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Updated 9 months ago on . Most recent reply

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Bob Stevens
  • Real Estate Consultant
  • Cleveland
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sec 8nswers It's not that complicated folks

Bob Stevens
  • Real Estate Consultant
  • Cleveland
Posted

Ok so it seems EVERYONE is making renting to sec 8 MUCH more complicated than it needs to be, not sure why. Maybe some guru is selling courses and telling everyone it is. Well, it's not. So here are answer to most of the questions I am seeing. 

Screen EXACTLY as you would for any tenant. 

When buying a prop, with a tenant already in, YES, get a copy of the HAP, agreement and lease, Call the office and make sure all is in order, DO NOT trust the seller. 

YES, the SD will come to you, if not, NOT your problem, Tell the tenant previous owner never gave to me. 

YES, you WILL fail your inspection, so what, everyone does. They will provide you with a list of items, do them. You have 30 days (in most states)

NO NEVER supply appliances (OH you do not have to) Why? When they break its your problem, when the tenant brings their own, yep, it's their problem.

If they do not pay their portion (if they have one) you say, " hey you are breaking the rules of your program, if you do not pay you will " lose your free ride ". watch how fast they pay. If not, evict, the same way you evict any tenant. 

NO, you do not determine how much sec 8 is going to pay, it's based on the FMR and in some cases they pay more.

If the tenant is not allowing access to do a repair (NEVER in 10 years has this happened to me) you put a 24 notice on the door and go in. ITS YOUR house not theirs. If they still give you a hard time, (not sure why they would make no sense) turn on your phone and record it. Tell them you are calling the office, and they just may lose their free ride. Watch how fast they accommodate you. Folks its ALL about wording, Be tough but polite.

Rent amount, they pay the FMR, and is some cases more. If you get a rent increase and the tenants portion goes up a little and they complain, say oh well you can leave, but the new place will have the same rent amount. So, suck it up and pay the extra X or move to a lower " class" area where the FMR will be lower. Either way I am getting the rent increase.

Best sites to market your property, the Sec 8 site.

Last, you rent to them the same exact way you rent to anyone, just more paperwork. 

Folks stop making it more difficult than it needs to be, buy right, Reno right, rent right, exactly how you would with any tenant.

I hope my suggestions help good luck to all.

Most Popular Reply

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Steve K.
  • Realtor
  • Boulder, CO
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Steve K.
  • Realtor
  • Boulder, CO
Replied

I used to have S8 properties and for the most part I agree with your sentiment: it doesn't have to be as bad as the stigma around it might lead one to believe. I never had any issues waiting on paperwork or the bureaucracy side of it like I had been warned about. I actually never failed an inspection!

However I sold those properties, as when I looked at the numbers compared to my other properties in better locations, I realized I was making a lot more money on those other properties. Even though they had less pro-forma cashflow in the magic spreadsheet, they were actually more profitable overall. This is because of less vacancy/turnover, rents increased much faster, less tenant damage, less maintenance and repair costs, and most important of all MUCH higher appreciation due to being in more desirable areas that actually improved instead of staying stagnant like many S8 areas. 

Other than making less money overall, some of the other downsides of my S8 experience were the following:

1. It's a sad way to make money IME. A very high percentage of my tenants (in fact, almost all of them) were single mothers. Many of them had drug or alcohol issues. Many of them had abusive boyfriends who took advantage of them. 3 of them died in my units from drug overdoses. 1 drank herself to death. I dealt with a lot of domestic abuse situations involving children... some of my S8 tenants only had to pay $7 for their portion of rent every month, but I still felt bad taking that money from them. 

2. S8 tenants never have good credit, savings, or anything to lose if they trash your property (besides their voucher, not always enough to make them care in my experience). In my other properties with high-earning tenants, I can get a judgment and garnish their wages, threaten their pristine credit that they actually care about, go after their savings, etc. Not so with S8, I'm paying out of pocket even if the place is completely destroyed (happened to me a few times unfortunately, and not by people in the program but usually their friends or relatives). 

3. There is always a lot more people living in the property than the person in the program. First the approved tenant moves in: perfect applicant, single mom with one kid, no pets... soon her adult kids move in with their kids and then her ex moves in with his kids and their kid's kids and their pitbulls and mastiffs...  most of the problems I had were not with people actually in the program. You have less control for this reason, and the property gets way more beat up. You can screen all you want and evict all you want, but it's hard to control when they invite people in so it's unavoidable unless you live next door or something. Having that many people in the property puts a lot more wear and tear on it, even if the people give a crap (but many don't, in fact many are entitled with no respect or appreciation). I had to deal with a lot more issues than I've ever had in non-S8 rentals like extensive property damage and also bed bugs, roaches, drain lines completely clogged up by grease (I learned what sewer worms are, look it up), spray paint art on walls and food on ceilings, noise complaints, police at the property, removing dead bodies, etc.  

4. As mentioned above, S8 properties tend to be in bad locations. I reiterate this because I have made the lion's share of my money in real estate by investing in "up and coming" locations as they transition from borderline to popular parts of town. The problem with S8 buildings is they can hold an area back that would otherwise be in the "Path of Progress". If there are a lot of S8 buildings in an area, it'll never be nice. I've seen gentrification spread right up to a block of S8 buildings, and then go around that block leaving it right where it was and will probably always be (undesirable). 

Appreciation is where the real money is at IME, and S8 is an appreciation killer. Buying in areas with a lot of good jobs and desirability is the key to growing wealth from rapid appreciation. S8 renters simply don't have good jobs, or they wouldn't be on S8. People live there because they have no other options. Property values are usually flat for this reason, compared to better locations where more people actually choose to live. So S8 not longer fits my strategy personally. 

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