.
  • Every floor of every unit must have a smoke detector.
  • All stairs and railings must be secure.
  • All common areas must be maintained and free of dangers to the tenants.

Most of this is pretty obvious, but the inspectors are very meticulous—a 1/4″ crack in a window you never knew existed (like one of those tiny ones at the top of a basement wall that happens to be hiding behind an armoire), and you’re kaput. Then you have to reschedule, pay for a new inspection, and get the problem fixed.

What’s more, these inspections happen whether the property has a tenant in it or not, and the inspectors don’t particularly care if a particular problem was caused by the tenant or not—you still have to deal with it, and fast. But seriously, guys—that list basically amounts to “you can only rent out units that are safe to live in.” If you can’t handle that, you shouldn’t be a landlord in the first place.

Benefits

So, is Section 8 worth it? If you’re discerning, patient, able to follow rules to the T, and willing to put in a little extra time elbow greasing the red tape until it gleams, absolutely! The benefits boil down to four items:

  • Section 8 isn’t easy to qualify for—so (to a degree), anyone offering you a voucher has been pre-screened (but that’s no excuse to skip your own screening—ever!).
  • There is never a shortage of Section 8 applicants, so vacancies are limited.
  • You can advertise on SocialServe.com and at your local Public Housing Authority to fill vacancies even faster.
  • And the big momma of them all: Rent comes in on time, every month, like clockwork. The government pays part of it (sometimes all of it), and the tenant is well aware that any violation of their lease–including a late payment—will result in a loss of their Section 8 status. Now, this obviously doesn’t keep emergencies from happening occasionally, but by and large, the reliability and timeliness of Section 8 rental income is the big draw.

We’re republishing this article to help out our newer readers.

Investors: Do YOU accept Section 8 applicants? Why or why not?

Let me know your experiences with a comment!

About Author

Drew Sygit

Drew is the manager of Royal Rose Property Management, a fairly high-tech solution for Detroit Metro area property owners & investors.

62 Comments

  1. Dawn Anastasi

    I had one inspection fail on a S8 tenant because the register cover in the bathroom was dented. Not missing, not broken, just dented. The reasoning was that it could restrict air flow. So yeah, they can be nit-picky. The new register cover was $10 but it was like c’mon give me a break.

    • Drew Sygit

      @DAWN ANASTASI: yea we’ve seen some of them do the same. Just wait to the frustration of a tenant denting that vent cover again and you have to address it again, when tenant should be held responsible.

      Overall, S8 is a good program, but just like anything else there are the occasional challenges!

  2. Jeff Rabinowitz

    If the housing counselors are now “almost absurdly hard to get ahold of ” the service has improved dramatically. When I last accepted Section 8 (over a decade ago) the Detroit workers were virtually impossible to get ahold of. Not that it mattered much because if one did manage to reach a worker they rarely knew their own rules nor had even the slightest desire to help resolve any issues.

    You didn’t mention my favorite downside. The voucher recipient would be subject to periodic reviews of their income. If the review revealed that the recipient received an hourly raise of as little as 10 cents an hour their voucher could be reduced by 100’s of dollars monthly. The landlord was required to sign an annual lease and they were held to every line. If the income review came only two months into the lease the voucher would be reduced immediately. The landlord still had to honor the lease even though they may not have considered the applicant with the new, much smaller voucher. What happened if the tenant (predictably) had trouble coming up with their new required payment? If they had a voucher from the DHC (Detroit Housing Commission)–not much. The worker, if one could reach them about any issue, would rarely be helpful.

    When one accepts Section 8 one enters into a very unequal partnership with Government. The landlord is likely to lose every dispute and will have little recourse short of suing the housing commission or the State. I will never participate in the program again.

    • sharon r.

      very true. I had the same experience. my sec8 tenant got a rais from his veteran
      program he was in and sec8 just stopped paying his voucher,
      he tried to appeal but they said no. i ended up getting paid for two months
      before I knew about it. (he didn’t tell me right away and for some reason
      it “didn’t come in the mail” obviously I waited a while till he paid it.
      but what if he couldn’t?
      they don’t really give you a guarantee for a full year, so if the tenant’s situation
      is changed, like Jeff wrote here, even for the better, if can actually be worse for the both of you. stupid system.

    • Drew Sygit

      @JEFF RABINOWITZ: a very good point about the lease and income changes. You forgot to leave out the part that a landlord’s only recourse is to evict the tenant if they don’t pay and then S8 takes their legal position that they didn’t sign the lease so aren’t responsible for anything.

  3. Paul M.

    One can’t just decide not to take section 8, without risking a ‘fair housing” lawsuit. The only legal way to get out of it is to make the condition and features of the apt good enough so market rent prices program participants out, even with subsidy.

        • Scott Schultz

          maybe in NY, but in WI we have Lawful source of income as well, and a section 8 voucher is not income, it is assistance, if it were income the recipient would have to pay income tax on that money, or it would apply to your annual income, and it does not, so NO you do not have to accept vouchers.

        • Wilson Churchill

          It’s interesting that it addresses the “source” of income but not the amount. I would hold everyone to the same income standard, which would comply with this statute: Three times the monthly rent in income required. So if their total income, including Section 8, is three times the monthly rent, then fine. If not, tough luck.

        • Katie Rogers

          “Income equal to three times the rent” turns the guidance upside down. This guidance came from a book by William Nicholson. The way it is supposed to work is the investor analyzes the income of the typical tenant in the location, then charges rent for a single family that is equal to no more than one-third of the typical income. Once this rent is determined, then the landlord can require that income be three times the rent. House price should be consistent with this rent. Typical local tenant income is supposed to be the starting point, not the rent the landlord wants to charge.

  4. I rent to section 8 tenants all the time. Your right the money comes in like clock work. Sometimes the paperwork is mountainous but well worth it. For you LAZY landlords that visit your properties when there’s a problem this isn’t for you. For the true business owner that protects their assets making sure a $10 part doesn’t become a $1,000 fix its perfect. Your business doesn’t run it self why do you think your real estate holding will ? When you rent to section 8 folk’s you have to teach and educate them as to what you expect and are willing to allow. Last but not least. We will not except section 8 tenants that do not contribute to their families or society . I refuse to pay taxes so someone can sit on my front porch smoke pot and drink beer all day.
    I leave you with one last tip. To truly understand the new tenant your getting. Go visit the current apartment that will show you a lot about someone.

  5. Tim Sabo

    Decent article, but I would like to add the following:
    Violations of the lease DOES NOT result in a loss of Section 8 status for the tenant UNLESS you, the landlord, evict the tenant through the judicial process (local magistrate). The Section 8 office will tell you that the lease is between you and the tenant, they only pay the rent: if there is a lease violation it is your responsibility as the landlord to act to correct the issue or evict the tenant, but eviction must go through the judicial process in order for the tenant to be disqualified from the Section 8 program (for up to five years).
    Additionally, inspections can be a royal pain. Doors and windows must operate as designed, with security latches and all functioning properly. Inside doors must latch also, even if they are only for a closet.
    For electrical issues, recent national code must be followed. Any electrical outlet within 6 feet of a water source must be a GFCI. (And you must have an outlet in the bathroom). If you have un-grounded three-prong outlets, they won’t pass either. Our local inspector encourages us to change the three-prong un-grounded receptacles to the old two-prong style, which I find ridiculous, because then the tenant has to use the three-to-two adapters.
    Smoke detectors must be in every bedroom and common areas, as well as carbon monoxide detectors, altogether adding great costs to your rental. And each floor requires one fire extinguisher now.
    Plumbing code must be followed also; no lead lines, no drips, handles must shut off water and toilets must not run or leak. Tubs can not have mold or mildew growth.
    Let’s not forget outside. Shingles can not be loose, curling or even in poor condition (subjective). No peeling paint outside either: if you are renting one side of a duplex via Section 8, the roof and paint on BOTH sides must meet this standard.
    Section 8 tenants need to be managed by a qualified landlord just like non-Section 8 tenants: being in a government-sponsored program won’t get people to behave if they want to act like heathens. We have had great Section 8 tenants and not-so-great Section 8 tenants. We have had great non-Section 8 tenants and not-so-great non-Section 8 tenants. Finding and keeping good tenants is the primary role of the qualified landlord; failing to perform this function correctly will lead to disaster regardless who is paying the rent.

  6. Tim Sabo

    One more thing: your unit must pass inspection prior to the tenant moving in. Sometimes this can cost you a bit of coin and some work to do these things, but you do it. Section 8 also requires you prove that all taxes and municipal utilities are working and paid up BEFORE the tenant moves in. You figure, wow that’s strict, but I’ll have some protection, right? WRONG!
    At the end of the year, you decide not to rent to the tenant again, and you inform Section 8. Are they going to verify that the tenant has paid up all the utilities prior to giving them a new voucher for the next place? No! Is Section 8 going to inspect the property-the one you worked long and hard and spent money to meet their standards-prior to the tenant moving out and getting a voucher for the next place? NO!
    Section 8 places great requirements on the landlord at the outset (and periodically if the contract is re-newed) but never places this same burden on the tenant. They simply let the tenant move on and you get stuck with the unpaid water and sewer bills and their junk left in your unit.
    Be sure to take a lot of pictures before you rent and after the tenant moves out. Also, if the utilities aren’t paid in full each month, you may have to threaten to evict them to get them to pay their bills. Be sure the Section 8 tenant pays their utilities each month in full. The Section 8 office leaves you with ALL the responsibility, so don’t expect anything but a rent check from them.
    I will never understand how a government-run program can give a taxpayer-supported voucher to a tenant who left behind a mess of junk and unpaid utility bills for a landlord: to me, that is the number one reason landlords don’t want to participate in the program: in the end, they get screwed by the tenant AND Uncle Sam.

  7. Todd Krzeminski

    Thank you for this article. I’m looking into transitioning at least one of my rentals to Section 8 in the future. Lots of information I did not know (and some I did).

    Sound like Section 8 tenants may be preferable if/when the economy goes south since rents are covered by the government.

  8. Robert Gilstrap

    Let’s see; extra requirements, extra rigorous screening, extra inspections, extra maintenance, extra frustration, extra headache, extra paperwork, yep that sounds wonderful…
    Section 8 is only a good deal when you have no other options due to the location of your property or the demographic for a particular property. Section 8 means taking everything thats written into your lease and throwing that out the window since the HAP addendum controls and basically partnering with the US Government. Does any rational person think it’s a good idea to “partner” with HUD?

    • Cindy Larsen

      Robert, my research indicates that you are right, and not exagerating: just wording it well.

      I recently bought 3 duplexes that came with existing tenants. The previous owner neglected to tell me that one of the tenants was section 8, and there was no indication in the lease. I asked all tenants to,sign up to pay rent via cosy. The section 8 tenant signed up, but rent did not get paid. On the 5th of the month I finally got in contactmwith him, and found out that he did not view it as his responsibility to pay the rent, just his portion of it, and had not bothered to tell the “housing authority” that he had a new landlord. Since he was month to month I immediately gave him his 20day notice to move.

      I then spent 15 hours over the next 5 days communicating with the tenant, and with the section8 housing authority trying to get my rent which had been sent to the previous owner. On the 23, I finally got paid. Meanwhile I researched section 8, and found that among other things they require the landlord to sign a contract that superceeds the lease. You are, in effect, signing up to work for them. I said NO Thanks, and made sure that tenant moved out on time.

      I have also upgraded the duplex unit so it will rent for higher than the section 8 upper limit. So, I will not be discriminating against section 8 as a source of income: my property just won’t fit their criteria. Darn. Oh, and I spent most of two weeks cleaning and fixing the place. NOT the kind of tenant I want.

  9. David Repka

    As exclusive financial advisor to a family owned and operated investment firm we recently placed a $8.9 million loan secured by a portfolio of scattered site houses and apartments rented via the Section 8 program.

    Sponsor signed a non-recourse loan and walked from the closing table with close to $5 million cash out to buy more stuff. Loan featured a fixed rate for 10 years with payments based on a 30 year amortization schedule.

    Section 8 program has been a wealth creation machine for this family.
    David

  10. Sylvia B.

    A friend of mine is the manager of the low income apartments in our small town. She recently had the yearly HUD inspection and had some interesting things to tell me.

    The inspector cited her for the following:
    1. Non-working refrigerator – It was a mini fridge, the personal property of the tenant, and stored in a closet.
    2. Broken glass – Again, the personal property of the tenant, a picture hanging on the wall with a crack in the glass.
    3. Poor seals on refrigerator doors – No objective test, the inspector just didn’t think the door “felt right” when opened.
    4. Use of caulk – (This one blew me away) Apparently they are not allowing the use of caulk or spray foam to seal cracks. No clue what one is supposed to use instead.

    Several of the tenants were quite annoyed because the inspector opened every closet and cabinet door and drawer, and rummaged through their stuff, looking for who knows what.

    My response – “And people ask us why we don’t accept HUD!”

    Accept Section 8 tenants or run the other way? My advice is, run fast, run far!

    • Drew Sygit

      @SYLVIA B.: sounds like a rogue inspector to us. Did you try to escalate the issue? There may have also been a situation where that S8 office/inspector wanted to get rid of this specific tenant. They will never admit to this, but it happens.

  11. Brian Walsh

    Great article. We own a property management company in Greenville, S.C. and have attempted to work with Section 8 tenants several times. Each time we experienced similar results to the examples given in this article. In short, we will never try to work with Section 8 again. The “system” they have in place just does not work. We have found that we are able to rent our houses much quicker on our own.

  12. Karl B.

    Never dealt with Section 8 in any of our single families but am likely buying a 4-unit (my first multi). I agreed on a price a week ago with the seller and am waiting to hear back from his slow lawyer.

    Anyways, when I looked at the property with my dad (we did a drive-by and stopped) a woman on the first floor saw us outside and after I said I was a potential buyer she invited us inside to check out her unit.

    I later learned she’s Section 8 – she’s been there a few years. I’m told of the four units, only two qualify for Section 8. Some properties cater toward Section 8 and some don’t. The unit I saw was pretty small – nice, though. The former owner and his PM took good care of the place.

    I look forward to learning more about Section 8. Like every tenant class/group/whatever, I’m sure some are problematic and some are a joy to rent to.

    I’m not opposed to renting to Section 8 – as long as it’s not a major paperwork/inspector hassle. I will find out.

      • Karl B.

        The seller told me they caseworkers can be SUPER picky and nothing can be at all damaged.

        But the one Section 8 lady seems awesome and she’s been there for years and so I’m open to having another. Of the two units that qualify for Section 8 one is vacant and I will rent it to Section 8 or not – no matter as long as the prospective tenant passes the requirements.

        The other vacant unit is considered a studio and doesn’t qualify for Section 8. I feel like there’s a big Section 8 stigma on BP – the trick is finding high-quality tenants, Section 8 or not.

        You wrote a great article – super informative with lots of facts/info I didn’t know – and I hope to see more articles from you. Thank you!

  13. I recommend consulting with an attorney who knows the Housing Choice Voucher Program and its interaction with state and local laws. I have been on both sides–I have represented voucher-assisted tenants as well as the residential property management company (I am a housing lawyer). Important factors include but are not limited to the local housing authority’s responsiveness, how robust your applicant screening program is, how much time you want to commit to management, & understanding that when voucher-assisted tenants change or lose jobs or experience income changes, there can be volatility in payments to the landlord. Overall, I have seen the HCV program work for the educated and compliant landlord.

    • Drew Sygit

      @THERESA MORELLI: great input. A landlord has to be organized and have time to deal with S8 when a lease starts and then on annual renewals and lastly for tenant changes in status.

      If you don’t have the proper amount of time or organization, it may be best to avoid S8.

  14. Chinedu Michael Onuoha

    Thanks for this post. I was contemplating buying a section 8 unit recently passed inspection at Cleveland. However, I am not really on ground, so I think I’ll just pass. Unless I get an awesome PM..

    Quick question @DREW SYGIT: If I buy this property, can I just rent it out to anyone else…is it compulsory I rent to a Section 8 tenant. Am asking because am thinking since property just passed Section 8 inspection, it must be in great shape… and therefore probably a good deal in terms of property quality. I am relatively new to REI.

    • Drew Sygit

      @CHINEDU MICHAEL ONUOHA: We’re not aware of any Section 8 single-family homes that are limited to accepting Section 8 tenants, but check to confirm.

      Regarding the condition of the property, Section 8 inspections only look for specific issues, so you should not rely on a Section 8 inspection to replace your own pre-purchase inspection.

      • Cindy Larsen

        My understanding is that section 8 pays up to 70%of the HUD fair market rent for the size of unit in the specific metro area. You can find this on the hud website. BUT, the HUD fair market rent includes cost of water/sewer/garbage so, the most you can get from section 8 is 70% of (w/s/g/ + rent) = Fair market rent. So the amount of rent you can get from a section 8 tenant may well be less than the market rent value of your property.

        Example: if the hud fair market rent is $1200/month for a 2 bed/1bath in your metro area, and w/s/g averages $125/ month, which you require your tenants to pay, the most you can charge for rent that woud be “100% paid by section 8” would be $1075. You would get a total of $1200: section8 would pay $840 tenant would be responsibe for $360. If you charged $1100 rent, section 8 payment would still be $840, but tenant would pay the additional $25.

        Also that HUD fair market rent number is targeted at the 40th percentile: meaning 60% of units in the area rent for more that the fair market rent number.

        My choice is to target the middle 40% of renters by buying and/or upgrading units to appeal to those renters. They tend to have higher incomes, higher credit scores and less criminal backgrounds. I do not want the bottom 40% of renters. Anyone who wants to target section8 is welcome to them. I believe my target market is more profitable for a buy and hold investor.

  15. Katie Rogers

    About HUD fair market rent determinations: Sometimes the determinations are zip-code specific. Root around here to find the determination for your zip code, if available. https://www.huduser.gov/portal/datasets/fmr/smallarea/

    I found no indication that the determinations include utilities. Here is a sample explanation of how the determinations was made for the Abilene, TX MSA: https://www.huduser.gov/portal/datasets/fmr/fmrs/FY2018_code/2018summary.odn

  16. Michelle Moore

    Check with other landlords regarding Section 8 experiences in the city you are contemplating. I rent 10% of my properties in one city to Section 8 tenants with no problems so long as I screen my tenants well. I had to stop accepting Section 8 in the other city where I have properties because the city has its own subsidized properties and would not honor leases with me in order to “steal” my tenant when they had vacancies. I had just made hundreds of dollars of repairs to pass inspection on a property that had just passed inspection 6 months prior. The tenant then asked to be released from her lease and I declined. The Section 8 office sent the inspector out again (1 month after I passed inspection) and sent me a list of 20 additional items that I would need to complete or they would invalidate my lease. They had the ability to reinspect my property every month and send me a new list until I would “agree” to release the tenant from her lease.

    As others have stated, you are not likely to win any battles with the government so I told them that I would no longer be doing business with them since I do not do business with unethical people.

  17. Melvin Plummer on

    In my experience, 2 out of 10 Section 8 tenants are decent. So if you get the top two, you’ll do fine. If you get the bottom three out of 10, you’re going to have a problem. Someone mentioned that you should go by and visit their current residence. That is a good idea but when you go by to visit them, it should be an unexpected visit.
    If they drive a car you should also look at the interior of the car. Also, if you are renting a single family house to a Section 8 tenant, it may be better to rent to a working Section 8 person rather than a non-working Section 8 person.

  18. ward conville

    Great discussion. From my experience whether S8 makes sense greatly determined by your market and how well the local office runs. We have a good local office and we get along very well with the housing specialists and the administrators. We also get market rate or more for our properties. We have about 20 units on the program and only one of the 20 did I accept a lease rate that was below what I could lease to a non s.8 tenant.
    My advice on S.8 is to talk to several local landlords/managers who actually have S. 8 tenants in your area. I hear lots of horror stories from managers who either did not accept s.8 tenants or that had no recent experience.
    Overall I can say that I have fewer problems with my non S.8 tenants that I do the S.8 primarily because of the program paying 80% of my rent on these units.
    Also, I have found that our inspectors not to be unreasonable. We have irritating issues that come up from time to time, like a refrigerator gasket not begin 100% attached, but one you are used to what they look for getting a unit ready for inspection is not that different that getting a non S.8 unit ready to rent.

  19. Kurt Stresau

    My experience:

    Inspections are semi-arbitrary and done by people who know nothing about the electric code, plumbing code, or residential construction. The example above about not using caulk to seal gaps is a good one, and is one that I have encountered as well.

    The housing authority staff are just there to process the paperwork and render the assistance payment. If the tenant begins a pattern of non-compliance with the lease or begins abusing the property, the housing staff doesn’t care and won’t get involved. It’s simply not their role, so don’t expect them to be “on your side.” If anything, our local officials are out to “save” the “poor tenant” from the “evil, greedy landlord”.

    As noted above, when re-inspection time comes around, the inspector doesn’t care that the tenant is the one who punched a hole in the wall. The hole exists, and the unit fails. Long-term users of the system know this, and will try to use a failed inspection as an excuse to break their lease.

    My advice: this program DOES work as part of a portfolio, but go in eyes wide open. Understand the risks and burdens (and benefits). People frequently advocate risk-diversification in asset allocation. Why would you not do the same within the rental portfolio itself.

    If you have mortgages (which most of us do), consider having 20-25% of your units available for Sec8. This should be enough that even if your OTHER tenants all skip down at once, the income stream helps keep the bills paid. In my mind, Sec8 in my portfolio helps me manage cash flow…but it comes with an operational burden.

  20. Wilson Churchill

    I don’t, because I don’t have to. I buy in cities that have people with actual jobs. My experience with Section 8 has been that the tenants don’t understand the importance of hygiene and end up attracting insects and rodents, among other things.

    I had a Section 8 tenant that didn’t bother to tell me that the furnace wasn’t working. She decided to use the gas oven to heat the home, which resulted in condensation and mold, along with damaged wood flooring. Another tenant allowed her child to damage screens and cabinets, and wondered why the housing inspector wouldn’t allow the house to pass inspection. All of the Section 8 tenants I had used drugs. Another tenant had a drug-dealing boyfriend (not on the lease, of course) that broke nearly all of the windows and doors.

    People that work for a living and have to come up with their own security deposit are more likely to treat your property with respect. Welfare recipients expect everything to be given to them. I remember interviewing a potential tenant that said she had been trying to get on Section 8 for 10 years! Surely, she could have gotten a graduate degree during that time, or at least a job..

    If Section 8 tenants are the only tenants available, then fine. If you have Section 8 tenants, be sure to put the home through a weatherization program, if one is available through the local municipality. You may at least get a new furnace or insulation out of the deal. Even then, Section 8 rents tend to be 100 per month or more below market rents, at least around here.

  21. Anthony Napier

    I have worked with Sec 8 tenants for many years. I mostly appreciate getting the rental payment on time month after month like clock work. Unfortunately, there are some draw backs if you don’t follow up regularly. I have an in-house property manager that visits each property monthly and inspects its condition. This helps us locate any repairs needed early in the lifecycle of the issue to avoid larger, more costly future repairs. This allows for avoidance of rotted floors, sheet rock damage, and mold caused by a little leak that goes unreported for a year or more. This also alerts the tenant that we are proactive in maintaining a safe, sanitary, secure environment for their family.

    Additionally, we make the tenant aware during the move-in inspection that there are standards that will be enforced. If damage is found and determined to be tenant negligence or deliberate destruction they will be held financially accountable. After damage is found during the monthly inspection the repairs are made and the tenant is then billed.

    Recently a tenant complained of water backing up in the toilet. Our plumber was called and after inspection found that the tenant was flushing feminine products down the toilet. The tenant was informed of the findings and billed for the repair. This was unfortunate since our lease lists many items that tenants should not flush in the toilets or pour into the sinks and their financial responsibility if they ignore this information.

    With a small amount of diligence, I can enjoy keeping my rental properties fully occupied, maintained, and with on time lease payments!

  22. Roman M.

    Seems like no downside however evictions are not covered by this article and my FL eviction attorney said it could be very expensive if tenant gets a lawyer specialized on “sec 8 milking landlord cases”. It could take months and tenants lawyer does it on contingency basis as they find a way to get a lot of money from the landlord where eventually it could be in thousands.

  23. Rob D.

    Sure. If your rentals are in a predominantly Sec8 area/city then you don’t have much of a choice but to accept the fact you’re going to be renting to Sec8 tenants. That’s not earth shattering news. But to sit there and state that all these people who are saying stay away should “take a short walk over a long cliff.” are wrong is beyond asinine.
    I personally know people on Sec8 and believe me they know how to play the system. Better than th3 landlord can. . I also know a few property managers and building owners who accept Sec8 and they have plenty of battles with the Sec8 recipients. While not all Sec8 recipients are bad people there are enough of the bad tenants out there that I personally have no interest in taking them on.

  24. Chris Gille

    We had Section 8 tenants for years and most of them are pretty decent but they all have baggage. The bottom line is once they get in the program they don’t want to jeopardize that so they tend to keep the place clean and let you know when things are broken or need maintenance however I did have one section 8 tenant that did not know the meaning of a sponge or a mop and literally failed the Section 8 inspection because the stove had about an inch of grease on it and inside of it. The Dark Side of Section 8 is also a prevalence of a victim mentality and a learned helplessness combined with some entitlement issues. They tend to be high maintenance because they come from a lot of dysfunction so you’re always dealing with that aspect, even when you spend time screening the tenants I think that this is something that comes with the territory . ALL of the Section 8 tenants that I had were typically single moms with children so I always felt like I was providing a service but the baggage and the fact that sometimes they couldn’t even come up with their small portion of rent (one tenant couldn’t come up with the $7 each month and I finally waved her rent portion and told her to get some diapers with the extra money) that being said after 7 years i traded the low-income properties for high end properties and I would never do Section 8 again. The bureaucracy is another layer all by itself that I could write a book about.

    Just my 2 cents…

  25. Our very first tenant almost 10 years ago was also our first and last Section 8 tenant. She knew the system better than her caseworker, and certainly better than we did. The statement was made in this article that these tenants are well aware of the consequences of lease violations may be true in the literal sense, but that didn’t stop our tenant from moving in extra people, a dog, taking in neighbors’ laundry for money, renting out the basement to someone to sleep in, allegedly selling drugs (per the neighbors) and refusing property visits when it wasn’t convenient for her. She had no fear whatsoever about being removed from the program.

    Her caseworker put the burden of proof on us to document any lease violations we found, most of which she had quick explanations for. Luckily, we were there fixing something one day and actually saw the pit bull she had built a doghouse for in the backyard and were able to take pictures. Her lease was expiring and we told her if she didn’t get rid of the dog, we’d get rid of her. She decided she wanted a second dog, and left when the lease ended.

    While we gave her credit for being an exceptional housekeeper, her belligerent attitude, flagrant lease violations and getting almost zero help from the Section 8 program itself turned us off from it forever. We never had trouble with the inspections though, since we took good care of the property and the tenant wasn’t destructive.

    In the states we invest in, evicting for non-payment of rent is fairly easy and straightforward. Because S8 evictions aren’t always about nonpaid rent, good luck in getting rid of a bad tenant. And forget about collecting on them.

    As noted in the comments here, the S8 program is really only as good as the agency running it in your location. Try reaching out to them before getting involved, and see how difficult it is, and get a sense of what the caseworkers are like. Because if you have a problem now, it will be immeasurably worse trying to solve it later.

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