Preemptive Strategies for Section 8?

Question

Hi! After struggling to find cash flowing properties in Raleigh/Cary/Apex, I'm starting to look into buying Duplexes in "middle of the road" neighborhoods in Durham and do Section 8. I've been reading blog posts last night and have heard of horror stories related to section 8. I'm still tempted though because it seems I can get greater than 2% with these types of properties.

Do you guys have any suggestions as far as minimizing property damage/degradation when renting to section 8 tenants?

I'm thinking I should really screen the applicants and even interview 2 or three former landlords. I'm also thinking about possibly visiting the properties monthly or every 2 weeks to begin with until I know I can trust them. I've also heard I can have a stern conversation with tenants initially and tell them that I will report them if I see significant property damage and they can lose their section 8 vouchers? I heard no one wants to lose their vouchers. What do you think of these ideas?

Daren H. · Answer

In regards to the question concerning minimizing property damage, I do not make an automatic correlation between Section 8 and property damage. All types of tenants will damage your property if you don't due proper due diligence (some will even if you do). Personally, the screening of section 8 and non-section 8 shouldn't be that different (they both should be screened thoroughly). As for visiting the property every two weeks, monthly, and making threats concerning their voucher; you are begging for vacancy. Just because they are on section 8 doesn't mean they are less human or would be more willing to accept harassment (how about quarterly or during maintenance calls?).

I have section 8 tenants in two of my rentals and have no issues. What I learned is that most section 8 tenants are like most non section 8 tenants. They want a clean, safe, and attractive place to live (mentioned above).

Dawn Anastasi · Answer

Provide clean, safe, attractive places without spending a ton of money on rehab. Screen for quality tenants.

Bradley Bogdan · Answer

@Christopher R.  I have a few suggestions:

1. Network with some local landlords to find out what kinds of rents you can reasonably expect to charge. The posted FMR rates ARE NOT what you can usually charge for rents, as they're supposed to also include tenants' expenses for paying part/all of their own utilities. They are also not a blanket rate for the whole area, if there are cheaper neighborhoods, the PHA can cap the rents in that area lower than the rest of their territory. They don't always, but can.

2. Follow @Dawn Anastasi 's advice for units. Think simple, clean and durable.

3. Ensure the neighborhoods you have/are purchasing rentals in are actually desirable. The more attractive the area, the more people will want to live there and the more choice you will have in tenants.

4. Be vigilant about your properties, as you would with any rental. Remember, though, that your reputation as a landlord will spread within a community. If you're checking up on your tenants every other week and it becomes annoying, your tenant pool will shrink. This goes for screening as well, the tenants you want in your units will have choices about where to rent. A speech about how you'll blow them in if the set a foot wrong will likely drive good tenants away as fast as bad ones.

5. Contact your local HUD-VASH program. It is financially the same as Section 8, but is for veterans and comes with VA services to ensure tenants are doing well in your rental. They will likely be very interested in providing you tenants if you're telling them about your vacancies. The program has a great success/retention rate, just be forewarned that the veterans in the program have mostly fallen on hard times, that's why they're eligible. If you're unable to find a local contact for the program, PM me and I can look up who heads the program in your area.

Good luck!

Andreas W. · Answer

@Christopher R.

You can check Gosection8.com what duplexes are rented for. A tenant might get a voucher for full or part of the rent. In fact, that can vary multiple times during the year. Most duplexes in Durham are in rougher neighborhoods that require more attention. Check if this is worth your time. The 2% rule is a guide line only, not a requirement to make money.

Chris Martin · Answer

Make sure you know what rent rates are before jumping in. Last year sequestration hit RHA landlords hard, and some rents remain significantly below published MSA FMR numbers. I don't know if Durham did what Raleigh did... just cut contract rents by 6...8...10...15%... and keep the number of vouchers the same. The worst we had was $1,045 to $609. Needless to say, we did not keep that property in the program.

Kate Pierse · Answer

@Christopher R. There is podcast about Section 8, I haven't listened to it but it may help you:

http://www.biggerpockets.com/renewsblog/2014/05/29...

I'm a realtor and wholesaler in the area so feel free to contact me if you'd like to connect and work as a team to find deals.

Preemptive Strategies for Section 8?

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