Section 8 + Property Management for Cashflow

[Snehann Kapnadak]

Hi All,

Hope your week's are going well!

What's the general consensus on newbies investing in section 8 rentals? Please pardon my ignorance and naivety, but I'd love to hear what people think of this plan and all the potential risks involved. Say I (as a newbie investor) want to get involved in a multifamily deal that involves Section 8 tenants in a market that I've vetted has opportunities for growth (my personal market is too expensive). I do my due diligence, vet and find a good property management team, no easy task at all but suppose I manage to find a great team, who's had experience handling Section 8 and who I trust will do a great job handling the day-to-day. Is this sustainable? What should I be looking out for? I'm relatively young and new to REI--meaning I have a longer timeline and will generally have a higher risk tolerance. I would be willing to hold on to this property for a while and deal with the rollercoaster I've heard that comes with Section 8.

My thinking is that I'd be able to find a multi-family deal at a lower price point, thereby spreading the risk of tenant turnover across several units. This would be a cash-flow play with little appreciation, unless something amazing happens, but it would yield solid cash flow for me. Ideally this would not be my only property, I would continue to invest that cashflow in B and possibly A class properties as well to diversify my portfolio in terms and spread my risk.

Additionally, I've been told that you live and die by my property manager. So if I properly vet them and if they have a ton of experience handling Section 8, then they would be managing the day-to-day, while I would get to collect higher returns. Does that seem like a good plan?

Again, please forgive me for the naivety, but I'd love to learn more from what everyone thinks. Thanks!