Current Demand for Section 8 Housing

[Brandon W.]

Hello BP community,

I am still in the "learn and self-education" phase of my REI journey. I've been talking with a co-worker about REI and different sectors and niches and we got on the topic of section 8. He told me there's a strong demand for section 8 housing and simply not enough supply out there; That as long as you meet the requirements of the program, you're basically guaranteed tenants.

Now I don't want to get into the pros/cons of section 8, that's not what this is necessarily about.. Rather, this caught my interest because, here in Dayton/Cincinnati area, there's a healthy amount of very cheap SFR properties ($10-50k). Some need more work than others but I can find them in conditions very close to what Section 8 requires already. I also found where I believe section 8 sets the "fair market rent" for whatever county you live in. For Butler county, it's $1178 for a 3BR home which seems high to me. In my city (in Butler county) I've found that rent for an average 3BR is at least a $300-$400 less than that...

My questions are:

1.  Is there really a strong demand for section 8 housing (at least in the Dayton/Cincinnati area)?  Would I have any problem attaining and retaining tenants assuming I meet section 8 minimum requirements?

2. Is this a smart strategy? Buy very cheap SFRs, fix up to meet Section 8 requirements and get Section 8 fair market rent (or what I believe is above market rent). Does anyone else do this and have success? I don't think I'd have any problem getting 1-2% of ARV in rent a month.

3.  Am I missing something?  Are there holes in my logic?

Thank you greatly in advance,

Brandon W.

[Tony Napier]

@Brandon W. I do exclusively sec 8 rentals. What you have heard is true. They pay rent based on bedrooms however the tenant usually has a small portion to pay as well. Normally, they won’t give you the max- for instance in dayton $1050 for a 3bdrm. Rather you’ll end up at around $800-900 in the cheaper areas. They have a calculation based on zip codes. The demand is extremely high- last I checked there were 200 families or so waiting for a house. As soon as one of them become available you have multiple applicants to choose from. The catch is the inspection process. Dayton sec 8 is very picky about the things they will fail you for. It usually takes about 2 weeks to get an inspection scheduled and if they find something- and they usually do- you will has 10 days to fix it and reschedule. Then it takes about 10 days or so for another inspection. If you pass then you’re good to go. If not you have to go back through the process again. I’ve gone as much as 6 weeks getting a house to pass. It was pretty nice but they kept moving the goal post so to speak. Anyway, that’s why a lot of investors don’t do sec 8 in my opinion.