Section 8...Looking for Pros/Conso

[Mark L.]

I'm looking at potentially getting into Section 8 investments. interested in hearing from investors that hold these in their portfolio.  How have these properties performed from a cash flow perspective?  What issues have you run into with tenants or payments?  Anything else you can share would be helpful.

[Ray Harrell]

First, Section 8 is not an investment. it is a housing program that provides assistance to people who otherwise can't afford market rents.

You will often hear that section 8 properties are "guaranteed money." But there are several catches to that:

1. Section 8 doesn't always pay 100% of the rent. The tenant may be responsible for a portion. You still have to deal with late payments or non payments of the tenant portion.
2. Section 8 inspections are generally more involved than just health and safety. They will find minor things and consider them violations, even if the tenant did the damage. They will abate (stop) your Section 8 payments until you correct the violations. You will not recover those rents.
3. Section 8 tenants, from my experience, have a sense of entitlement, and will report you to housing and the buildings department whenever they feel slighted for any reason (late fee, you didn't change a light bulb). This will lead to additional inspections and potential violations and rent abatement.
4. People who have no stake in something generally don't appreciate things. They don't understand the value of things, so for them to totally destroy your blinds, abuse your appliances, knock holes in walls, etc. is a regular day for them. They don't have to pay for it, so they don't care.
5. They can leave your rental without giving notice because Section 8 will grant them a voucher for a new place for the next month regardless whether they gave notice or not.

I would think long and hard before embarking on this. I'd rather have an employed tenant who can afford the rent than someone who has lived life thinking rent is $300 a month and the government pays the rest.