Anyone used a "Bird Dog" for Section-8?

[Benjamin B.]

Has anyone out there used a "Bird Dog" / scout / head hunter to find quality (honest, reliable, zero drama, long-term) section-8 tenants?  I've been doing research and section-8 is a gold rush IF you can land a good tenant that doesn't burn you.  I'd love to hear from the community on this one and god willing get a referral!!

[Jeff Copeland]

Section 8 is not a gold rush. It's a confusing and slow jumble of bureaucratic red tape. 

Your question is interesting, but I don't understand the premise. Is your "bird dog" supposed to find low income people and encourage them to sign up for Section 8? Or find people who already have a Section 8 voucher and bring them to you?

In my experience, you will have no shortage of Section 8 applicants if you advertise a listing that fits the bill. There are usually more Section 8 tenants than there are Section 8 listings. 

It falls upon you or your property manager to screen them, within the scope of what Section 8 allows you to do (for example, you can't really screen for income and employment, because you have to count their Section 8 voucher as income).

Benefits of Section 8:

Tenants tend to stay a long time (because of the nightmare of red tape required to get into a lease in the first place).

Market rent is (usually) reasonable (at least you hope it is, because you arent setting it, the Housing Authority is). 

Part (rarely all) of the tenant's rent is more or less guaranteed. 

Disadvantages of Section 8

Painfully slow and bureaucratic - For example, it's not uncommon for it to take a month to get your rental approved (it has to be inspected, etc) before you can move the tenant in, and then another month or two before you actually receive a payment (you typically always get made whole, but often with back pay a couple of months after the lease starts). 

You give up a LOT of control - You lose the ability to fully screen your tenants, you lose the ability to set your own rent, and in many states you lose the ability to evict a tenant, even if they aren't paying their share of the rent. (That market rent set by the Housing Authority may look attractive, but not if the tenant is supposed to (but fails to) pay 37% of it and you can't evict them). 

Accounting hassles - Some Section 8 tenants have their benefits change several times over the course of a year. Every time they get a new job, lose a job, have a kid, or whatever, it can trigger a new analysis of their benfits, and their payment amounts may change. 

For example, they may start off with $1250 rent, Section 8 paying $1000 and the tenant paying $250 of it. Then three months in you get direct deposit for $800 from Section 8 because the tenant got a new job and now Section 8 on pays $800 and the tenant is supposed to start paying $450 - But nobody told you, and now you have to change everything in your books/software. And by the time you get it all straigtened out, the tenant quit the job and it all changes again.

There are certainly people out there who have built real estate empires with Section 8 and are killing it. But it takes a very special type of person (patient, flexible, detail-oriented, but also willing to deal with slow moving government bureaucratic processes and requirements that often make no sense) and systems to make it work. So you really need to go into it with eyes wide open. 

And finally, I'll also acknowledge that some Housing Authorities are better than others. So talk to experienced Section 8 landlords in the market you're considering to get a better understanding of the landscape.