Section 8 -- Incentives (rebates) to be good, clean tenants?

Question

Hi guys,

I am thinking about purchasing a 4-unit, 1 BR/1BA building.  Two are Section 8 ready.  In order to decrease problems with the property, I am thinking about doing the following things:

1.  Only accepting those with 100% vouchers

2.  Offering a $50 per month gift if they promise to keep a clean place subject to random monthly inspections.  It would be more or less an honor system.

What do you all think?  Please, only respond if you have experience with Section 8.

Thanks,

Steven

Michael Noto · Answer

@Steven Fowler So you are going to pay people $50 each to live in your apartments?  Good deal for them.  When the people get used to getting the $50 per month and then they don't pass one of your inspections, what then?

What if you decide you do not have the energy to do these inspections anymore?  Most class D landlords I know get burned out pretty quick.  Who is going to do the inspections?  Will you pay someone?

Point is that once you start just giving people $50 for being normal they will start expecting the money and depending on it.  That's a can of worms that will be tough to deal with.

Bob B. · Answer

I can see why you would want to incentive them to keep your property up.  What will happen when your idea of clean is not on par with their idea?  I think they will do just the opposite because of the "expectant entitlement" attitude and training. They will have already spent that gift card and will highly resent not getting it.

When I was a lender it was drilled into my head that you close the loan with making sure the borrower understood the terms and what was expected "train them".  Same thing with tenants.  Train them and kick them out if they do not do what is expected.

Good Luck

Dave Fontana · Answer

I have 15 section 8 tenants. Keep your money and put it in a clean up fund for when the tenants move.

Michele Fischer · Answer

The problem with the incentive is that you would have to define your expectations very clearly; everyone has a different idea of clean.  Even my best tenants do not keep the interior and exterior to the level I would expect.  We've decided to add a housekeeping addendum and tell people that if we see issues during inspections that we will crack down on the addendum.  We are trying to avoid hoarders rather than people with different standards.  You will find that in low income properties people either aren't equipped to keep house or truly don't know they are ruining a unit.  Don't fight it, figure out how to deal with your biggest pet peeves (indoor furniture outdoors, for me) and let the rest slide.  I don't think surprise inspections are legal, we have to give 48 hour notice to enter.  Show your generosity with birthday and Christmas gift cards and leniency on rent when they are in a crisis and save the rebate fund for re-carpeting.

Rolanda Eldridge · Answer

Alan B. ..All units open to Sect 8 , but of course screen each applicant carefully..

Most of my Sect 8 pay a portion..it's not always 100%...Good luck!

Alan B. · Answer

I would disagree with giving them an incentive. It sounds like you have a soft spot in your heart right now which I also had at first. The landlord business will toughen you up real quick.

Respect your tenants and give them what is necessary, noting more nothing less. I too was thinking about doing rent discounts for on-time payments, gift cards, etc. You are already providing them with a place to live and they are paying practically nothing, that in itself is a gift.

If you haven't already, read The Section 8 Bible 1 & 2. The author sounds like an unreasonable jerk but after a little experience with section 8 I wish I had listened to the book from the start.

Soft hearts make for empty pockets.

Heather W. · Answer

If the neighborhood is so bad you will only get subpar tenants and if you have to take money from the government to rebate to the tenants to get them to stay and treat the property right, then I'd probably advise you to pass on the property.

Heather W. · Answer

Meh. Seems like a waste of $600. Your tenants should behave and be clean because you've screened them well and it is clear through your lease what your cleanliness standards are. If you were really concerned about your unit then you could pay your handyman to visit quarterly, check the air filters, look for leaks, etc. and it would still cost you less than $600 plus you'd have regular eyes on your unit.  A surprise or short notice visit to a promising applicant's current residence is also a great way to see how he lives.

Are you only going to offer cleanliness incentives only to Section 8 participants or to all of your tenants?

Account Closed · Answer

Alan, I just bought the two volumes and look forward to reading them.  Thank you immensely.

Account Closed · Answer

Thanks, Alan.

I love to hear straight-shooting straight talk.  I will check these books out and read them.

Do you prefer Section 8 to non-Section 8?