Section 8 Tenants - Pros/Cons/Opinions?

[Andrew Glenn]

We're evaluating a deal that involves a Section 8 tenant already in place. We've read that the government will guarantee up to 70% of the rent on behalf of the tenant. However, I do know that Section 8 has a bit of a stigma. 

With that said, I'm looking for thoughts / experiences with Section 8 Tenants from experienced landlords. What should we keep in mind / look out for / etc? 

[Rick P.]

For a long time I used section 8 as a last resort. Lately though, I have had a change of heart. I think that once you get comfortable with the added paperwork & inspections you really can't beat it. The money is there every month. It is a little bit of extra legwork in the beginning but I think it's worth it. I have heard the horror stories about section 8 tenants but I don't think they have been any harder on my properties than any other tenant(s). In fact I would say they've probably been closer to model tenants.

[Christopher Gingras]

That's been my experience as well in Florida.

There is definitely some extra paperwork but the check shows up in my bank account on the 1st, you should still apply your screening criteria and the inspections are quite low key.

Overall I accept it for some of my properties and it's been worthwhile, plus it expands your tenant pool.

[Jeffrey Goers]

I use section 8 for several rentals in Baltimore. The continual inspections are costly as the inspectors always find things to fail you for. But the consistent payments on the 1st of the month are great.

Jeff

[Robert Leonard]

I think it all boils down to how the program is locally administered. You have local administrators who take a tenant or landlord "friendly" approach to inspections. I've considered using it a couple times but always found a "market" tenant at the same rates. The less number of people involved in my operations the better. I like simple.

[Gail K.]

Robert hit the nail on the head.  You need to check out your local Housing Authority.  My county is currently dealing with 1300 vouchers.  That means both caseworkers and inspectors are overworked.   Takes six to eight weeks to get the initial inspection on a property (remember those same inspectors also do yearly inspection on every approved rental property); meanwhile you're sitting there with an empty unit.  Inspectors can fail you over the dumbest things.

While it's great that the check shows up in the bank on the 1st you need to understand that HUD's FMR (fair market rent) often does NOT match with what your local Housing Authority will decide your unit is worth. For example, in my county HUD's FMR for a 3 bedroom unit for 2016 is $997. Our Housing Authority caps payment at $675 for a 3 bedroom (and a landlord has to agree not to accept more than this, whether it is all from the Housing Authority or a combination of them and the tenant). That's it. $525 for a 2 bedroom. $750 for a 4 bedroom. Been that way for years. With luck, begging and several attempts you MIGHT get this increased by $25 but one year they asked landlords to take a CUT in this payment.

So before you decide to accept this glorious program (and it is likely you will, no doubt be overwhelmed by a number of folks with vouchers if you agree to this since many landlords will have nothing to do with this program for various reasons) make certain you are familiar with your local housing authority PLUS the length of time with the initial inspection process AND the amount of reimbursement you can expect for your properties.

Gail

[Ed S.]

Screen, screen, screen.     

They (your tenant) still pays part of the rent, so underwrite it like any other tenant!

You may get your Section 8 check, but you need their portion to pay the mortgage!

[Account Closed]

Andrew Glenn
Hi I have worked with the Housing Authority for many years. It is all about know the program and being an active landlord. If you have any questions or concerns please reach out.

[Rong Liu]

@ Merlie 

What do you mean being active? Could you explain more?

[Jeff Rabinowitz]

The local housing administrations can be extremely difficult to nearly impossible to work with. If there is ever a dispute you will lose. When you accept sec 8 you enter into a very unequal partnership with Government. You are held to every line of the agreement but the housing authority can violate the agreement and/or change the amounts they agreed to pay at will. You will have little recourse short of suing the State. (Yes, I was offered that opportunity a couple times--I declined.) I worked with 4 agencies ~10 years ago. I will never even consider doing so again.

[Dumitru Anton]

Originally posted by @Rong Liu:

@ Merlie 

What do you mean being active? Could you explain more?

 @Rong Liu,

I think she is referring to landlord/landlord PM/representative not going for slumlord status/barely repairing/maintaining the property.

i would look also at local HA interaction with local vendors (power company, green energy,...), classes available to educate landlords.

but mostly talk with local landlords with at least 3 years under the belt

[Dumitru Anton]

Originally posted by @Andrew Glenn:

We're evaluating a deal that involves a Section 8 tenant already in place. We've read that the government will guarantee up to 70% of the rent on behalf of the tenant. However, I do know that Section 8 has a bit of a stigma. 

With that said, I'm looking for thoughts / experiences with Section 8 Tenants from experienced landlords. What should we keep in mind / look out for / etc? 

talk with seasoned local landlords: at least 5 years under the belt. they've seen it all...

you want long term tenants (at least 3 years in previous place). 

if in place/existent tenants, you may need to re-educate them to your program/needs (from former landlord standards to yours)

you want tenants which they work and pay for some part of the rent: less time to complain....= appreciate your work more...

if let's say their voucher is for $1,500, please consider this also includes utilities allocation so your actual total pay may be $1,300. bonus points for a lot of insulation in the walls and attic+-crawl space. my local HA has some discounts available with local vendors for energy audit and property insulation/green stuff.

 you harden your property by going to nice and  abuse-resistent: check your local competition and go one level above. kitchens and bathroom sells the property. also go directly to the heart of the head/ lady of the house!!!

do not go under your standards. it will save you next recession when you will have a nice property to show. YOU ARE IN FOR THE LONG TERM

have reserves: bad neighbors/tenants happen...

be present (your representative) at inspections: words in reports may be different than what the inspector wanted fixed! also you may find out something changed in the area so they are looking for different stuff than let's say 2 years ago (lots of basement floods, critters because of new construction, yada yada)

generally they are looking for safety (more strict if children under 6 present), but they could also be picky. fix it and move on. expense the repair as house improvement.

did local HA did crazy stuff in the past? (search BP for Raleigh HA)

most important: does the numbers make sense? (after you gather the info, not just projected numbers from somebody doing this for years)

what does your market says?

[Account Closed]

I don't recommend this in Raleigh