Section 8

[Clint Cook]

Please share your thoughts on the good, the bad and the ugly of Section 8 rentals.

Thanks

[Bradley Bogdan]

Pros: Partial (or total) guaranteed rent, based on your tenant's income. 

- You're providing a public service to renters who are often discriminated against. 

- The good tenants tend to be very long term, due to the complexity and hassle of moving with a voucher.

- In the right areas, high demand for your housing. Some PHAs will allow you free advertising via their office or newsletter for your rental. 

- In the right areas, at or above market rent for your neighborhood, with the proper strategy. 

Cons: You're dealing with a third party. This doesn't have to be a con, the PHAs I've had a lot of experience with have been great, but any time you involve another party in your business model, there's the potential for issues. 

- You need to be familiar with a pretty lengthy book on how both the program and PHA work. Each PHA is a bit different, as they're independent, special class non-profits that are basically contracted by HUD, and as such, they have leeway on how they can administer programs. Many landlords don't know as much as they should about the program before they jump in, as it seems simple. Usually it works out fine, but anytime you don't know what you don't know about your business, that can be dangerous.

- You're dealing with low income renters. They're not generally bad people, but on average, they're tougher on your place and have more issues than a medium to high income renter. Screen well and you'll do fine, but do screen well. 

- It really helps to know your local housing assistance non-profits. This is another area of knowledge that adds to what you should know, which is a con, but good knowledge and relationships with those agencies, churches, etc. can easily turn to a plus of an endless renter stream, deposit assistance for your tenants (ie higher deposits for you), rental assistance if someone falls behind on rent, and support for issues tenants may have that otherwise would blow up and lead to a messy eviction. 

Finally, look into your local HUDVASH program. Its a Section 8 program for veterans that includes Social Worker support and regular home visits, and in larger urban areas, dedicated medical and mental health teams. It mitigates a lot of the risk that comes with many low income renters by providing you a resource to call and address problems before they become evictions, as well as having renters with a large number of options for support open to them. Often, vets in the program are discriminated against, when, ironically, they have a tremendous success/retention rate in housing. If you call up your local program with a one bedroom rental or two to pilot the program for yourself, I suspect you'll be pleasantly surprised.