Would you use a PM when picking up section 8 properties?

Question

Would you recommend using a property manager to manage section 8 properties?

Looking at a section 8 property that already has long term tenants in place (1 for 15 years, 1 for 5 years).  Sounds like it’s pretty much covered through the government so seems I could save on PM costs. Thoughts?

Anything else we should consider when looking at Section 8 properties?

Drew Sygit · Answer

In our experience, property management always comes down to the tradeoff between an owner's time versus the cost of hiring a PMC.

Basically, if you make $50+ an hour at your day job, why would you want to spend your off-time doing a $20 an hour job?

We've also observed that the lower the Class of a property and corresponding tenants, the more time it takes to effectively manage. So, a Class B will take more time than a Class A, Class C > Class B and Class D > Class C.

Section 8 tends to be mostly Class C, with some Class B if you're lucky. So, everything else being equal, it will take more time to manage Section 8 tenants.

Yet, most property owners that contact us to manage their Class C properties, want to pay us like their properties our Class A. This leads to owners hiring the wrong PMC and then not understanding why the PMC limits their services so they can be profitable. The owner then comes to BP and complains about it here, putting 100% of the blame on the PMC.

Tracy Streich · Answer

Don't fall into the trap thinking property management is just collecting rent.   This is  a very small part of what a PM does or in fact what anyone does while managing a property.   Applications, background checks, employment verifications, fair housing, postings, collections, 24 hr maintenance calls, coordination of vendors, late payments, move in inspections, move out inspections, general complaints and excuses.    These are just a few off the top of my head.   Can you do it yourself?  Sure you can, but just make sure you know what all is involved.   If you think it is just collecting rent you will shocked into reality rather quickly.

Jennifer Donley · Answer

@Rei Reid I have a portfolio of Section 8 properties and self manage.  I actually wrote a blog post about hiring a PM for Section 8 properties because I'm shocked at how few PMs manage them well (at least where I live).  I'm a fan of self management but understand this isn't an option for everyone.

Check out the blog - but in general, if I were going to hire a PM for Section 8 properties, I would ask a lot of questions around their processes specific to Section 8.  I would want to know how many Section 8 properties they currently manage (although I wouldn't hang my hat on this alone - there is a PM company here locally that manages a lot of Section 8 and is terrible at it) and I would request references from 3 Section 8 landlords.

Steve Morris · Answer

When you say Section 8, does that mean there is a LURA (land use restriction agreement) recorded on title?  If yes, then I'd hire a PM to learn from since there's a lot of compliance paperwork you may have to do.

If the tenant's are just using vouchers to pay their rent and you can manage it otherwise, then no need for a PM.  However, I'd get the caseworker for each tenant since they may want some extra stuff like inspections.

Kenneth Garrett · Answer

@Rei Reid

Hiring a property manager is an investors choice.  Whether it’s section 8 or not has no bearing on it.  I self manage 20 units.  Combination of SFR and Multiunits.  Eventually I will turn it over to a pm.  I think managing it yourself will give you a true appreciation on what it takes to manage your properties.  I find by screening properly and keeping your property in good condition before the tenant moves in requires very little management on SFR.  Multi-units take more effort.  @Tracy Streich gave you a good list of what to expect.

Good Luck.

Gio Corpus · Answer

Yes, I believe you should get a PM anytime you are planning to scale and want to earn more properties. Section 8 is no different. Besides the stereotypes you're going to need a PM eventually.

Would you use a PM when picking up section 8 properties?

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