Question re: Prof Prop Mgmt Co for section 8 properties??

Question

I am considering investing/purchasing a rehabed property in Detroit, MI and renting it to section 8 tenants. This is my first time renting to section 8 tenants. Are there professional property management companies that specialize in finding section 8 tenants and managing section 8 rental properties? If any investors in the Detroit, MI area have recommendations on reputable professional property management companies please share. I appreciate any assistance in providing me information.

John Underwood · Answer

I use the local section 8 website to list my houses also I advertise on FB marketplace, Zillow, craigslist etc and say I accept section 8 tenants.Doesn't need to be a specialized PM. Doesn't need to be a PM at all.Once it's going section 8 direct deposits the rent into your account. Tenants tend to stay for a long time.Section 8 does inspections for you. So no real need for a PM.

Drew Sygit · Answer

@Paul S.: now you made me go and think about it! Bought my first Detroit rental in 1999.Learned a lot of stuff the hard way - tenants will teach you a lesson!

Paul S. · Answer

Memory Lane huh? I remember mine was early 1993 - the reason I know is there was a man killed by police named Malice Green, I bought my first house on the West side... at the end of the street was the mural they painted in remembrance. The locals looked at me strutting all around the area and just laughed.. they thought I'd be dead in a week.

Paul S. · Answer

Drew, you sound like you've been in the city longer than I have! Section 8 is not all that its cracked up to be... these OOS investors think they can fill em up and just collect checks.

Bob Prisco · Answer

@Thuan Phan You need to find a team that is extensive knowledge of Sec 8 and other Govt programs,,,,,,

Drew Sygit · Answer

@Thuan Phan: while we appreciate the opinion of @John Underwood, what works for him may not work for you. There's also a big difference between remote managing suburban Detroit properties vs City of Detroit properties.Section 8 (S8) has maximum rents they will pay, which means that properties in the best areas typically don't qualify. So, that leaves investors with properties in the lower demographic areas of the suburbs and the City of Detroit that have market rents that will qualify for S8 caps.Tenant demographics are also a large factor to consider: S8 tenants, to qualify for the program, must be low-income. They also statistically tend to be low-educated. MANY investors make the mistake of thinking that just because the government is sending you a monthly check, they have nothing to worry about. Here are some common issues with tenants that S8 doesn't address for owners:1) Monitoring Utility Bills - S8 prefers that landlords include utilities in the rent payment. That often leads to tenants not monitoring water usage from running toilets, kids playing with a hose and leaving it running, tenants cranking heat to 90 degrees in winter while opening windows, and more abuse stories. We DON'T recommend including any utilities in the rent. While electric & gas are private entities and allow tenant accounts, water in most Michigan cities is tied to the property owner. That often leads to absentee owners getting stuck with a large water bill when a tenant moves out. And NO you cannot put a utility cap in your lease and force the tenant to pay anything over it. That will get you BANNED from the S8 program!2) Maintenance: several investors here on BP have mentioned how tough it is to find reliable & affordable handymen in Detroit, not to mention contractors. They try to rip us off and we're LOCAL, so what do you think they'll do to an absentee owner?3) Protecting Vacant Properties: unmonitored, vacant properties in Detroit quickly lose their furnaces, hot water heaters, any copper plumbing - and we've even had kitchen cabinets and toilets stolen! Good luck managing that remotely.4) Showing Vacant Properties: who's going to handle this for you? Yes, you can list it for rent with a real estate agent, but they split 1 month of rent, which on a $900 rent rate is only $450 per agent. Most of the good agents focus on buying & selling to make 5x that per transaction.5) Damages: you'd be surprised how much damage S8 tenants cause to properties. Many simply live like pigs and don't care because it's not theirs! Many Detroit tenants get dogs (not just S8 tenants) in violation of their lease and then let the dogs use the basement for relieving themselves. Holes in the walls, cracked windows, broken doors, etc. are very common. Yes you can charge the tenant for the repairs, but they are LOW INCOME, so good luck trying to get blood out of a rockA good property manager (us) is a lot like insurance: you don't need us when everything is going fine, but when everything goes south, because you didn't have time to keep tabs on everything, then a good PM is worth every penny you pay them:)