Philadelphia Section 8 multi family

[Pierre Streat]

Hello All,

As many of you know I am pretty focused on the Philadelphia multi family market at the moment for buy and hold cash flow. As a result, I would like to explore the Section 8 markets in Philadelphia. Are there any investors on BP currently focused on Section 8 multi family rentals in Philly? If so, what areas and what has your experience been like with these units? Is it easy to find great property managers willing to manage these units for you? Any tips, horror stories etc. are greatly appreciated. Please educate me.

Thank you,

Pierre

[Paulette Midgette]

@Pierre Streat I have not participated in Section 8 since the mid 90's here in Philadelphia.  However, I ensure that I stay on top of what is going on in the Philadelphia market.  @Mary B. is correct in that in that Philadelphia Housing Authority (PHA) does not have a good reputation with Section 8.  It is one that is based more on how they operated 15 years or so ago instead of what they are doing today.  PHA has changed their process over the years and operate, in my opinion with much more efficiency. Interested landlords must now take a course and provide documentation of their compliance with city laws and regulationsin order to sign up for the Section 8 program.  Not only will Section 8 complete inspections prior to renting any unit, you will be subject to the inspections of Philadelphia's licensing and Inspections departments.   Sections 8 tenants are now required to contribute to the rent system.  I believe that making tenants accountable for paying  a portion of their rents makes them likely to be a little more responsible with the property.

Of course the good with Section 8 is that your rent is guaranteed.  The bad is the tenants may not be responsible for the upkeep of the property in the way they should.  But tell me how many tenants have you had that didn't take of your property that were not Section 8?  All tenants have the potential of being bad tenants no matter what there economic status is.  This is where your intuition and homework comes into play.  At the end of the day you choose who you put into your apartment. 

One thing I will share with you from my experience of renting Section 8 was that it was difficult to rent multifamily units.  The majority of potential tenants I came across were young mothers looking for 2 bedrooms.  Single family homes seems to rent faster and was more desired than MFH.

I believe you need to approach Property Managers just like you approach your tenant screenings.  If a property manager puts less effort and attention into a Section 8 tenant building than any other...run for the hills, they will suck no matter what building they are managing.

Philadelphia will require you to have a Business Privilege license to do business in the City.  I believe the price is currently around $300.00.  However, it is a one time fee.  You will also need a rental licenses ($30.00 per unit) and there is a trash collection fee of $300 per year.  If you own a multifamily unit.  If you own a Single Family unit the trash collection fee is included in your property taxes.  Yes, your property taxes for your MFH includes the city service of collecting trash...please don't ask.  Lastly, one thing I learned recently is that if you MFH has a common area lighting system (i.e., hallway light and exterior light) it must be on its own electrical box and therefore, the landlord is responsible for the common area electrical bill.