To Section 8 or Not to Section 8

[Dan Powers]

Every rental investor always stresses about wanting the maximize cashflow, and the clear answer to that is Section 8. While on the surface of examining the rents in the most popular zip codes (19143, 19139, 19142) might show Section 8 rents identical to market, that being said the conditions needed to reach that rent are drastically different. To reach market rent in West Philly you'll most likely need central AC, stainless steel apps, and near flip finishes throughout. In comparison, for Section 8, you really only have to finish the home to pass inspection, or play the fun game of going to Home Depot and buying the cheapest finishes you can. This is really where you make your money in Section 8.

There are still parts of the city where Section 8 rent is higher than market (19121, 19132, 19133, and 19140), but it’s extremely block by block to say the least. That being said, your margins are significantly better because the entry price is drastically lower than West Philly, with most properties selling around 50-80k while rent is $1200.

I would love to hear why people are reluctant to rent Section 8 especially if you get a solid property manager to handle everything.