Starting with section 8

[Mike Harvey]

Hello all!

I've been renting out a couple properties for a few years, and recently have turned my attention towards the idea of section 8 housing. I am curious if any of you have some good intel on getting started with section 8 in the indianapolis area. I consider myself day 0 total noob on section 8. Is it worth it? What are the best kind of properties for section 8? Tell me anything and everything you can please! Thanks!

[Bruce Woodruff]

@bobstevens is into the S8 thing, hopefully he'll check in. Do a search though, there are horror stories as well....

[Travis Biziorek]

Hey Mike, I have 12-doors in Detroit and 3 of them are Section 8. 

The quick good/bad of Section 8:

• - S8 tenants tend to be rougher on the property (but not always)
• - Paperwork/inspections/etc. can be burdensome and tough to navigate (especially initially)
• - People often think FMR rates are guarantee rental rates but that's not the case
• - Usually the rent isn't 100% subsidized and a lot of people don't realize this
• - S8 tenants tend to stay a lot longer than cash tenants
• - Obviously, the guaranteed rent portion

Overall, I'm neutral on the program. If the tenant makes sense, the rent is there, and it all works for the particular property, I'll go with S8.

But I'm not the type to turn down a well qualified cash paying tenant simply because I only want S8.

[Michael Smythe]

@Mike Harvey

Section 8 can be a great government program to work with if you do it right!

In the past, the Department of HUD targeted S8 rents to be at the lower end of a rental market. In 2022, rising rental rates have forced HUD to significantly increase maximum rents as too many S8 voucher holders can't find rental homes at previous rates.

Positives

1. Rent comes directly to landlord, every month!
2. Landlord can require tenants to be responsible for separately metered utilities, so can avoid waste.
3. Landlord can get annual small increases in rent.

Negatives

Most of us don’t treat something we get for free the same way we treat something we’ve worked hard to obtain.

1. S8 applicants claim “broke” and don’t like to pay application fees
2. Same goes for security deposits
3. S8 tenants, in our experience, tend to cause more property damage than non-S8 tenants.
   - Make sure you get a security deposit and perhaps do a surprise inspection of their current home.
4. S8 requires an inspection (mostly health & safety) before approving a lease and then annually thereafter.
   - Not something most landlords taking care of their properties have to worry about.
5. There are limits to clauses they allow in your lease. This isn’t really a big deal though.
6. Rent payments can be abated over unresolved maintenance issues and tenants failing to abide by S8 requirements.
7. Many S8 housing commissions will not hold tenants accountable for damages they cause (tenant is supposed to repair or lose their voucher). Instead S8 requires landlords to repair damages to keep S8 payments. Landlord’s only option to collect funds for damages is to take tenants to court.
8. More and more tenants are only having a portion of their rent covered by S8, so landlords need to still screen S8 applicants for portion they must pay.
9. Landlord cannot charge S8 tenants a portion of shared utilities – which can lead to the infamous tales of tenant retaliation against landlord by blasting heat on high with open windows during winter.
10. S8 caseworker response times can be very slow, as they are usually overworked & underpaid.

Again, overall it’s a pretty good deal for a landlord that does some decent screening.

Exposing Section 8 Housing | Tenants From hell 243 - YouTube

Liberals Blame this Eviction on Landlord Despite the Before & After Footage | Tenants From Hell 241 - YouTube

My first Baltimore buy & hold investment - SOLD (Lessons learned) (biggerpockets.com)

Besides MANY self-labeled "gurus" exaggerating their success, many of them just supply readily available info.

If you're too busy to find the info and are willing to pay for it, no problem as you accept their time vs money solution.

REGARDING S8 GURU ISSUES SPECIFICALLY

Most of them don't share all the facts about how Section 8 actually works.

They claim you can get HIGHER rent from S8 tenants vs private-paying tenants.

Why would the government allow our tax dollars to be spent this way?

The S8 program was never designed to put S8 tenants in Class A rentals! The program was created to give low-income tenants an alternative to living in federal project housing.

S8 sets their rental rates to the LOW-END of market averages, if not slightly below.

What the gurus do NOT tell you is they expect you to get a Class C S8 tenant to rent a Class D property.

That's pretty much the only way you can consistently get higher than market rent via S8.

Also, don't make the mistake of assuming the S8 voucher amount is 100% for rent. S8 standard voucher amounts INCLUDE all utilities. An owner would be foolish to cover all utilities for an S8 tenant. Think of all the horror stories about tenants maxing out the heat with their windows open during the winter, deliberately running water bills up, etc.

[Nadeem Alamgir]

Time for a pro and con list: 

Pros: 

- consistent rent 

- prequalified tenants 

- higher profit margins

- free marketing 

- less eviction 

Cons:

- required inspection 

- security deposits are not included 

- delay payment before the first payment 

[Mia Chatman]

Hey! My name is Mia, New to BP forums! But glad I saw your post! We love leasing section8 rentals here in Indianapolis! Marion county is a great place to have section8 rentals. There's such a need for decent housing among the voucher holders here!

One thing for sure is screening the tenants is going to be key. There are GOOD people who have vouchers that take care of property and stay longer than most market tenants, less turnover with section8. 

Plus we are seeing higher rental rates! Single family 2-4br homes are HOT right now! if a home has 2bathrooms consider it leased with a quality voucher holder quickly! Tenants usually pay all utilities and their own deposit. 

[Harvey Levin]

Mike, I am the longest S8 landlord in Indianapolis. My 1st was in 1985
until last June I owned and operated the #1 PM company in Indianapolis. I also have consulted numerous local officials as well as HUD in DC. I have been a speaker for HUD on the topic of landlord issues with local Housing Authorities.  A couple of key points. 1 there is no national fixed process. Each HA uses HUD guidelines but has the ability to modify the process upon HUD approval. 2. many landlords do not fully understand  the ins and ours of the program. They operate S8 management the exact same way as non S8. This leaves a lot of money on the table and causes great frustration for landlords. Over my 44 years I learned how to maximize my profits and deal with the frustration very effectively. I encourage you to contact Indianapolis to get a copy of the HAP ( the contract between landlord and  Housing Authority .  Also you can go to my old website harveyproperty.com or YouTube and watch my videos.  I still manage my 60 +/- houses ( I am slowly selling them) and have made a lot more money than I made on my non section houses. Mine are all long term holds because that is the benefit of S8.
Good Luck.

[Todd Strong]

I'm currently looking into section 8. Do you look into the county to see how many vouchers they have available? 

How do you know that a county accepts Section 8 rentals.  Tried calling but very hard to get ahold of a person to discuss.

Any tips are apprecited!

[Danny Celestin]

Quote from @Mia Chatman:

Hey! My name is Mia, New to BP forums! But glad I saw your post! We love leasing section8 rentals here in Indianapolis! Marion county is a great place to have section8 rentals. There's such a need for decent housing among the voucher holders here!

One thing for sure is screening the tenants is going to be key. There are GOOD people who have vouchers that take care of property and stay longer than most market tenants, less turnover with section8. 

Plus we are seeing higher rental rates! Single family 2-4br homes are HOT right now! if a home has 2bathrooms consider it leased with a quality voucher holder quickly! Tenants usually pay all utilities and their own deposit. 

Mia, are you seeing guaranteed rental rates matching the payment standards in Indy or are they much lower?