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.