HELP! My tenant caused $16,000 of damage!

[Matt Everling]

Seeking solid advice. I bought a SFR 1.5 years ago and did a full rehab that cost me $22k. My first Section 8 tenant moved into it, stopped paying rent 6 months ago and has total trashed it. I finally got them out and my contractor who did the original rehab 1.5 years ago just gave me a $16,000 bid to fix all the damage! I thought that Section 8 was supposed to guarantee rent? Do I sue the tenant/Housing Authority and get a judgement, can I garnish wages? I need a solid way forward. Really appreciate any help.

[Nathan Gesner]

Most people on Biggerpockets love Section 8 because they wrongly believe it guarantees rent. It only guarantees the government portion of rent, it only guarantees it as long as the tenant abides by the agreement, and it does nothing to guarantee the tenant maintains the rental. I've had about 40 Section 8 leases and probably half of them left owing money. Some of them left owing over $5,000.

When your tenant stops paying, you should start the eviction process. Why did you let it go six months?

The fact is, the tenant is living off the government and doesn't have any money for you to collect. You could get a judgment in court and send them to collections, but their credit is probably already trashed and your collection won't make any difference.

Improve your screening and be careful who you rent to. Create procedures to nip problems in the bud as quickly as the law allows, not six months later. Consider hiring a professional property manager to protect you in one of the most heavily regulated markets in the world.