Rental / Section 8 Properties

[Jahangir Hasanov]

Hello everyone. I’m new to bigger pockets and in need of advice. I’m new to investing and was looking to invest into 2-4 bedroom houses for Section 8 rentals. I live in NY and was looking in Detroit, MI, Cleveland, OH and Philadelphia, PA areas. Found lots of properties that might be in need of rehab for a relatively low price which seemed like a good deal to me. Question is how hard is to find section 8 tenants in those cities and which areas I should be looking to purchase that are section 8 friendly. Any advise would be greatly appreciated. Thank you. 

[Bruce Woodruff]

You are aware of the hazards of getting involved in S8 housing as a landlord, right?

[Jahangir Hasanov]

Quote from @Bruce Woodruff:

You are aware of the hazards of getting involved in S8 housing as a landlord, right?

I’m still researching this. Someone I know owns section 8 properties, he doesn’t have any issues and the rent gets deposited directly to his account. What are the hazards I should be aware of if you don’t mind telling me please?

[Bruce Woodruff]

Quote from @Jahangir Hasanov:

Quote from @Bruce Woodruff:

You are aware of the hazards of getting involved in S8 housing as a landlord, right?

I’m still researching this. Someone I know owns section 8 properties, he doesn’t have any issues and the rent gets deposited directly to his account. What are the hazards I should be aware of if you don’t mind telling me please?

 He's lucky. Only a portion of the rent is covered. And any quick search will give you the info you need. Below is a cut/paste from a site I found. But better yet, do a deep search on this very Forum and see what actual S8 Landlords have said about this.

1. Rental Pricing Regulations
2. Risk of Renting in Lower Income Areas
3. Restrictions of Section 8 Tenants
4. Don’t Receive Voucher Payment Until Tenant Moves In
5. HUD Does Not Pay Security Deposits
6. Annual Property Inspections
7. Potential for Difficult Tenants
8. Property Damage Issues
9. Harder to Evict Difficult Tenants
10. Full-Paying Tenants May Turn Away
11. Difficulty Selling Properties to Free Market

[Jahangir Hasanov]

Quote from @Bruce Woodruff:

Quote from @Jahangir Hasanov:

Quote from @Bruce Woodruff:

You are aware of the hazards of getting involved in S8 housing as a landlord, right?

I’m still researching this. Someone I know owns section 8 properties, he doesn’t have any issues and the rent gets deposited directly to his account. What are the hazards I should be aware of if you don’t mind telling me please?

 He's lucky. Only a portion of the rent is covered. And any quick search will give you the info you need. Below is a cut/paste from a site I found. But better yet, do a deep search on this very Forum and see what actual S8 Landlords have said about this.

1. Rental Pricing Regulations
2. Risk of Renting in Lower Income Areas
3. Restrictions of Section 8 Tenants
4. Don’t Receive Voucher Payment Until Tenant Moves In
5. HUD Does Not Pay Security Deposits
6. Annual Property Inspections
7. Potential for Difficult Tenants
8. Property Damage Issues
9. Harder to Evict Difficult Tenants
10. Full-Paying Tenants May Turn Away
11. Difficulty Selling Properties to Free Market

Probably he is lucky. He has steady cash flow without any major issues. And he is very happy about his decision. Thank you Bruce for the information provided, yes it makes a lot sense.  I will look deeper into this. 

[Arsen Atanasovski]

I’m a section 8 investor half of those items do not comply, difficult to evict?? Does that mean the city or government can’t pay you rent? Never heard of this never had this happen. Yearly inspections, great I do them 2-3 times a year it’s my property would like to see them and check on them. Have you driven a car and not do an oil change? Of course you don’t get payment until the application and process is complete and approved by the committee then you allow them access and that’s after they paid the SD. Difficult selling? Really? Hi investor, I have 10 vacant homes for sale would you like to give me a “low ball offer”??? Hi investor I have 10 fully leased section 8 tenants oh and btw here is my income statements and all the income from my section 8 properties showing the state of where ever you live depositing into my account, which on do you think you will be better off when time comes to sell??? 

[Jahangir Hasanov]

Quote from @Arsen Atanasovski:

I’m a section 8 investor half of those items do not comply, difficult to evict?? Does that mean the city or government can’t pay you rent? Never heard of this never had this happen. Yearly inspections, great I do them 2-3 times a year it’s my property would like to see them and check on them. Have you driven a car and not do an oil change? Of course you don’t get payment until the application and process is complete and approved by the committee then you allow them access and that’s after they paid the SD. Difficult selling? Really? Hi investor, I have 10 vacant homes for sale would you like to give me a “low ball offer”??? Hi investor I have 10 fully leased section 8 tenants oh and btw here is my income statements and all the income from my section 8 properties showing the state of where ever you live depositing into my account, which on do you think you will be better off when time comes to sell??? 

Hey Arsen. Thank you for your input. Do you have any recommendations for a good realtor or a wholesaler or a property manager that can help me out with this. Also I know there are different Class Areas and that I should avoid anything that’s in Class D area. Do you have any experience with class D S8 investments? 

[Travis Biziorek]

Hey Jahangir, I do a ton in Detroit and have 12-doors there myself. Three of those are rented to S8 tenants.

Finding S8 tenants is definitely doable, but has gotten more challenging as more and more investors seem to be gravitating toward this strategy. 

These are all great markets for cash flow and potential appreciation. You can do extremely well if you work with the right folks. I'd be happy to shoot you over some Detroit specific resources if you end up looking at that market.

[Jahangir Hasanov]

Quote from @Travis Biziorek:

Hey Jahangir, I do a ton in Detroit and have 12-doors there myself. Three of those are rented to S8 tenants.

Finding S8 tenants is definitely doable, but has gotten more challenging as more and more investors seem to be gravitating toward this strategy. 

These are all great markets for cash flow and potential appreciation. You can do extremely well if you work with the right folks. I'd be happy to shoot you over some Detroit specific resources if you end up looking at that market.

Hi Travis. And thank you for your insight. I would be really helpful if you can help me with those resources or any recommendations that could guide me in the right direction. Thank you. 

[Arsen Atanasovski]

Travis are you trolling me??? Jk! About classes Detroit is a street by street city not necessarily by class you have class B and a block away is a war zone so you do need boots on the ground for sure DM me or Travis and I give you some guidance but going solo is a little difficult partnering up would be a little easier and less risk but again up to you. 

[Travis Biziorek]

Quote from @Arsen Atanasovski:

Travis are you trolling me??? Jk! About classes Detroit is a street by street city not necessarily by class you have class B and a block away is a war zone so you do need boots on the ground for sure DM me or Travis and I give you some guidance but going solo is a little difficult partnering up would be a little easier and less risk but again up to you. 

 No sir, I could not read that big block of text with no line breaks :-)

Nope you're well. Let's catch up soon!

[Jahangir Hasanov]

Quote from @Arsen Atanasovski:

Travis are you trolling me??? Jk! About classes Detroit is a street by street city not necessarily by class you have class B and a block away is a war zone so you do need boots on the ground for sure DM me or Travis and I give you some guidance but going solo is a little difficult partnering up would be a little easier and less risk but again up to you. 

Thank you Arsen. I could be possibly open for partnership. The thing is will be buying properties through 1031 exchange and I don’t know if partnerships would work. I’m really grateful for any guidance you can offer. Thanks again. 

[Arsen Atanasovski]

Send me a DM I have a few deals you might fit right in since you’re going down that route. I will need a little more information so I can get a better idea what would work for you here in Detroit .

[Nicholas L.]

@Jahangir Hasanov

those low price points are tempting for a reason... probably lots of deferred maintenance and potentially in more challenging neighborhoods.

if you think you're going to buy a random property off Zillow and start cash flowing in month 1 or even year 1... buckle up.

i strongly recommend you start with a house hack locally instead.  or... move to one of the cities, roll up your sleeves, and start in person.

https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

[Bob Stevens]

Quote from @Bruce Woodruff:

Quote from @Jahangir Hasanov:

Quote from @Bruce Woodruff:

You are aware of the hazards of getting involved in S8 housing as a landlord, right?

I’m still researching this. Someone I know owns section 8 properties, he doesn’t have any issues and the rent gets deposited directly to his account. What are the hazards I should be aware of if you don’t mind telling me please?

 He's lucky. Only a portion of the rent is covered. And any quick search will give you the info you need. Below is a cut/paste from a site I found. But better yet, do a deep search on this very Forum and see what actual S8 Landlords have said about this.

1. Bruce ya know I love ya but come on man, You know this is my wheelhouse. :) 
2. whomever wrote this " cut and paste " is clueless. This person probably sites on the internet and thinks they know what they are talking about but again 100% clueless . 
3. Rental Pricing Regulations 99% of the time HUD pays MORE than cash.in OH anyway. 
4. Risk of Renting in Lower Income Areas SEC 8 prop can be anywhere, NOT just low income, I have props in the best areas in Cleveland. Even in the worst areas cash tenants are IMO worse than HUD tenants. 
5. Restrictions of Section 8 Tenants There are unlimited, everywhere. 
6. Don’t Receive Voucher Payment Until Tenant Moves In SO? its guaranteed. 100% irrelevant 
7. HUD Does Not Pay Security Deposits Those that do not have the SD you are not renting to, it's all about screening. Also, in many cases HUD or other program pays their SD. But again, if they can't afford it, you do not rent to them. In 10 years doing 100s and 100s and 100s of sec 8, not one ever asked me, please rent to me even though I do not have a SD, NEVER happens.  EVERYONE of my govt tenants has to have income of at least 1 month rent. 
8. Annual Property Inspections THIS is a GOOD thing, it keeps the prop in good condition. They usually just find minor items, under 200 bux. I just had one last week, it was a broken smoke detector. 40 bux. 
9. Potential for Difficult Tenants JUST like cash tenants, screening is the key 
10. Property Damage Issues JUST like cash tenants, screening is the key
11. 
    Harder to Evict Difficult Tenants NO it's not, in OH anyway. 
12. Full-Paying Tenants May Turn Away NOT sure what you mean?
13. Difficulty Selling Properties to Free Market again, NOT correct. most investors want sec 8 tenants in. This means, the property is in great shape, (do to inspections) and guaranteed rent.  

[Bob Stevens]

Quote from @Nicholas L.:

@Jahangir Hasanov

those low price points are tempting for a reason... probably lots of deferred maintenance and potentially in more challenging neighborhoods.

if you think you're going to buy a random property off Zillow and start cash flowing in month 1 or even year 1... buckle up.

i strongly recommend you start with a house hack locally instead.  or... move to one of the cities, roll up your sleeves, and start in person.

https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

 If you follow " my rules " when renting to ANYONE cash or a govt program. Buy right, RENO right, rent right, all is fine. There is not any more deferred maintenance renting to a govt tenant vs cash. 

[Nicholas L.]

@Bob Stevens

good points, I was just saying that for this poster - who is based in NY - these properties look 'low priced' because they need big rehabs.  you have an experienced team... he does not =)

[Bob Stevens]

Quote from @Nicholas L.:

@Bob Stevens

good points, I was just saying that for this poster - who is based in NY - these properties look 'low priced' because they need big rehabs.  you have an experienced team... he does not =)

 Just because there low priced does not always indicate the prop needs a big reno. I just got a few for under 90k,( one for 38k) that need under 10k and that's only because I am doing preventive maintenance. Does not really need anything, 

All the best 

[Arsen Atanasovski]

Nicholas actually you can pick a house in Detroit in the $50k to $70k range then in Zillow flip the search to rental your already in the 1-2% rule for renting. I’ve been saying this way too many times. This is not California, Texas or Florida. This is cash flow king :) come by one day I’ll be more than happy to show you around the Motown! 

[Nicholas L.]

@Arsen Atanasovski

yes totally agree it's possible.  you can do the same in Pittsburgh.  i just worry about the posters in HCOL areas who want to do it all from Internet.  that is what is not a good idea =)

[Bruce Woodruff]

Quote from @Bob Stevens:

1. Bruce ya know I love ya but come on man, You know this is my wheelhouse. :) 

Ok, Bob, I'll defer to you on this. Way out of my comfort zone.....

[Bob Stevens]

Quote from @Bruce Woodruff:

Quote from @Bob Stevens:

1. Bruce ya know I love ya but come on man, You know this is my wheelhouse. :) 

Ok, Bob, I'll defer to you on this. Way out of my comfort zone.....

 All good bro,,,,,,,, YES the person who wrote that should not be posting those comments. UNLESS he is trying to sell a " sec 8 class" 

Keep crushing it . 

[Mark Cruse]

Its a very good program and can be lucrative if the person has the abilities and skill sets to make it work. There are many moving parts that can present massive challenges if not done effectively.  However,  there are so many here who can testify what a great experience they have had with it. One thing that concerns me is it seems like you could be approaching this from a simplistic mindset. It seems like you observed your friend making out with it, its easy, so you will do the same. Its not easy and can be very involved. Doing it from out of town with no experience can collapse the entire thing if you dont assess reality. Its so much more than buying any home; have home depot labors fix it; rent to section 8 and collect check to become rich.  It can happen but there could be 2 to 3 dozen more things in between you need to be proficient in. You must be prepared from multiple angles and know how to maintain stability. If it was easy and smooth simply collecting checks, everyone would be rich doing the same thing with success.  

[Jahangir Hasanov]

Quote from @Nicholas L.:

@Jahangir Hasanov

those low price points are tempting for a reason... probably lots of deferred maintenance and potentially in more challenging neighborhoods.

if you think you're going to buy a random property off Zillow and start cash flowing in month 1 or even year 1... buckle up.

i strongly recommend you start with a house hack locally instead.  or... move to one of the cities, roll up your sleeves, and start in person.

https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

Hi Nicholas. Thank you for your response. I’m selling my property this week in NY and doing 1031 that’s the reason I can’t do hacking. Your points are valid. I see a lot of people doing what I’m trying to do buying properties that need a little work in class B and C areas and successfully rent them out for cash flow. I’m trying to do the same and I’m aware of risk. 

[Jahangir Hasanov]

Quote from @Mark Cruse:

It’s a very good program and can be lucrative if the person has the abilities and skill sets to make it work. There are many moving parts that can present massive challenges if not done effectively.  However,  there are so many here who can testify what a great experience they have had with it. One thing that concerns me is it seems like you could be approaching this from a simplistic mindset. It seems like you observed your friend making out with it, it’s easy, so you will do the same. It’s not easy and can be very involved. Doing it from out of town with no experience can collapse the entire thing if you dont assess reality. It’s so much more than buying any home; have home depot labors fix it; rent to section 8 and collect check to become rich.  It can happen but there could be 2 to 3 dozen more things in between you need to be proficient in. You must be prepared from multiple angles and know how to maintain stability. If it was easy and smooth simply collecting checks, everyone would be rich doing the same thing with success.  

Hi Mark. Thank you for your response. I understand the risks. I know just because it worked for someone else doesn’t mean it will for me. I’m doing my due diligence. At the end of the day everything is a risk. And nothing is guaranteed, I’m just trying to minimize it with right people ( property managers, contractors, brokers and learning data and markets in those areas. 

[Jahangir Hasanov]

Quote from @Bob Stevens:

Quote from @Nicholas L.:

@Jahangir Hasanov

those low price points are tempting for a reason... probably lots of deferred maintenance and potentially in more challenging neighborhoods.

if you think you're going to buy a random property off Zillow and start cash flowing in month 1 or even year 1... buckle up.

i strongly recommend you start with a house hack locally instead.  or... move to one of the cities, roll up your sleeves, and start in person.

https://www.biggerpockets.com/forums/12/topics/1171104-the-m...

 If you follow " my rules " when renting to ANYONE cash or a govt program. Buy right, RENO right, rent right, all is fine. There is not any more deferred maintenance renting to a govt tenant vs cash. 

Hey Bob. I would love to learn few things from you and your approach to the Ohio market. You also mentioned you don’t use brokers. How do you go about finding the properties? Unless you go door to door yourself or use wholesalers. Thank you