New purchase need section 8 advice

[Vaughn Black]

New investor alert.!!  I am buying a duplex in a small city in Northeastern Pennsylvania (Lackawanna county) , Current tenants are both on section 8 vouchers and rents are FAR below market rent rates. Both tenant leases have expired and are on month-to-month rental basis (one tenant has been there 9 years and the other just over a year) . Both tenants have pets and I want to make them no pet units.  I never really planned on participating in section 8 as a landlord. I am curious on how best to proceed....Any advice

[Chris K.]

@Vaughn Black

This is the FMRs for Lackawanna County: 

Lackawanna and Luzerne County are really good when it comes to FMRs. That's why there has been so much construction in the area over the past few years specifically targeting such tenants. 

Also, you may know that having Section 8 in those two counties is literally like winning the lottery --- just getting on the waiting list is already a challenge. So the Section 8 folks I've worked with have been much better than the average tenant in the area. Not saying every one of them is an angel and you have to do your due diligence. 

As for your specific rent, the landlord has the option to rent the place for less than the FMR amount. If you think you can get closer to the FMR amount, you can go for it.

I haven't looked at it in a while, but HUD only allows for month-to-month leases if the original long-term lease expires. It sounds like the current owner is just letting them stay on that month-to-month basis. Maybe he or she thought it would hurt the market value if the property has long-term Section 8 tenants. Maybe so although I don't think most experienced investors fear Section 8 tenants.

In terms of terminating the lease, the lease should spell it out. My guess is that you have to give 30-day to 60-day notices. The notice goes to both the tenants and the relevant agencies. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.