Section 8 or Private Pay Rentals, which is the Better Investment?

Question

Guaranteed payment by the government

Higher Rents

Incentives for tenants to maintain the property

A larger pool of tenants

The chance for a longer-term tenant

_________________________Versus_________________________________________________

Dealing with the government, the red tape, and regulations.

Delayed payments and accounting delays. Section 8 inspections are brutal!

What are your thoughts?

Jennifer Donley · Answer

@Jorge Vazquez, Section 8 all the way in B and C areas.  Especially now.

Our Section 8 inspections aren't any more difficult than our municipality occupancy inspections. Different, yes but not harder.

The move in can be lengthy but that guaranteed rent is worth an extra couple weeks of waiting, I think.

Agree with @Steve C. that rents aren't always higher.

The red tape is hardest when you're new to it.  Once you know it, you can count onthe process being the same every time, which for a checklisty, process person, is awesome.

Lam N. · Answer

I have friends who have had tried section 8. Many horror stories. So for now I am not joining the section 8 thing.  At the moment most of my tenants are paying on time every month. I select working professionals so no problem. Among my tenants are paramedic, nurses, IT, banker, dieticians, etc. The only problem tenants I have are holdover tenants from previous landlords I bought properties from.

Steve C. · Answer

I do a lot of section 8 rentals and in my lower-income area rentals that is all I will do.  Especially now with the eviction moratorium being extended until May thanks to our genius Governor here in NY, I thank the lord that I have section 8 tenants.  The only hard part, in my opinion, is the move-in process.  I love hearing my phone ding on the 2nd or 3rd of the month and seeing the direct deposit in my account.  I have found that if you find tenants that receive section 8 vouchers and that also have a job that they have been at for at least 3 or 4 years, they end up being very responsible (mostly single moms) that just need help with rent.  And they have been on a waiting list for as long as 10 years usually so they respect the fact that they get the help and they do WHATEVER it takes to keep it.  That means when they come and do the 2 annual plus one random inspection a year, that they have the apartment well taken care of because they just don't want to risk losing the voucher.  Also, if they don't pay their portion, then they are risk of losing their voucher so they always seem to stay on top of it.  I have about a dozen section 8 units and most of my tenants have been there for roughly 10 years.

If you take care of your units and especially are on top of making sure there is no chipping paint, I have found that they will always find something small but it is easy to fix.  I know most of the inspectors now so they usually just have me sign a form after I have fixed what they want done and then fax it or email it in.

As far as higher rents - I think that would only apply to class C properties where someone without section 8 cant pay that much. And as far as section 8 tenants in class A or B properties I think then you are hurting your cash flow.

Section 8 or Private Pay Rentals, which is the Better Investment?

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