Section 8

[Jason Victoria]

I live in Greenville, Sc. and plan on buying my first investment property in the February time frame. My plan is to start small and invest into a single family home. I have an interest in renting out my first home to section 8 renters. My reason behind this is I know that I will receive a check every month with out chasing down the tenant plus I have heard (not read) there are other advantages to renting out to HUD. Advantages such as repairs that maybe caused by the tenants damaging the property. Not sure how true that is, but would like to believe it. I have read a couple of forum discussions on BP about this topic, but have not come across anything to disprove my theory. I am fully aware of the risks associated with rented to lower income families.

My questions are, Is there a fact sheet that is in plain english that HUD provides describing the ins and outs of renting through HUD? Like how to allocate rent for a home that is acceptable for HUD, repairs cost if any, home requirements, locations of the home ect... I would greatly appreciate your feed back on this topic. A bonus would be someone in the Greenville area renting to section 8 would be total awesome. Thanks Jason

[Gail K.]

When you work with Section 8, you're signing a lease with both the program AND the tenant.  It's the program that decides how much the rent will be (plus how much the housing authority will pay versus the tenant).  The amount the tenant is responsible for can change if their income levels change (they need to periodically meet with their caseworker to provide information on income and family status).

Rent is typically based on the number of bedrooms in the rental unit; you may have, for example, a 3 bedroom unit but be contact by someone with a voucher for just a 2 bedroom and that's all that housing will pay for.  And when you agree to work with this program you must agree to accept the amount of reimbursement that the program chooses (although I suspect there are landlords who get more by doing such things as "renting" appliances to their tenants).  Fair market value is often an unheard issue with the housing authority.

In my neck of the woods inspections don't occur until you find Section 8 client interested in your place.  Unfortunately it can take 4 to 6 weeks for the inspection to happen and meanwhile your place sits empty. 

Your unit can "fail" for a number of stupid reasons.  In some places inspectors are so picky rental units have failed for such dumb things as pulled threads in a carpet (a so-called "tripping" hazard). 

We had one Section 8 rental unit that went years through the inspection just  fine until a new inspector came on board and failed it for "mold" in the bathtub when the tenant failed to clean the mildew from around the tub.  Guess who spent their Saturday scrubbing and bleaching the tub and tile down in and around that bathtub (hint: we did while the tenants sat around and watched TV).  When it failed the second time we said that's it; we're through cleaning someone else's dirt and these folks can either bite the bullet and move or stay and pay the full rent; we're through with the Section 8 program, having received one $25 increase in rent in the six years we dealt with it (at one point the program asked landlords to reduce the rent on their properties).

Would we do this again?  Never.  And this was a working family; dad worked outside the home; the best kind of Section 8 folks you'd want.  Their problem (which became our problem) was that they had older children who began spitting children like they were PEZ dispensers and dropped them off at mom and dads to raise.  At one point we had no idea just how many people were living there and when they finally moved out the condition of the house reflected this.

Think long and hard about this before you do this.  It's NOT for the faint of heart.

Gail