Detroit Housing Commission Section 8 System

[William Burns]

Hi BP Community,

Has anyone here had experience investing in Detroit with Section 8 tenants? Is the program really as problematic as it’s been portrayed? Any insights from your experience, whether positive or negative, would be greatly appreciated.

The attached link explains the current situation with the Detroit Housing Commission (DHC), highlighting that they are severely understaffed and have limited communication with both tenants and landlords. Some landlords report that it regularly takes around six months to start receiving direct deposits from the government. The article quotes: "The DHC regularly takes many months to initiate payments or approve rent increases and rarely responds to landlords’ messages." Additionally, some landlords are still waiting on over $5,000 in payments from the program.

This market is right in my backyard, and it seems like a good place to start, as I can afford to buy homes in the $65,000–$80,000 range and am familiar with the area. The numbers for investing in Detroit look promising, but I am hesitant to proceed with purchasing a property and accepting Section 8 tenants due to the long delays in rent payments.

There are many Section 8 voucher holders looking for homes, and many tenants have shared horror stories about their previous landlords. I want to be a part of this market because I know I can offer tenants a well-maintained, up-to-code home. However, the idea of running a rental business while waiting six months for payments especially with bills still coming in doesn’t seem sustainable.

Can anyone speak from experience in the current market? Was the risk worth the reward in your situation?

- Attached below is the same link in the header

https://outliermedia.org/detroit-section-8-housing-vouchers-...

[Drew Sygit]

@William Burns we've managed thousands of S8 leases in our 24 years in business.

The DHC has the most challenges, but it's NOT all their fault. 

Many S8 tenants are getting free rent money, yet don't take the time to understand the program and dump everything on their caseworkers and landlords!

A tenant doesn't qualify for a S8 voucher by making good financial and life decisions, so what quality of people do you think the system is dealing with?

The system is what's really broken:

1) S8 should have a time limit - get free housing to get your life in order and move on.

2) S8 should have strong requirements for taking care of the home taxpayers are paying the rent for. 
--- We haven't seen a S8 inspection report in over a decade that required a tenant to fix damages they obviously caused. The landlord is required to repair EVERYTHING!

3) It's been 5+ years since we've seen a S8 tenant lose their voucher for property damages, not paying their portion of the rent or utilities, or other lease violations (letting others move in with them).

It's our opinion that #2 & #3 above are caused by overworked caseworkers not having the time to process the extra required paperwork, so they take the path of least resistance.

4) S8 needs someone at the federal level to put more of the program online and streamline the process!
--- This includes requiring Housing Commissions to make better use of technology. EXAMPLE: a local HC has a single comcast email address for their entire office - mysteriously, they seem to be always losing emails and asking us to resend multiple times.

The good news is they finally increased their max rental amounts a few years ago, so they are now more competitive. 

If you're persistant, you can get things done, but it does take a lot of time.
Yet investors expect a PMC to do all this extra followup for free because they think the program is "gold".

We've always accepted S8 tenants and have no plans to stop.

It's a decent program if the investor understands the limitations and challenges.

Otherwise, it's "fool's gold".