All Forum Posts by: Jennifer Donley

@Bassim Audi how exciting!  I would echo what the others have said and add a few more things.  I have a portfolio of Section 8 rentals in the St. Louis area. I've bought 14 tenant occupied properties over the last 18 months, about half had Section 8 tenants. 

First, I'd ask for the current HAP contract or most recent Notice of Change for every unit.  That's the documentation from the Housing Authority that lays out how much the tenant pays and how much the Housing Authority pays.  It will also tell you when the annual recertification is for the unit/tenant, which may tell you when an increase can be requested (it would here, see below, but may be different there). Then I'd ask for a ledger for the last 12 months for each unit for the HA portion and the tenant portion.

Next, I'd try to find a local landlord who has been successful with Section 8 in the area that you're buying.  There are more Section 8 horror stories out there than success stories in my experience but it can be done well, so don't listen to the naysayers.  I'd ask that person what rents they're getting as well as some tips, tricks, info on working with your Housing Authority.  Every HA operates differently so they each have little nuances that can be learned and utilized to your benefit.

Here we can only submit for a rent increase 60 to 90 days prior to the annual HAP contract renewal and if we miss that window, we have to wait until the next year.  I never miss this window, btw!  

I have found that my Section 8 tenants have been fine during COVID because if their income situation changes due to job changes or loss, they simply submit new income paperwork to their caseworker and the portion of the rent that they pay is adjusted accordingly.  I am currently owed $0 in past due rent!

I do increase rents on my Section 8 properties to market rents even with existing tenants.  It hasn't generally negatively affected how much the tenants pay in rent (the tenant portion).  I also haven't had issues with existing Section 8 tenants leaving over rent increases.

Lastly, I've found that the tenants expect some changes with a new owner and depending on the last owner, may welcome it, including a signed lease because it makes it very clear who's responsible for what and leaves no gray area.  If there's repairs that need to be made, we give them a list of the repairs we're going to make and on what timeline and then we do it.  That has helped tenants to know that we will do what we say we'll do, including sticking to the terms of the lease.  Again, my experience with this has been almost completely positive.

Let me know if I can help further and good luck!

@Bryce Bicksler, I bought a package of 12 rented properties in May 2019, half had Section 8 tenants.  The purchase prices were higher and so were the rents (than what you're buying) but they were all in less than pristine condition.  They're in C areas.

I have spent the last 18 months since purchase getting rid of bad tenants and rehabbing these houses as they've come vacant.  It's taken a lot of cash so I've sold 2 along the way to keep paying for the rehabs.

My experience has been that the quality of the product will determine the qualify of tenant you attract.  So my approach has been that I want to end up with one of the nicest houses in the neighborhood, which has allowed me to attract great tenants who take good care of the properties and are easy to do business with.  I also only take Section 8 tenants now.

Anything can be done so this may or not be a good deal with you, depending on your cash reserves and how you want to spend your time over the next few years.  Do you want to be dealing with rehabs, lots of maintenance, lots of tenant management, turnovers, etc.  If so, you may be fine.  If you want this investment to be more passive, you may not be.

@Ryan Sullivan, I'm in St. Louis.   The state is landlord friendly but our sheriffs have stopped executing evictions.  Given the CDC's recent mandate though, any tenant can claim eviction would make them homeless and avoid eviction until the mandate is lifted.

I have 26 properties with Section 8 tenants and am currently owed $0 in past due rent. Obviously the Section 8 portion is being paid but my tenants are paying their portion too.  Done right, I think this niche is the most stable & profitable way to invest in rental properties.  Especially right now.

@Anthony Watkins- I’m with David. I only have Section 8 tenants. I have 26 units and not a single dollar in rent is past due.

I think Section 8 has always been one of the most stable and profitable niches when done right. IMO, that’s truer now more than ever.

@Sami Gren I would probably just do a lease amendment once you have the new amount for February. In the amendment, I’d include the new rent amount and new lease dates (I’d use the February dates since that’s when the Section 8 renews.

I’d call and discuss it with the tenant before sending of course.

@Hank Walter I don't think you can do a 2 year lease w Section 8 tenants.  At least, we can't here.  The lease dates have to be the same as the HAP contract dates, which are always for a year initially.  You may be able to do a longer lease after the initial 1 year term.

@Robert Fink Yes my Section 8 rents are higher.  I watch this closely and keep it on a spreadsheet!   My rents are 10 percent above what Zillow says they should be and 8% above the Rentometer average.  

I also don't include any utilities in my rents - all utilities are either in the tenant's name or we bill them forward (there are a couple utilities here that have to stay in the property owner's name).  

I let the tenants know this will be the case before I approve them so there aren't surprises at lease signing.

Hi Gary, I have a portfolio of 26 Section 8 properties in the St. Louis area and love it.  It's now the only thing I do.  Here are my experiences.

My properties are all in B and C class areas.  I love Section 8 for all the reasons stated above and a few more - the demand for Section 8 housing is very high and the supply is low (at least it is here and I hear this is the case elsewhere too). If you add on 1 more qualifier - supply of quality housing - the supply is very low.  

So my strategy is to provide one of the nicest units in the neighborhood.  I don't go crazy but the units have modern colors, a relatively updated kitchen and is very clean.  Doing this means I get a lot of interest quickly - the last unit I put out for rent had 30 showings and 13 applications in 4 days.  Then I screen meticulously (as I would for market tenants too), pick the best applicant, and I do a home visit as the last piece of the screening process (again, would do this if I took market tenants too).  

In my areas, I get 5 to 10 percent more in rent than I would from market tenants. I don't know how that will play out where you are but it's not uncommon to get more from Section 8 than from market rents.

Lastly, I have made it my mission to understand the rules & processes of my local housing authorities (I deal with 2 here) so that I can maximize rents and ensure good lease compliance from tenants.

I am currently owed $0 in past due rent (including the tenant portion) and my tenants are taking good care of their properties and are easy to work with.  

I think every Housing Authority operates a little differently but ours here don't take 3 months to start payments.  Usually within 30 days of move in, we get our first payment and it's clockwork from there.  Knowing the steps of the process so knowing how/when to follow up has helped me here.

Hi Robert, I can't help you with item 1 but I will be happy to share my experience with 2 and 3.  I own a portfolio of strictly Section 8 properties in St. Louis, MO.

Here, 4 bedrooms are in extremely high demand.  There are so few units with 4 bedrooms that voucher holders with a 4 bedroom voucher absolutely jump on any listings they with 4 bedrooms that will take their voucher.  

Which takes me to your question 3 - again, I'm speaking from my experience and here, all Section 8 properties are in high demand. Especially units that are higher quality.  That gap allows me to be very choosy when it comes to picking a tenant.  I screen meticulously (I would if I had market tenants too) but in doing so have been able to find wonderful tenants.  They take care of their properties, they're easy to work with and they pay their rent portion and utilities on time (I'm actually owed $0 right now from anyone).

Good luck, I love the Section 8 niche!

@Vyacheslav Borodkin I have a portfolio of 26 Section 8 properties in the St Louis area and love the niche.  It is all I do.

I love it for 5 reasons - Guaranteed rent, Higher rents than market rents (in my areas - B & C neighborhoods), long tenancies, the rules of Section 8 which allow me to get higher rents & ensure good lease compliance, and the supply/demand gap, which allows me to attract great tenants quickly.

As the others indicated, your local PHA will operate on somewhat of its own terms so while the general set up will be the same from one to the next, there will be some differences. I'd recommend trying to find a landlord who is successful with Section 8 in your area as well as contacting the local PHA. They can assist you with determining how much you can expect to get in rent. You can also look into the "fair market rent" set by HUD for your area to help you figure this number out but that may or may not help, depending on what area/asset class you're in and how your PHA sets rents.

I know another person said you could ask for more than the approved rent and collect the difference from the tenant, but that is actually illegal and violates the terms of the Housing Authority's contract, so I would strongly advise against that.

You can find amazing tenants if you screen thoroughly. Given the pandemic and potential for ongoing eviction moratoriums, I'm thrilled I have Section 8 tenants, as I am owed $0 in rent right now.

Feel free to reach out if I can help further.