Section 8 government subsidized properties

[Daniel Castellano]

Hi, 

Does anyone have any knowledge or experience in purchasing properties where a majority of the tenants are under section 8 "low income assistance" where the government pays most of their rent? I am concerned with the quality of tenants however I believe there are tax benefits etc and occupancy could remain high due to the government assistance. Any advice is appreciated.

Thanks in advance!

[James Mc Ree]

I think Section 8 is a great program that has acquired a bad rep sometimes due to a combination of poorly screened tenants and bad landlords.  Don't let that dissuade you, but you absolutely need to do a good job screening tenants as @Ryan Craig mentioned.  I have 3 properties rented through Section 8.

Your property may be held to a higher standard by your local housing authority than your local municipality.  I don't think that is a bad thing as they ask for a higher regard for safety and sanitation than our local municipality in Pennsylvania.  For example, our authority requires carbon monoxide detectors and our municipality does not.  I satisfy that requirement for less than $50.

The guaranteed rent payments are great - direct deposit on the 1st of the month right to your account. Tenants tend to be longer duration. HUD inspects the tenant's standard of living (are they taking care of the place?) and your property (are you taking care of it?) annually. I am not aware of any tax benefits for Section 8 rentals beyond ordinary rental property investment.

The one caution I can share is new tenants might not promptly report issues because they might be living with issues and consider that normal.  I always tell my tenants that; to my knowledge, everything works, nothing leaks and there are no deficiencies; however, they should tell me immediately if they see anything that needs attention.  They shouldn't assume I know about it or I would have already fixed it.  That usually gets me several reports of mostly legitimate issues that I missed in the first couple weeks after move-in, then quiet after that.

I've found the PA housing authority office staff and housing inspectors to be helpful too.  They understand it can be challenging dealing with low income tenants and offer helpful suggestions on how to navigate the system and get a better payment.  This varies person-to-person within the department though.  North Dakota is probably similar.

Good luck!

Jim.