I have investors that buy "blanket leases" and buy buildings that have entire Section 8 leases. They feel that their investment is better protected from the guaranteed income. It takes some effort to deal with format and goverment agencies but is well worth it long term.

My current client is in the process of converting his portfolio to Section 8 leasing in select markets. One thing to keep in mind will be your vacancy rate and the loss you are willing to take making the change.

Hope that helps.

Bill, make sure your security deposit is large enough to take care of any damage that might be left on the property... IE: if you allow cats, expect your section 8 tenants' units to smell of cat urine.

Not all section 8 tenants are bad, but they are more likely to not care about their surroundings.

I know people that LOVE Section 8

you just need to get with your local Section 8 office and let them screen with you

also - some areas allow landlord add-ons

I recommend it... $2-300/mo from the tenant and they're more likely to take it seriously

Hey bud

You're on the right track when it comes down to renting houses out Section 8. I have 6 rental properties that i went from lease purchase to just renting out... with section 8 if you have problems with tenants not paying their part, they would be kick off the program. so it has lot of advantages when come down to payments. one draw back i been seen, is the tenants seem to be more messy. they will leave your property in awful conditions... Make sure you get a security deposit larger enough to take care damages that might arise.. one thing i might do as well,is to inspect their current property before i bring them on as tenants... good luck

I want to know this:  what the heck took you so ling to start blogging?

Congrats on your First Featured Post Billy!!!  Though I am not currently in ownership of any investment properties, I look at it as though I were a lending entity.  For potential renter's I would not only do the credit & income checks....I would also ask for references for previous housing history (last 12 months).  HUD housing seems to be a nice fit to guarantee that residual income coming in.

My cousin had a section 8 tenant for a while. At first they were wonderful, even though the rent was a little below market.  But that changed about 8 months after he had bought the property. They literally let it go and he eventually had to evict. It put a sour taste in his mouth, but that can happen with any tenant. -Charles

As an agent in NY, you would think that I would be a pro at section 8.  I can not find any landlords who will accept the program.  I don't think that landlords know what to do #1, but also think that landlords shy away from the program because it is hard(er) to evict a tenant should they lose the program.  I am interested in hearing from agents also who know about Section 8. 

my investors like section 8 because the renters have motivation to take care of the place.

tear up a property and you are off the section 8 roll.

I have quite a bit of Section 8 experience.  It varies from jurisdiction to jurisdiction.  Kansas City is split into, Missouri and Kansas.  Within those two states are several different housing authorities I work with. All with slightly different rules.  All with slightly different expectations.  One I'll never work with again unless the whole management staff is fired.

Kansas City Housing Authority - aweful.

Independence Housing Authority - excellent.

Johnson County Housing Authority - very good.

I would ask around with some of the different landlords that have worked with the housing authority you are looking at.  Just like you would check out a tenant, check out your housing authority.  And of course you will know this, don't offer a 3 bedroom to Section 8 people for $400/mo while you are offering the same unit to "cash" renters at $350/mo.  That is a set up for trouble.

There are a lot of variables in deciding if Section 8 is right for you or not. Beyond the positives that have been pointed out there are also the negatives.

I have several clients who will not do section 8 housing. Reason is that there past history has shown a strong disregard for their property even though the units were in top condition when rented.

Hi Bill...congratulations on your featured blog.  I have had many section 8 tenants in the past and have found it worked well for me.  Naturally, I had to make some apartments "section 8 qualified", but that was not difficult and the fact that the tenant's rent is subsidized tended to mean that I got paid every month.  There were a few exceptions, but then those tenants lost their section 8 status and were quickly sent packing to find their own, unsubsidized, way.

Regards,

Jay Burnham, VP
Coldwell Banker Residential Brokerage
North Shore, Massachusetts 

I have also heard that Section 8 tenants are generally a good risk because if they get removed from the program for cause, it is next to impossible to get back on the program. 

Anyone have any experence with section 8 Housing in New Orleans? 

Wouldn't it be great to see Realtors and Investors help rebulid that city 

Bill... you and Tom bring up some good points. They do have a reason to pay their portion. And it cracks me up, those that think that they don't have to pay at all. I am sure some of these that act this way are the ones that find out that the renter is protected, harder to get them evicted. Well, just that it takes longer in some states.  

I myself have never had any experience with Section 8 housing. So I can't share anything else.

On another note, CONGRATS on your 1st featured post.

Couldn't resist. I am acquised by my wife of fixing up my rental units to perfection, well, I guess thats my standard, and I am telling you this to set the tone as to what we provide. I currently have sec 8 tenants and they are somewhat cluttered, but the payments as mentioned, are there each and every month. Some have been a pain in the u know what and most seasoned sec 8 know more about the law than u or I when it comes to tenants rights. You have the option to screen them and I recommend you do so. I had one who had a few cards short of a full deck and totally damaged my apartment as I tried in vain to oust him legally.

I found later he spent a liftime terorizing landlords and yet he was still on section eight. On the other hand, In renting on the open market you have no protection and you will meet a bunch of hombres with no government subsity. Yes the gov is stringent in there requirments, but that is the way it should be. Don't be afraid, but also check them out. There are good people who are victums of circumstances and need a place to live, just screen them and set the standards going in. Have a good future, and good luck./

I inherited a Section 8 tenant when I purchased one of my properties.   She was the worst.  She wanted to break the lease so she could move - she claimed health reasons (it was a second story unit, and she was having trouble doing stairs, so she claimed).  So I drove her to the Housing Authority so we could cancel the lease.  She had 4 months to vacate the unit.  Then, when the time came, she wouldn't leave.  She also turned me into the Housing Authority.  She wanted new windows in her entire unit.  I told her I would not put windows in for her, as she was supposed to already be gone.  Long story short, the Section 8 money stopped coming and she continued to live there.  She couldn't even pay me the $20 a month for her part of the rent.  I had to evict her though the court system, and she knew how to play the system.  The day before the Sherif was to set her out, she finally moved, and the place was trashed.  She even had the nerve to ask for the return of her security deposit.  The judge laughed at that one.  It was such a bad experience, I will never consider Section 8.  Positive side of the story;  I rehabbed the unit and am now receiving higher rent on that unit with great tenants. 

In New Orleans sec-8 is very big. You get $1100 for a 2 bedroom that you or I would not want to visit at nite. The tentants pay very little in most cases. I have a friend who interviews his clients and interviewed over forty to fill both sides of a double he bought for 92k and put 20k into it. He gets a great return. The tentants pay him $35 and the rest comes from the taxpayers. This happens to thousands here. My client bought one near the bus line and next to a prison so it was safe since criminals did not want to stay there. He liked getting older people who were disabled and would appreciate. He did not care if he got the $35, he would give it back to them to keep the place up or some cleaning. He would bring them a turkey twice a year and would make sure that they called him if things went wrong.  

When a city gets too many sec-8 renters its a curse from a macro view, but great when you meet and talk to the individuals who are in the program.   

HI, I can only comment from one experience that several people have already brought up.  I had a friend who was renting through Section 8 and had never been to her house until I knew her for about a year.  The place was a Mess (which is putting it nicely).  I finally asked her why it was in that condition and she said "It's not my place, why would I care"?  I'm sure that can happen with any renter but some people take pride in their surroundings whether they own or rent.  Good luck and congratulations on your feature!

I had an experience with a section 8 tenant, where she would not allow anyone to come and make repairs.Sec 8 goes annually to inspect and they went and gave us a list of things to repair.When it was not repaired, they withheld rent.After a couple of months we managed to get things fixed , but we lost the 1 months rent forever.At end of the year we were frustrated and put it onmarket for sale.The tenant wanted to continue to stay and section 8 said we cannot ask her to move , because what if the new buyer wants to rent it out.We tried to sell but because we could not guarantee possession, it did not sell.We were told only if we were going to move in there or our close family memeber, we could ask her to move.

Apart from this experience, we have had other tenants who have been good and we get the rent in the first week of the month.

I want to thank everyone who left a comment. Your thoughts, advice, and shared experiences are greatly appreciated and have convinced me that this is the right direction to go.

So Engleman, you stopped while on top?  I look forward to any post you put out there amigo, your writing acumen is rather impressive!

Bill,

I think you are definitely on the right track.

In the past, the Section 8 program was not well received by some property owners, mostly novice investors. Sure tenants damaged properties but I have seen properties badly damaged by non Section 8 tenants as well. The difference is that Section 8 will compensate you or repair any damage by tenants, just make sure you take pictures prior to each tenants move in date.

File the photos with notes so that you have documentation of the condition of the home prior to your tenant's move in date.

Many investors in Maryland depend on Section 8 tenants and the program because of the security the program provides the property owner (A constant pool of tenants and guaranteed rental payment). In addition, you are helping others that otherwise might be homeless or could not afford adequate housing.

In addition, remember, you can also ask for a yearly rate increase, so year after year you are increasing the ROI (Return on Investment), on you property.

Oh, by the way, I have had Section 8 tenants... some were difficult but the majority worked out just fine.

Best of Luck

Please remember, if you are renting homes in a subdivision occupied by other homeowners, they have to live in that neighborhood every day.  You don't.  They suffer the repercussions of bad tenants as well.  Theft, proerty value reduction, disrespectful section 8 occupants who don't care becasue they don't own the property.  Just be mindful of the other people that are affected by your tenents.

A while back (over a decade) I worked on Capitol Hill for a Congressman who had a LOT of upset consitutents, blaming Setion 8 for the decline in their neighborhood.  Of course, the program was not entirely to blame, however, we uncovered some provisions of the program that certainly did not help neighborhood stability. (Most of my info is old, and some may have changed in that time - please correct me if this is the case).

Rental rates paid to the owner are set based on geographic region.  For Philly, for example, it is based on the entire Philly metro area.  That means that the average rate for a 3 bedroom row home (standard stock) is set not just by the enighborhood it is in, but also by the average rental rate for a 3 bedroom in the uper class suburbs. 

Obviously this artificially inflates the rental rate for lower income areas, so Section 8 is a wise bet for property owners in those areas (they get more than they could simply renting it on their own.) 

When the market was flooded with middle class rowhomes for sale in traditionally middle class nighborhoods in NE Philly, they were bought by investors on the cheap and many were turned into Section 8 rentals. (So the neighbors had some degree of validity to their complaint).

However, this same phenomenon (glut of homes, low prices) also attracted new homeOWNERS from these lower income nighborhoods as well, who were buying as a result of the depressed prices. 

Section 8 in Philly is poorly run by the Housing Authority.  They have 11 inspectors who are supossed to perform annual inspections on over 11,000 properties, in addition to follow up to see if appropriate repairs have been made, investigation of complaints, etc.  The math, obviously makes doing an effective job impossible. 

I agree with the person who said the program is as good as the local enforcement and implementation.  For property owners, it is undoubtedly a success in many instances.

Hello Bill -

I've been snooping through your posts.  Good stuff. 

As much as I would love to support the idea of Section 8, I would be wary of what kind of funding (present and future) your local government might have just in case things go a wry as they did for my friend as I posted here.  Her cost to cure is $20k to $40k with no assistance.  I hope that your experience is better.