​Section 8 - Should you do it?

Through time and experience we have been thinking all about which ones have been our best investment ideas, analyzing our mistakes and thinking over on how we could do them better through time, and we have come to many conclusions, but one of them has always been that section 8 was both the best idea we had, yet the worst! I’ll explain myself, but here’s a basic on what section is and how it works, you can always ask the HUD if you want further information, which we obviously recommend you do, however, let’s go over the basics to see if it peaks your interest.

Section 8 is a part of the Housing Act of 1937 that goes over the Housing Choice Voucher program, which allows tenants with low income to rent properties that meet their needs, and it’s financed by the government, basically it works in a way where the tenant pays around 30% of the total rent and the government pays the rest, depending on each case this will work differently, however, this is the basics after all. As this program works with people with low income, there’s a long waiting list of people hoping to qualify and get accepted into the program, and there’s an even longer list of people already accepted into it ready to move into a rental deal, and as with everything there are ups and downs, pros and cons, white flags and red flags, it’s up to you to decide for yourself what outweighs what, but let’s go over our experience, and why we think is both the best and worst, and whether or not we would go through it all over again.

When we first started on this business the plan was pretty straightforward, purchase a property, fix it up and resell it, it worked quite well, until we made just enough to purchase the property to fix and hold for a while, and while we were holding it we needed it to bring in some cash, so we started on seeing what would be the best idea to rent it, the property was in a good area but it wasn’t a fancy one, so the tenants wouldn’t come running in as we expected it, we had to figure out a back up plan and one that moved relatively fast, so we went into section 8 after a bit of research, at first it seemed like a fix all end all kind of idea, we knew the cons of it but as always you think by just knowing the consequences of something won’t make it your problem since it will never happen to you, and boy were we wrong at first!

One thing we would recommend for you to do when you go into this, is go with your eyes wide open and believe all the wrong things will happen to you, because that way I think, you’ll be more ready for it, however, it wasn’t really anyone’s fault but our own when we made the mistakes we made the first time we had section 8, we should’ve been more ready and known more. Basically there are a bunch of things to do before you actually start cashing in that sweet government money, you have to be an approved section 8 landlord, you also have to go through really invasive inspections, and once it’s all ready to go you probably won’t be cashing in at least 2 months into having the tenant because those things take time, who knew?! You, now do, since you are doing all the smart research!

We did do some research on this, we were prepared to be waiting around, but we really didn’t expect for it to take as long as it did, and that’s when we knew the bureaucracy, it works wonders when you need to go over things quickly… or not. It was a long process, thankfully we had some really cool tenants the first time, they were kind on the property and ready to take care of it as if it was their own home, because it was, but we have been doing this thing since, it was what started our passion and understanding for the need for affordable housing, and how we can improve on it, however for every tenant that was amazing, there was one that wasn’t, for every great experience there was one that ruined everything, it’s a mind game most times, and it’s a money game, no matter how much you screen your tenants, how many things you scratch out of the application, how many you deny, there’s always going to be a bad experience, our worst one was when everything we had in the property was stolen, every single appliance, and much more, but it’s part of the business, and no matter what you do, it could be something for this particular case or a private tenant, and you’d have similar experiences.

The only thing we don’t enjoy of this particular business is the lack of exit options, evicting a tenant with section 8 can be and it is a complete nightmare, it’s a hard and long process that takes a ton of money and gives nothing back since the HUD doesn’t really cover those things. Now, should you do section 8 for your rental? Perhaps yes, perhaps no, it all depends on what exactly you are looking for and what properties you have, sometimes it’s a good idea for your business, since you can work with a bit more rent that you would on average, but it’s also something that doesn’t give you other guarantees other than the fact that there will always be a tenant ready for you, and each month you’ll receive your rent (after those first 2 months of nothing, be patient, is coming), but other than that, you have to go over some inspections every year, which can be costly, not the inspection itself, since you don’t have to pay it, but the results it could bring, since you DO have to meet their needs.

Can you tell us a little bit more of your experience with section 8? Was it good, bad, regular? Would you go into it blindly or never do it? Let us know in the comments below.