Multi-Family Investements in Greater Houston Area

[Casey Hampton]

Hi, all. I am interested in investing in MFH and am located in the Houston market. What are your thoughts on the Texas City, Lamarque, Baytown areas for section 8 rentals? I understand the varied success and experiences with section 8 rentals but the lesser home prices in the area are intriguing. Any thoughts on the subject will be beneficial!

[Joshua Christensen]

Quote from @Casey Hampton:

Hi, all. I am interested in investing in MFH and am located in the Houston market. What are your thoughts on the Texas City, Lamarque, Baytown areas for section 8 rentals? I understand the varied success and experiences with section 8 rentals but the lesser home prices in the area are intriguing. Any thoughts on the subject will be beneficial!

 Good morning Casey,

I'm a broker and property manger in Albuquerque, NM.  I'm not familiar with the Houston market, and I do quite a bit with SECT 8.  I love the model and it does come with its own set of challenges (so does conventional leasing).  

Here in our market, we see the SECT 8 vouchers out pacing the number of available units which leads to shorter turn windows.  We see the average Sect 8 tenant occupies a unit for 7-8 years before making any moves reducing turnover costs.  

We also see that the SECT 8 typically pay higher than our market rents in many cases in the lower income areas of town.  In higher income areas, the market rents tend to be higher than the SECT 8, so we rarely see vouchers accepted in those areas.  

Monthly the checks come in.  During the pandemic, my voucher tenants kept our properties whole and we didn't have the massive non-payment issues that many experienced.  

Annual increases in keeping with HUD's fair market rents build in a stable increase in revenue.

Regular inspections from the local agency provides us with an excuse to get into the units to check for maintenance issues that often go unreported and cause more damage.

We love the model. It has worked well for us.  Just know what you're getting into and you'll do fine.  

Find out who the local agency is that handles them.  They often offer free classes for landlords to make sure you know the Facts of how to manage them as you partner with the agency.  They are a wealth of knowledge and very helpful.