Dealing with Section 8 Tenants

[Anthony Sanzari]

I have received an application from someone who gets section 8 vouchers. The rent will be guaranteed so It's an option I am highly considering but I do not know much about it. I have heard some horror stories about section 8 tenants. Any advise/input would be greatly appreciated.

[Malcolm LeBourne]

Hi @Anthony Sanzari great question to keep it short there are definitely some advantages and disadvantages to section 8 just to give you a couple for each.

Advantages: 

1. Section 8 pays landlords directly for a portion of the tenant's rent. Having that guarantee does help with peace of mind/reduction of risk. 

2. Section 8 tenants generally have a larger need for stable housing so this typically leads to longer tenancies and lower vacancy rates.

Disadvantages:

1. Section 8 properties must meet certain housing quality standards and undergo regular inspection by your local public housing authority. Develop a positive working relationship with the local PHA to help facilitate interactions.

2. Section 8 tenants can present issues. Issues however can arise with any tenancy. The important thing here is to screen tenants thoroughly. Despite the program having a vetting process, you as a landlord (if you don't have a PM company doing it) should still conduct your own screening process to reduce risk and ensure compatibility. 

Helping Section 8 tenants can be a rewarding experience. Just make sure you are well prepared and understand the program dynamics carefully. 

[Aly W.]

We had a Section 8 tenant in Trenton, years ago. While there were advantages, we found the disadvantages far outweighed them. Proceed with caution.

1. Unless things have changed, your property needs an initial, and annual inspection. Not a problem if your property is in perfect condition (and they'll provide a list of what they'll be checking), but inspections were only done once or twice a month. If you miss that date, or your property failed, you need to wait another month for the reinspection. You will not be paid the rent until you pass, although you'll get all the back rent. But it could take quite a while.

2. In NJ, the easiest eviction is for nonpayment. Since that isn't usually an issue with S8 tenants (unless they have to pay their own portion of the rent), you will have a nearly impossible time to evict for any other reason such as a lease violation. Our tenant had others living in the house (not on the lease), she ran a neighborhood laundry service out of the basement, she got a pit bull, and the neighbors complained she was selling drugs. Her caseworker said the burden of proof was on us for all these things, and we finally just had to wait out her lease, and not renew.

3. Caseworkers do not screen a tenant the way a landlord would. That burden is on you. They only screen them for eligibility to participate in the program. They may do a criminal background check, but that's it. 

4. The program has a vested interest in keeping S8 tenants housed, as opposed to them becoming homeless, so don't expect much if any help if your tenant becomes a problem.

5. If a tenant complains about anything in your property, your rent may be withheld until it's resolved. Tenants have been known to deliberately break appliances or cause damage, to get new items.

6. Often their security deposit comes from government assistance, so they have no "skin in the game", and no vested interest in taking care of your property. 

Our experience was one and done; others have had good experiences, including our contractor. His Section 8 tenant has been renting from him for almost 20 years. 

[John Morgan]

@Anthony Sanzari

I’ve got four sec 8 houses.

Pros: you get paid 80-90% of rent on the 1st. Once these people get vouchers, they’re set with free rent for life. And they don’t want to lose their voucher so they’re usually decent tenants.

Cons: you’re chasing the tenants around for their small portion of rent. Lol. Trashier people in general. And some of the inspectors are very picky on their annual inspections. Make sure your house is in tip top condition.

[James Wise]

Quote from @Anthony Sanzari:

I have received an application from someone who gets section 8 vouchers. The rent will be guaranteed so It's an option I am highly considering but I do not know much about it. I have heard some horror stories about section 8 tenants. Any advise/input would be greatly appreciated.

 I've made millions in the Section 8 space. The money is great and it comes in on time every single month. However, you need to understand that a large portion of Section 8 tenants are complete animals. They will be very rough on your property. You're probably going to have to deal with a slew of unauthorized boyfriends with a pension for punching holes in your drywall. Unauthorized pets which are almost always going to be a huge problem for your insurance company because 9 times out of 10 they are gonna be Pitbulls. Additionally, your insurance company is already gonna be salty with you because of all the unauthorized swimming pools your tenants got. Beyond that you've got constant fighting with the neighbors, layers of nicotine caked onto your walls, constant complaining, broken windows, no batteries in your smoke detectors, and a yearly Section 8 inspection that requires you to pay to fix a whole bunch of tenant caused damages. If you can deal with all of that, like I said, the money is great.

Here is the big thing, a lot of investors read what I wrote above and go, "screw this, I ain't about that Section 8 life." That's all well and good to want to avoid the Section 8 life, but you've got to understand that you better not be buying a rental property in a low income area then. Because if you've got yourself a rental in a low income area, the above is the type of tenant base you're dealing with whether they are on Section 8 or not. The only difference being the tenants who do have Section 8 have guaranteed rent coming to you while the ones who don't are going to add the massive problem of constantly stealing money from you, which obviously adds the need for constant evictions to be added to that mix of loveliness.

[Tricia O'Brien]

Great overview of the pros and cons from your experience!

[Colleen F.]

@Anthony Sanzari  depending on location you may be obligated to accept Section 8 due to local law. However often a qualified paying tenant comes along before section 8 can get their act together. Not sure if you can accept the tenant and require inspection before move in, I never got to that point. Having an older building that was my concern and the caseworker don't seem to have any knowledge of inspections. They just want to sell you their client.

Also if a voucher isn't for your area or for the correct amount of bedrooms the prospective tenant won't be very knowledgeable about it. They have to have a voucher that covers the unit size you  offer and  either from a local housing authority or transferable. I have run across this a couple of times. 

[Mackaylee Beach]

Section 8 may have their own screening policies in place, but it's crucial to remain diligent in meeting your own screening requirements. Always follow through to guarantee a comprehensive screening process. Ensuring your property adheres to Section 8 standards is also crucial. It's important to have a good understanding of the inspection process to meet these standards.

[Lisa Hammond]

I recommend caution and as a PM, we will no longer accept them. Here's why: 

- The annual inspections are fine, we have no issue with that and will pass however if there's something the tenant is responsible for and they don't handle, they lose their voucher then you're stuck. In addition, the inspector will often place the responsibility on the LL when it's really the tenant that caused it and you cannot then charge them as you normally would. We replace 7 (yes SEVEN) refrigerator door handles because the kids kept hanging on them. During the inspection this was placed on us, despite my explanation to the inspector, and we couldn't charge the tenant. 

- These tenants, the ones we've had, don't care a whit about the unit because they're not paying for, trash is all over and they either don't notify of repairs because we found most of the time they've got illegal activity or additional guests living there. 

- We've had a tenant with a $4.36/month responsibility who would NOT pay it. Seems minor but it's sure irritating to deal with that in our software each month and no judge will evict if they haven't paid it. 

- The program in our City now requires the LL to sign documents that they will not evict regardless if the tenant pays for a minimum of 60 days from receiving the funding. So if S8 pays on Jan 1 their portion, you cannot evict that tenant even if they don't pay, until March. 

- The program in our City now pays whenever they feel like it, could be the 1st, could be the 12th, it's up to them. Yes it's guaranteed, but we use Appfolio and they don't pay through the portal so that means I'm checking the bank constantly to find that deposit and manually get it posted to the tenant's account. 

- The initial steps to get the tenant in don't line up with ours so it's a real bottle neck. We get the lease out electronically, tenant signs, we meet in 24 hrs to collect deposit, set the move in date. With S8, we send the lease but they can't sign it until the inspection which could take 6-8 weeks but we have to pull the property and agree to stop showing it. We can't collect the deposit either. 

- The stupid forms they have us sign continually are a real pain and can take 30 min to an hour for all the paperwork but owners don't want to pay for that time so we're doing it on our nickel. 

For all these reasons, it's a nightmare for a PM so we stopped dealing with them. A self managed owner might be agreeable with all that but it's not a good business practice for a PM.