Any tips for low income/section 8 rentals?

[Douglas B.]

I'm ready to buy my first duplex. In our market I can buy a habitable duplex in a low income urban market for 30k. Rents are aprox $500/unit but will likely be low income urban or section 8 tenants. The ROI opportunity here seems fantastic. My wife and I are meticulous planners and will heavily screen tenants to find the right fit. We plan on buying for cash so there's no mortgage and no reason to rush and take risky tenants.

Has anyone else out there done this sort of thing? I'm looking for advice, warnings and, hopefully, some encouragement! Thanks.

(My first biggerpockets post!)

[Marcia Maynard]

I'm going to respectfully disagree with the assumptions in some of the other posts as to the characteristics of a low income/Section 8 renter and what amenities should or should not be provided based on your decision to rent to this population.

We have successfully worked with the Section 8 program for over 10 years. We do not treat Section 8 tenants any different than our other tenants. We have 15 residential rental units. We have had a duplex with a tenant who receives public assistance and Section 8 benefits on one side and a working attorney in the other side. Both given the same amenities. Both given the same respect.

None of our current Section 8 tenants have young children, but we had one Section 8 tenant in the past who did. Only one current tenant is a poor housekeeper and that has nothing to do with their low income/Section 8 status.

The key is, when you provide affordable housing (or any type of housing for that matter) you need to reduce your risk. To do so... screen well, select well, have a well written rental agreement, make sure the tenant understands the rental agreement and enforce the rental agreement.

As for tips... if you decide to work with the Section 8 program, take the time to learn about the roles and responsibilities of all parties involved - case managers, inspectors, tenants and landlords. Develop a healthy working relationship with the people in Section 8 office. Communicate well with the case managers. Follow the requirements they set forth. Do your own regular inspections (as you would with any unit) and don't count on the Section 8 inspectors catching all deficiencies.

As @Rod Smith mentioned, a big plus is the consistency in rent payments when they come from the Section 8 program. The tenant portions also come in on time. If they don't, the tenant is in violation of the not only their rental agreement with the landlord, but also their agreement with Section 8. The case manager can help get the renter back on track.

You are right about the length of tenancy.... we have had good luck in that regard. All of our Section 8 tenants have been in our units no less than 7 years and one has been with us for over 25 years!

Hope this is encouraging!