Section 8 rules and regs in Rhode Island?

Question

Anthony Thompson · Answer

Jacob, I've rented section 8 in Woonsocket. It's pretty much the same as section 8 everywhere, as far as what the housing authority wants you to do. One of the big items is that you'll need to get a lead certificate but otherwise it's not too bad as long as you maintain your properties.

Also as you noted, the tenant pool in most areas Woonsocket can be "challenging". Someone (a real estate "guru") once said that you make the most money in "C" areas. That might be true, but man you really have to work for it (headaches and aggravation).

My biggest issue with section 8 at the moment is that it seems they often aren't keeping up with the market rents, in general but especially for single family houses. Section 8 considers a 3 family house the same thing as a 3 family apartment which is not the case at all in the real world. I would recommend against section 8 if you have a SFH, it will save you a lot of wasted time to rule it out from the beginning.

Any housing authority will be happy to give you a packet describing the requirements of the program though, in your case there's Woonsocket Housing Authority. Oh and if you ever go to their office, don't walk into the awkwardly-placed pole in the front entry way like I did once :)

Patti Robertson · Answer

@Kevin Siedlecki - You are right!  I miss tagged.  Sorry about that to you and @Jacob Ostreicher.  Jacob's profile says he is the barber. I'm not sure he is doing it wrong.  He's looking at what seems to be a low price in his market and is trying to decide if there is a way to make it profitable.  It's a logical thought process to me. It doesn't mean he will only offer SEC 8 in certain neighborhoods. I got the impression he is just feeling out his options.

Patti Robertson · Answer

Wow @Jacob Ostreicher.  That's a real sinister view of landlords. I'm a big proponent of SEC 8, and I SEC 8 in all neighborhoods where the SEC 8 budget will meet the market rent. In my portfolio, that's most of what I own. I don't buy in "war zones", but do buy in lower income neighborhoods, because they have the return for the investment. (OK, so I do have a few in the war zone - but very few.) Remember, SEC 8 is the Housing Choice Voucher Program, meaning the TENANT CHOOSES our property. In my experience (of about 100 SEC 8 leases right now and at least a thousand over the years), I find that most SEC 8 tenants choose their neighborhood based on where a family member lives. SEC 8 tenants are required to work, and they always work low income jobs.  The cost of formal daycare is prohibitive, and the majority are raising families on one income.  They need the support of extended family, so they generally want to live near mom, grandma, an aunt, etc. I'm not a slumlord because I accept their voucher after they choose my house. I am providing my tenants an opportunity to live independently and still have the very important support of their extended families to assist in raising their families.

BTW - I see you are a barber by trade.  I am also a Great Clips franchisee and employee hair stylists.  You are smart to seek real estate as an income diversification.  I encourage all my salon employees to find an alternative source of income because cutting hair is SO hard on your body.  I'm not from the hair industry and had no idea how hard your job is until I became a salon owner.  Kudos to you for continuing your education into a new industry.

Kevin Siedlecki · Answer

@Patti Robertson - I think you meant to tag me with the cynical view of landlords, but I'm not a barber, so I'm a little confused by the post.

To clarify, I also have Section 8 tenants, and I agree with you that the "Housing Choice" piece is important. You are doing it right. I think @Jacob Ostreicher's idea would be doing it wrong, and I see a lot of people in my market using Section 8 that way. The tenants don't get to choose when the landlords in nice neighborhoods are saying "no" and the landlords in bad neighborhoods are trying to fill every unit with government-paid rent.

Melanie Berchtold · Answer

Hi, Jacob, I am also in Bellingham,MA. While I too have been tempted to purchase in RI, I see your dilemma. In Woonsocket, the initial investment may be low, but the taxes are very high. Section 8 is a federal program. RI housing also has a voucher program. The link here gives you plenty of information. http://www.rhodeislandhousing.org/sp.cfm?pageid=42...

My observation about low income rentals is that your maintenance time and money may be more than it is worth. You seem to have your plate full time wise right now.

Kevin Siedlecki · Answer

@Jacob Ostreicher - I have a real problem with the way many landlords treat section 8, so what follows may seem a little harsh, but I would warn against this kind of strategy for three reasons.

1) Section 8 is designed to get good people out of bad neighborhoods. Unfortunately, the way it works, opportunistic landlords just fill buildings in bad neighborhoods with section 8 tenants. So ethically, I do not like that strategy. It is the definition of slumlord.

2) Section 8 does not pay the full rent. Tenants are responsible for 30% of their income. That means if your plan is to buy a bad building in a bad neighborhood and just suck from teat of the government to make yourself money, that's not going to work. Not only is it unethical, but you'll find yourself chasing down tenants for their portion of the rent.

3) Section 8 requires tenants to keep up with meetings and paperwork. So all the same downsides as my second point, but now you're also talking about chasing them down for that, too. If you only have one building, and one tenant skips a meeting or a form and loses the voucher, you could be in real trouble when you have to evict.

There are my thoughts. In the end, regardless of what it looks like on paper, it's going to be a lot of work, possibly not profitable, and you will have to live with the label of "slumlord" to make any money this way. I know, I've got a bleeding heart, but even those who focus solely on numbers will have some of the same concerns. Cheap houses in bad neighborhoods never perform as well in reality as they do on paper.

Section 8 rules and regs in Rhode Island?

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