section 8

[John C S.]

Hi I am in the processes of creating my business plan. my original plan was to start off with  3 or 4 family building owner occupied. In the process I was contemplating going to a section 8 building. I am a newbie to this site although I've been thinking about investing in real estate for a long time now. Can anyone tell me if they think it would be a good idea for my first property to be a section 8 rental Thanks

[Scott C.]

@Dooreuhn Cee

I quickly found out that screening for a Section 8 tenant is different than a conventional tenant. 

The first thing is that the credit check is mostly useless.  Most of them are going to have bad credit due to financial difficulties which necessitates them being in Sec 8 in the first place. 

The second thing is that the income versus rent rule is also less important.  Normally you wouldn't rent to someone if they weren't making at least 3X the rent.  That doesn't apply to Sec 8 because they are getting the housing subsidy.  That being said I do have them list their sources of income (job, disability, child support, etc...) on the application but it is never enough to qualify for the 3X rule.   I don't have a hard and fast rule but I like to see at least some income since they are going to have to pay at least their portion of the rent.  It is also made more difficult because most of my tenants also qualify for energy assistance so they get help with the utilities.

My biggest screening tools are the criminal background check, previous landlord call, and meeting them in person.  I don't rent to anyone with a criminal background. I also make them sign a form that I can call their previous landlords.  This part is a must. I have accepted and rejected tenants based on this. With a couple of my existing tenants the landlords were very sad to lose them so that is always a good sign.  Finally I always meet them in person when I show them the property. I make it clear to them that we are fair but have standards and rules.  I can usually get a pretty good feel for them in that meeting.

I hope this helps and I would love to hear other investor's experiences.

Thanks,

Scott