How and what do you need to know before investing in section 8?

[Utsav Mahi]

I'm relatively new investor. I'm learning about section 8 housing. Any experienced section 8 investors, what formula do you use evaluate neighborhood and properties and eventually renters?

Im doing research on 2-3 markets that i would like to invest in but most of the neighborhoods are C and D and crime rate is high. I'm skeptical but i have learnt that it can get you started with relatively smaller investments. So i was wondering how do you identify the market and what do you use?

Any help is appreciated.

[Elise Bickel Tauber]

I use to absolutely love section 8. Dependable income with tenants that, more often then not, stayed for a very long time. More recently, right before the pandemic, they really started to tighten up on requirements for the section 8 inspections. It use to be only safety issues but have now included cosmetic items as well. They have relaxed on some of those requirements in the last year or two but could come back if they choose to. Either way, my experience after managing hundreds of section 8 tenants is that they overall stay for longer (3-4 years on average) and take decent care of the properties they lease. Most section 8 tenants work really had to get onto the list and find a home so they want to stay there once they do.

As for rents, I agree with Miranda that they are often similar or even sometimes higher then market rents. Pay close attention to the price versus what utilities need paid. You get a different amount for the rent depending on what utilities you are including. You cannot bill for utilities, it must be separately metered or included with the rent. 

Always screen tenants the same as you would those without section 8. I usually just give full points for the income portion since that will be handled with the section 8 office. Areas, you can use sites like niche.com to check out the area ratings. 

And dont be shocked when the first month or twos rent is delayed in processing. Once you get rolling, you are good to go.

If you have any questions at all about section 8 please do not hesitate to reach out. I've been managing section 8 for 13+ years in the City of Pittsburgh and multiple surround counties.