I notice a lot of posters here own Sec. 8 properties. Why? (I’m a total novice, so sorry for the ignorant question) Is it due to the lower entry point? Are there advantages that compensate for what I would imagine are HUGE headaches that come from owning and renting this type of property? Personal preference(a niche, if you will)? I always thought it would be better to have a hotel on Park Place than a lot of little houses on Baltic Ave.
Thanks, and sorry again for the ‘duh’ question.
Michael
Why?? Don’t you think the FIRST and most IMPORTANT order of the rental business is getting your rent like clockwork from the most creditworthy customers.
You get rent checks like clockwork from the govenment in section 8, and who’s more creditworthy than the Federal govenment. And you get the rent even if the tenant is out of work, sitting home all day watching TV.
Personally, I looked into doing section 8, but didn’t care for the area that I have to work in or the type of tenants I’ll have to deal with, especially here in the northeast. In some areas, section 8 tenants can be very nice people just fallen on hard times.
We screen sections 8 tenants thoroughly like the rest of our tenants and have a lot of success with the program. Get good tenants and guaranteed payment of rent.
I have two properties that are section 8. The other posters were correct in saying the number 1 thing is getting rent every month. Section 8 always pays, even if the tenant loses their job.
The only bad thing is that a Section 8 inspector has to inspect your property every year. You then have to fix anything they find. Things like 1 smoke detector per floor, broken windows, etc. These are things that should be fixed and brought up to code anyways.
Well, guaranteed rent is a bit of a stretch. Section 8 normally only pays a portion of the rent and the tenant pays the rest. The only portion of the rent that is “guaranteed” is the Section 8 portion. Even that is not guaranteed.
Section 8 tenants are just as likely as any other tenants to mess up. I am evicting one this month. She had no criminal record when we accepted her as a tenant, but is now doing drugs including herion. I’ve also had section 8 tenants leave during their lease term because they wanted to shack up with a new boyfriend and for a variety of other reasons.
Guaranteed rent? Not hardly!
Mike
There is nothing in real estate that is 100% guaranted, but section 8 is by far the most likely to pay rent every month. There are headaches with every property, and section 8 doesn’t guarantee to eliminate those headaches. But if the tenant does not pay their portion of rent then you can call section 8 and they will suspend them until they pay you.
For example I have a tenant who gets $503 from section 8 and pays $337 out of their own pocket. If they don’t pay and I evict them, they will not receive section 8 assistence until they pay me the owed rent. So going from $358 to having to pay $840 is scary for most of them. But there are some who just to care and will screw you over no matter what.
You are right in that there are headaches with tenants, but the Section 8 part does guarantee a portion of rent will always be paid, and it gives you a little more leverage on the tenant.
So in the end Section 8 does eliminate the tenants use of drugs or damage to property, but it does at least guarantee if the tenant doesn’t pay you can at least count on a portion of the rent paid.
You wouldn’t really accept only $503 for an $840 rental, would you? If my tenants don’t pay their portion of the rent, I evict them.
Mike
I guess what I’m trying to get across about section 8 is that it doesn’t guarantee that tenants won’t do drugs or distroy property, or even pay their part of the rent. But it does at least guarantee you will get the part of the rent that section 8 pays.
So section 8 isn’t the answer to all problems, but it does help. I can eat a $300 a month loss for a few months until I get a court order to remove the dead beats. But I can’t afford an $840 a month loss for a few months until I remove a tenant through a court order.
One tenant I had paid $35 a month and section 8 paid about $509 a month. She stopped paying so I went through all the process of evicting her. I never told section 8 she wasn’t paying so I keeped getting rent from section 8 all the way up until she was removed. The few months it took to get her out only cost me $35 a month. But if this was a non-section 8 apartment I would have lost the full $544 a month. $544 a month for 3-4 months is a couple of thousand dollars vs. a couple of hundred.
Iron Range,
What state are you in? In most states, you can not evict someone for non-payment of rent if you have received partial rent. Therefore, you can not keep receiving Section 8 and do the eviction process at the same time. I have done a lot of evictions and the magistrate always asks when I last received rent. If you receive ANY rent during the period that you are claiming non-payment, the eviction is dismissed and you must refile.
Mike
Seeing all the comments here, one point I didn’t see mention is if an area is heavily “section 8”, regular renters would avoid the area, so you’re stuck with mainly section 8 tenants renting there.
When my sister’s husband passed away, she needed some assistance, and wound up on “section 8” There was a beautiful complex of building where she lived in, but up close, only the one she lives in has a security guard out front. adults and children congregating outside, noisy, plus graffitti. Neighboring buildings by contrast are quiet and clean by comparison.
She mentioned people with assistance are all channeled to that one building so building management can keep an eye on things.
After here daugher got married, her husband became a contractor and made a good living rehabbing units when section 8 tenants vacate. He says on at least half of them, he does a major overhaul, even new kitchens, or a new bathroom that he was showing me.
Which is why I paid a little more on properties I buy, maybe does not cash flow that well up front, but long term, I avoid many of the issues, and get paid more than one months security to boot.
9 out of 10 times an eviction will never end up going to court. The tenant will know they have used up their landlord and just leave. But the time period for that to happen takes several months. During those months you will receive section 8 rent. If the tenant will not leave the property then you would have to stop all rent and go to court. But that is not common, most of the times a dead beat tenant will know they have used up all the resource they can and move on to the next victim. People who are both poor and scum bags like to stay under the radar, they don’t want to get the ''Man" involved.
Iron Range,
Clearly you don’t have many rentals and haven’t been doing this long. I wish that 9 out of 10 times an eviction never even went to court. The truth is, if it doesn’t go to court, it is NOT an eviction. Tenants do not care if they’ve “used up their landlord”. Most deadbeats would live in your unit forever if they don’t have to pay rent. Most successful landlords start the eviction process on any tenant the day after the rent is late. Poor scumbags don’t care about staying under the radar and it does not bother them one bit to go to court and explain to the magistrate what a victim they are. I don’t know where you came up with your information, but it is not correct.
Again, what state are you in? I don’t know of any state where it takes several months to make it to court. Are you just making this stuff up?
Mike
I invest in the Iron Range of Minnesota. Like most of your posts you have nothing of substance to say. Most of the time if a tenant is not paying they will leave without having to go to a court and get a court order and have the police remove them. If you didn’t let deadbeats into your place then you wouldn’t have so many problems. It sounds like your the one who is burned out with real estate. Perhaps you should be doing something else if this is so horrible for you.
p.s. if you want to be an ass then go to a different site. People here are like me and our looking for Q&A not negativity.
Iron Range,
I’m not trying to be negative, just accurate.
Almost everything you said is factually incorrect.
- Section 8 rent is not guaranteed. The tenants can do a bunch of things to cause Section
8 terminate their eligibility. - Section 8 tenants are not better than any others.
- You have not evicted someone, if they don’t go to court.
- It does not take several months to go to court in the vast majority of the US.
- Most tenants that refuse to pay will not leave voluntarily.
If you are going to post, then at least try to be accurate.
Mike
- You are just twisting words. Section 8 will pay rent every month. It is obvious that there are ways for a tenant’s benefits to be terminated. What is your point?
- What is your point in #2? We’re not talking about tenants we’re talking about section 8.
- Just because you didn’t go to court doesn’t mean that they weren’t kicked out do to none pmt of rent. Don’t play dumb.
- What is your point? Again talking about nothing.
- Most tenants who fall behind on their rent will leave before a court order is needed and the police are called out. Maybe you need to do more research on your tenants before you let all these deadbeats you seem to have into your place.
The benefit in having section 8 is that part of the rent is always paid on time. It obviously doesn’t guarantee good tenants, because that is your job. Its your job to find and research tenants.
Iron Range,
I’ll try this one last time and then you can have the last word.
Section 8 tenants are no different from any other low income tenants. They do all the same stupid things that any other tenants do and in about the same proportions. Low income tenants frequently do not act rationally, that is exactly why they are low income tenants. In almost every case, they repeatedly make poor choices in their lives. Most of these people are not upwardly mobile and will always be low income.
You should screen every tenant and we do. In fact, we do a very thorough screening. The fact is that a lot of Section 8 tenants are single females with multiple children, usually by different men. (Some of the bad choices I was talking about). However, whether they are male or female, the common thread is that most are relatively young and make bad choices.
We only take tenants that have no felonies AND not more than 2 misdemeanors AND no drugs. It is pointless to screen Section 8 tenants with a credit score, because they all have terrible credit. We do not accept anyone that has been evicted in the past five years or had their utilities shut off in the last year.
None of this differs whether the tenant is self-pay or Section 8. Once the tenants are in our rental, approximately 90% are good tenants. Whether they are self-pay or Section 8, they cause no problems and we get paid on time. An additional 9% have some issues that we must deal with, but they pay their rent. On average, we evict 1% per month, almost always for non-payment of rent. These percentages are almost exactly the same whether the tenant is self-pay or Section 8.
Whether the tenant is Section 8 or not, your payment is “guaranteed” by your lease (and the Tenancy Addendum for Section 8 tenants). However, what does “guaranteed” mean? It means that you will receive your rent if the tenant follows the lease. In either case, if the tenant does not follow the lease, you may not get your rent.
In one of your earlier posts you said:
One tenant I had paid $35 a month and section 8 paid about $509 a month. She stopped paying so I went through all the process of evicting her. I never told section 8 she wasn't paying so I keeped getting rent from section 8 all the way up until she was removed. The few months it took to get her out only cost me $35 a month. But if this was a non-section 8 apartment I would have lost the full $544 a month. $544 a month for 3-4 months is a couple of thousand dollars vs. a couple of hundred.
This is a blantant violation of the agreement that you signed with Section 8. You can NOT do this without risking losing your Section 8 eligibility as a landlord. In addition, Section 8 could demand repayment of the rent that you received as a result of your violation of your contract. Here is what the contract you signed required (paragraph 8 f):
“The owner MUST give the PHA a copy of any owner eviction notice at the same time the owner notifies the tenant”.
So, not telling Section 8 that the tenant isn’t paying their portion is a violation of YOUR agreement. If you only have two rentals, you might be willing to risk violating your HAP contract, but I have a bunch of Section 8 rentals and will not lose a sizeable part of my business to do things in a shady manner. In addition, there is just no reason to do things wrong. You might be able to get away with this non-sense for a while, but that won’t go on forever.
Are rents guaranteed from Section 8? No. Will they pay as long as the tenant (and the landlord) follow their agreements? Yes.
Are the payments guaranteed for non-Section 8 tenants? No. Will they pay as long as the tenant follows their agreement? Yes.
In either case, if the tenant decides not to pay or to otherwise violates the lease, the rent will stop - one way or another.
An eviction is a legal proceeding - simple. If someone leaves without a legal proceeding, You did NOT evict them.
You claimed that it takes several months to go to court. That is simply wrong in the vast majority of the US.
Most tenants who do not pay rent will not leave voluntarily. That is simply incorrect. You will realize this as your portfolio grows and you gain more experience.
Mike
I’m going to step back in the middle of this discussion and say I still don’t see, at least, a reason to go out and actively pursue Section 8 housing. If it all comes down to screening, then what’s the difference? And it sounds like many Sec. 8 tenants are unstable financially, so the chances of them having unforseen problems submitting rent would be higher, plus it’s been said low-income tenants may not care for the property in the most desirable way.
A good deal is a good deal, but when comparing, say a 3/2 single family in a nice neighborhood that cash flows the same as four sec. 8’s, it just seems to me that the 3/2 would be the way to go. Also, and this may be presumptuous, but a family in the nicer neighborhood may want to do anything they can to not have their belongings thrown out onto the curb, whereas sec. 8 may not care so much what the neighbors think, and how it will affect their future financial standing and upward mobility. Am I missing something? Is it that nicer homes that offer a good cash flow are just more scarce than sec. 8’s coming on the market? Sorry for the ignorance; I’m just trying to wrap my head around this as I start out in search of properties.
Lucy,
Everything you said is correct. There is only one reason to pursue Section 8 tenants - to fill rentals. If I could find enough self-pay tenants to fill all of my units, I would not accept Section 8. However, our rental market is marginal (but improving slightly) and accepting Section 8 tenants helps to fill units.
Lower income rentals also give you a little better bang for your investment buck (although this is at the expense of dealing with tenants who are a LOT worse). As you move into relatively more expensive houses in any given market (possibly except NYC), there is lower cash flow in proportion to the investment. Additionally, as you move up the food chain, a smaller percentage of the population are renting.
In short, you’ve got it exactly right.
Mike
Q: What happens if your properties are located in a town that has no housing authority (and, thus, no section 8 housing office)? Can you still get S8 tenants in on a county, region, state level?
Thanks Mike-that’s the idea I was looking for, and for some reason I couldn’t get it through my head that renting out higher end houses would be trickier than low-end units due to socio-economic factors in most cities.
I just moved from a very affluent place (except for me) that really had no low-end housing, and since it wasn’t uncommon to be able to rent an ‘executive’ home with little trouble I had a hard time remembering the normal market. But I just moved to a much more diverse city, for which the situation described fits. Anyone who can pay 1500+/mo to rent a house could probably just buy one soon enough and there isn’t as large a market for high-end temporary housing, whereas the market and tenant pool for low end rentals is greater due to their financial situation and the choices that led them there. Duh. Got it, finally. I don’t know why I had trouble seeing that!
Thanks! 