Rental Properties as Section 8 KCMO

[Koki Agata]

Hello all! I have been wondering about Section 8 rentals in KCMO areas. What are your thoughts and do you have any personal anecdotes you can share? I am curious about the niche and would like to know more about others' experience! Any thoughts would be great!

[Adam Sankowski]

@Koki Agata So I have one rental in KCMO and its a section 8.  I honestly had no intention at all of going section 8 but I went through a turnkey company about 2 years ago and, surprise, they tenanted it with a section 8 tenant.  So far its been really positive but I'll do my best to list the pros and cons and please reach out or PM for any other info.  I've got a few things that I can't really share on here either ha... so PM me if you want the real goods :) 

Pros: 

- Above market rent generally 

- This is also a con but there are yearly inspections.  They can nickel and dime you but if you're investing in lower priced rentals in general its nice to have someone HAVE to go through your rental once a year and make sure its ok. Some people look at this as a pain for them when they have to make repairs BUT I think it also reminds the tenant that if they want to stay in the program they can't be growing weed or running a pit bull breeding operation indoors because they will get caught as well. 

- The rent really does come in every month on time like clockwork. 

- If you do this with a larger bedroom count home (like 4-5 bedrooms) you can make some good money.  There are some people who only like to invest in 3 bedroom homes because 4-5 are harder to rent generally.  But, if you're a parent and have 3 kids you want a 4 bed home and they are hard to find.  So, when you find one you stay there and the 4 bed voucher amount is def. above market.  When this tenant moved in I (maybe stupidly) personally reached out to say hi and they were really grateful to move into a nice home in a decent area and were basically like "we plan on staying here forever, thanks". We all know that nothing kills your return like turnover and I feel like its really easy to end up with a 20 year tenant via section 8.  They are on their 3rd year with me and so far so good. 

- I know that some people don't like renting to families because kids will kill a place, which they will, but if the tenant stays forever what does it really matter? 

-I don't know if you've been following KCMO local politics but they are about to pass a tenant bill of rights that makes it so you have to accept section 8 tenants anyways so you might as well figure this all out anyways because I don't think that you'll be able to avoid this for long no matter what you're trying to rent. 

CONS

- Right after I started renting to section 8 they passed an annual inspection.  Its honestly a pain.  They found a ton of small things wrong and even after I fixed them a different inspector would come out to check the repairs and then find additional things wrong.  Of course being long distance I also had to pay my PM to accompany each of their inspections and then follow up with them. If you're local you can just go to it yourself but if you're out of town on top of having to fix some things you have this annoying extra PM fee.  Plus most PM's mark up any repair so it becomes frustrating fast. 

- The government shut down last year was a real scare for me because HUD shut down and they were talking about section 8 payments being delayed. Now, not every president is going to shut down the government for that long but it was scary (to me at least) while it was going on. If your entire portfolio was section 8 I could see how you could really be screwed if something major went down with the government.

- So the rental rate starts above market but good luck getting an increase passed or even figuring out the process for that. There are charts somewhere for what you're suppose to be able to make in KCMO with section 8 but it doesn't seem like they actually pay attention to HUD's own rates.

- There is a limited PM pool of people willing to manage section 8. 

I am currently investigating something I learned though where apparently section 8 in KCMO will pay way more if you include utilities in the rent.  I'm going to try and go solar, make the rental super energy efficient and see if I can pocket the difference and try to make super green section 8 housing.  This is my long term goal with it, we'll see how it goes.  I hope this helps and again, please message me with any additional questions. Also, keep in mind I only have one rental so I'm sure that someone else will have much more info.  Thanks!