Section 8 Investing

[John Preston Neely]

Hey y’all,

I need some advice. I am a new investor, and have been approached with an opportunity to purchase a House in Section 8. House currently has tenant in that wants to stay. I am curious about Section 8 housing in general, but more specifically the things I could do to raise rents in the Section 8 program (improvements to house etc.). Lastly, what are some pros/cons y’all have experienced with Section 8?

I would love and appreciate any feedback, thank you!

Preston

[Seth Hochberg]

I'm a bit weary of choosing a property that already has a tenant in place (section 8 tenant or not), because it always feels like a bit of a gamble. For all I know, the tenant is terrible and refuses to leave, and maybe why the seller is even trying to sell. 

I would agree with what's been said. I've also had luck in Baltimore, scoring an extra $300 in section 8 rent because I added a room in the basement. Adding a bedroom will score you more rent then renovating the kitchen and bathroom (although you shouldn't strive for bare minimum).

To determine what portion of the rent the tenant will pay, you can estimate this, by contacting their previous landlord and asking them. 

Spend time on GoSection8.com, that will answer a lot of your questions. Section 8 houses need to pass an inspection in order to qualify for the section 8 rent, and that inspection is a baseline standard the house has to be in. As I said before, a fully renovated kitchen and bathroom will not increase your rent, as much as an extra bedroom will, since the vouchers are determined mostly by how many bedrooms there are. 

A bit off topic, but people tend to take advantage of this by buying in rough neighborhoods and renovating it to the absolute bare minimum and posting it on GoSection8. These tenants might not have any other option. If you're in a reasonable neighborhood, and you are not a slumlord, you can get a lot of attention, which will allow you to be picky. I highly recommend listening to podcast episode 356, with Joe Asamoah in the DC area. Not everyone agrees with him, but I fully support his approach of listing high quality homes on section 8, and treating them like quality tenants, rather than scum only because of a disadvantaged financial situation.