Section 8 for newbie investor?

Question

New investor here trying to stay in my local market (Dayton, OH).

Since I've started looking for my first deal I've come across a few section 8 properties that seem to pencil, but I'm a bit loath to jump into that kind of deal.

For those who have or had  section 8 investments (especially in my market) how would you describe your experience?

Would you recommend section 8 for a newbie investor? Why/Why not?

Thank you!

Alyssa Wright · Answer

As long as you're willing to make sure you have good, quality properties, Section 8 can be a good way to go! The main issues a lot of investors/PM's run into is the inspection period since Section 8 inspections are no walk in the park. But you could always request an inspection checklist from your Section 8 and start getting those things taken care of ahead of time.

Overall, Section 8 is a good way to get some pretty reliable income to get the property cash-flowing, provide additional experience, as well as with the required annual inspections, make sure your property stays in a good condition!

Randy Person · Answer

We invest in Greene County, Ohio and currently have 24 low income units.  Seven of those units are through Section 8 (Greene Metropolitan Housing).  Greene Met is very reasonable to work with for the most part.  Montgomery Metropolitan Housing has a reputation of being difficult to work with and are slow to pay at times r so I have heard.

One thing to keep in mind is that even with section 8, you still get to set your criteria that tenants need to qualify for your unit.  Critical to that is verifiable income.  In addition to a voucher, we require that the tenant be able to show income at least 1.5 time the monthly rent, as opposed to our regular tenants who must show 3.5 time monthly rent.

Marc Rice · Answer

I've found that if you're going to do section 8, a lot of your trust is in the property manager to make or break the deal. If they can manage them well, then no problem. If they can't then it's going to be a headache. Overall they pay a premium on rent.

Edward Barrett · Answer

That's a great point!

If you know any that specialize in dayton or are local I'm all ears :)

Samuel Diouf · Answer

Section-8 rentals are great because of that dependable income. Especially in Dayton, where you'll get that high cash-flow. Just make sure you do a diligent job when vetting tenants. I would connect with a local PM who has connections with the HUD programs so you can get the most accurate information and guidance in your market.

Peter Falk · Answer

I agree with screening the Sec 8 applicant the same as all applicants for good housing history.  I simply view their Sec 8 voucher as additional income and try to make sure all else shows a quality tenant.  Unfortunately, my experience has also been they Sec 8 tenants have generally been rougher on property.  To help expedite the rental unit approval/inspection, you can also talk with your local housing provider that runs the Sec 8 program what basic items they look for and make sure you have those covered.

Corina Eufinger · Answer

I don't think it can be overstated that you need to speak with rental owners in the specific Housing Authority the properties are in to see how the housing authority operates.  Even within a state, the experience can vary dramatically.  Here is an example from Wisconsin. Racine and Kenosha Co are side by side but their housing authorities couldn't be more different.  Racine is difficult to work with (No direct contacts just general email and voicemail inboxes) but Kenosha is very responsive and easy to work with. Some states have housing authorities that are more landlord-friendly (i.e. holding tenants responsible for damages or cleanliness v landlord).

Ty Coutts · Answer

Hi Edward

The main benefits of section 8 include guaranteed rent payments from the government, which can provide a steady income stream and reduce the risk of vacancies or non-payment. However, some challenges to consider are the additional paperwork, property inspections, and potential tenant turnover. For a newbie investor, if you’re comfortable with the process and ready to manage the administrative side, Section 8 can be a solid option. It’s important to do your due diligence on the specific properties and local market conditions to ensure they meet your investment goals.

If you'd like more information on how to finance these types of properties feel free to DM me.

James Wise · Answer

Have done a lot of Section 8 in Dayton as well as many other markets. You can make a lot of money, but be warned, a large % of Section 8 tenants are complete savages. They will tear your houses up man lol.

Shawn Ackerman · Answer

@Edward Barrett it is really a mixed bag.  We are based in Milwaukee WI and have tenants from Milwaukee County and the City of Milwaukee and it's pretty much hurry up and wait.  I can tell you the money is consistent however approvals, paperwork and follow up is what you would need to be good at.  Connect with a housing coordinator if that position is available in your area and stay in contact with that person.  General phone numbers are rarely answered and we are forced to communicate most times via email.

The word of the day is patience.  Regarding the tenants who use the program that too my friend is a mixed bag. screen, screen and screen some more!

Would I recommend section 8 for a newbie. Sure, because when you take rent payments out of the equation you can focus on the tenant landlord relationship and providing the best experience for the tenant.

All the best!

Section 8 for newbie investor?

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