Section 8: Philadelphia

[Charles H.]

I recently started looking in the Philly market and there is lots to learn.  I was wondering if some investors in the market have experience with section 8 housing.  If so, did they purchase a place that was section 8 or did they apply to have their house listed as section 8?  The conventional wisdom is to avoid section 8 housing, however, isn't the income guaranteed since the government assists with the rent?  This would be especially ideal during a downturn.  I recently heard BP podcast 356 and it seemed like a solid strategy but I am not naive enough to believe one strategy would work in every market.  Curious to hear from investors with experience.


Charles 

[Jennifer Donley]

I'm a Section 8 specialist in St. Louis.  Pros for me are - Guaranteed rents, higher than market rents in some places, additional accountability through the Housing Authority and the huge demand/lack of supply in Section8 housing means you can find great S8 tenants.

I have a meticulous screening process and reject probably 80% of my applicants.  My screening checklist is 5 pages long, I check background, credit, eviction history, prior landlords and I require some income from my S8 tenants.  The last step of my process is a home visit at their current residence to verify they take good care of their home. Doing it this way has been very successful - I don't have trouble collecting the tenant's rent portions or landlord billed utilities or repairs.  I've got 26 occupied properties and collected all but $150 of my rents last month (I do have 1 inherited Section 8 tenant who I have a hard time collecting her rent portion/sewer from).

Cons I usually hear - the processes of Section 8 can be a pain (especially at first when you're learning them), the Housing Authority can be tough to deal with (this varies widely because each Housing Authority is run independently across the country), the inspections can be a pain (also wide variance here) and some people have a hard time finding good S8 tenants.  On this last one - I believe your property attracts your tenants so I've found that by having one of the nicest properties on the block, I'm able to attract great tenants.