Investing out of state- Section 8

[Ihosvany Castaneda]

I am looking to make my first investment and was thinking about going to section 8 route out of state. What are the common mistakes people make when getting into out of state investing Specifically section 8. What is the potential of it? What areas should I stay away from and what are some good areas to look in? 

[Travis Biziorek]

Hey Ihosvany,

These are super common questions, and Section 8 out-of-state is something I have a lot of personal experience with.

I built a 12-door rental portfolio in Detroit using the BRRRR strategy, and currently have several of those units rented to Section 8 tenants. The model can absolutely work, but there are definitely some landmines to avoid, especially when you're managing things from afar.

A few of the most common mistakes I see:

• Assuming Section 8 tenants are all the same. Like cash tenants, there’s a wide range of quality. Screening still matters — big time.

• Investing in low-grade neighborhoods just because Section 8 pays well. The tenant pool is usually much weaker in these areas, and it’s easy to get stuck with high turnover, lots of maintenance, and neighborhood-level issues.

• Underestimating the delays. Getting a tenant placed can take longer than you expect — inspections, paperwork, approvals. It’s not fast.

• Thinking “guaranteed rent” means “guaranteed good tenant.” They’re not the same. Rent reliability is a pro — but tenant quality and maintenance expectations can be a challenge.

That said, the potential is real:

• Rent is direct-deposited every month.

• Demand is strong.

• In some markets (Detroit included), Section 8 rents can be higher than market — especially for 3–4 bedroom homes.

You just have to approach it strategically. Personally, I like placing strong Section 8 tenants in solid C+ neighborhoods that are on the upswing — areas where the numbers still work, but you’re not stuck in a warzone. That positioning attracts a better tenant and sets you up for long-term success.

If you’re still early in the process and want to go deeper, I’ve written extensively about my experience with Section 8, common landlord myths, and lessons learned from the last few years. Feel free to DM me and I’m happy to share some of those resources.