Section 8 tenants in Cleveland

[Johnny Weekend]

What are your thoughts on having section 8 tenants in Cleveland? Sounds like a positive to me as the gov is helping with the rent. What would be your drawback?

thanks!

[Anna Sagatelova]

Section 8 in Cleveland usually means you are dealing with CMHA, and they move at their own pace. It's not unusual to wait weeks for them to schedule an inspection or re-inspection, and then a rent determination.

If you do decide to offer Section 8, you need to make sure you don't throw your screening criteria out the window. Yes, that includes credit and income - whatever the tenant's portion is, you need to ensure their income is 3x that amount (or whatever your criteria is). Screening is by far the biggest pitfall, people see a voucher and forget all about their screening criteria.

Know that Sec 8 can change the tenant's portion vs. subsidized portion any time, but will not raise the overall rent for you. Asking for a rent amount revision can actually yield you a lower rent, depending on market conditions.

You will likely be paying for water/sewer (this gets you a higher rent determination).

Be aware that CMHA will tell you which violations are tenant responsibility vs. owner. However, even if something is tenant responsibility and it doesn't get fixed, it's you, the owner, who doesn't get next month's rent payment. It's abated and forever lost. So you end up doing a lot of tenant responsibility repairs, charging them back, and hoping they pay that on top of their portion (good luck enforcing it if they don't).

At the end of the day, the analysis shifts based on which parts of Cleveland you are investing in. You can look at the HUD maximum rents based on number of bedrooms in a given zip code... if you can get more than that with an unsubsidized tenant in your neighborhood, no reason to go with Section 8 there. CMHA very rarely determines that the rent is at that HUD max amount, anyway.