Questions on Section 8

General Real Estate Investing
1

Hey Guys,

I got a little bit of cash to throw down on an investment property, and I’ve found a triplex that’s selling for 124k. I thought I’d offer 100k.

There’s currently 2 of the places being filled. They are paying $650 each, and the front floor is currently vacant. The catch is that they are all Section 8 properties. If I do the math and get someone filled in on the first floor I’m looking at around $1000 cash positive a month. However I don’t know much about section 8.

This would be my first investment property, and I would have a property management company to run the place. It’s a rather scary neighborhood. Is there anything I should know before proceeding?

Thanks

2

Here in texas you have to register and take a seminar on owning a section 8 property. On the bright side of things…section 8 will direct deposit your rent money automatically at the beginning of the month. So you will never have to deal with tenants being late on their rent.

3

Christopher,

Not exactly. Section 8 normally only pays a portion of the tenant’s rent, with the tenant being responsible for the balance. Section 8 does send the money directly to the landlord, but the landlord still has to collect the balance from the tenant.

In my experience, Section 8 tenants are no different than any other tenants. They have the same troubles; they commit the same crimes; they are just as irresponsible in paying their portion of the rent; and they must be evicted with the same regularity. Always screen them just as you would any other tenant.

Mike

4

Not all Section 8 tenants have to pay a portion of the rent.
It just depends on the particular program. Some don’t have a portion to pay and you must remember to price your unit to the max allowed for your state under Sec 8 rules.

5

Property,

You are correct in what you said. I was assuming that the rent would be the section 8 max for the area.

6

section 8 works well in my experience. you get to screen your tenants, you must pass inspection on the property and sec 8 pays a portion of the agreed rent which is usually on the high end.

pro’s
sec 8’s portion is directly deposited
tenant turnover is lower (tenant can stay up to seven yrs)
rent on the high end
you are providing affordable housing for the lower income

cons
section 8 inspectors are fine toothed combed
inspections are rarely passed in the first outing

true sec 8 tenants are no different than any others.
dun -deel

7

Pulsescan,

It is true that not all section 8 tenants have to pay a portion of the rent. It is true that the majority (vast majority) of tenants must pay a portion. That does not depend on a “particular program”. Section 8 is a federal program with regulations that apply throughout the United States, although there are slight variations in interpretation and enforcement from one housing office to the next.

Dun-deel,

Section 8 rents are not on the high end. In fact, by federal regulation, they must be no higher than the 40th percentile for each authority. Therefore, Section 8 rents are by definition in the lower half of rents. The objective of the Section 8 program is to provide safe, clean housing for their clients, not to provide housing superior to the paying public.

There are variances in the way programs are administered (although there aren’t supposed to be). A strict inspector is a problem in your local area. There is a very simple list of items that have to be accomplished to pass the Section 8 inspection. I currently have quite a few (15-20) Section 8 tenants and have never failed to pass the inspection on the first try. I just inspect my unit with the same checklist the inspector uses. As they say in the military - attention to detail.

Mike

8

section 8 means section 1 was to hard,secion 2 was too expensive,section 3 was too clean,section 4 was too into crimewatch,section 5 was too close to the nice area,section 6 was too strict on its rules,section 7 was too small to hold all my junk, Heck looks like section 8 is our only option.Ha and look we dont have to work either , the govt will pay all our rent if I can convince them that my daily trip to the liquor store is a routine looking for a job. :banghead: …and thats all I have to say about that.

9

Well, at least you’re objective and not bitter…yet.

:rotate:

Keith

10

When we first bought one of our properties we had 2 sec 8 tenants. For us the rent was on the high end. The tenants only paid $7 and $36 for their share.

We did NOT like the yearly inspection and all the BS fixes to get them passed. It was rediculous some of the things sec 8 wanted us to do so the tenant would pass. Here is an example- they wanted US to clean window ceils because they were dirty, repalce screens because of little holes (holes less then 1/2 the size of a dime) (holes the TENANT caused), the kitchen sink was chipped so WE had to repair it or they would fail inspection, A tag on the waterheater release valve was missing so they would be failed (the 2 tenants would pass the tag back and forth with each other so they would pass, they made us paint every couple years ( I didn’t have to paint for my other long term tenants). AND if the landlord doesn’t do their part, sec8 will WITHHOLD the rent!!! Mind you, all the repairs and such are things the tenants have destroyed!! Anyway, I know they changed their rule to make it more landlord friendly but we finally gave the last sec 8 tenant notice to move when sec 8 wouldn’t approve a $50 rent increase. The rent for the area was still at least $150 on the low side after the increase. Sec8 wanted ME to call other owners in the area and get them to write a letter of how much rent THEY charge and the adddress of THEIR property. Would YOU give that kind of info to a stranger calling, a signed statement. AND how am I supposed to get all the phone #s to all the owners in the area. REDICULIOUS!!!

That was another thing, the notice to move. At the time regular tenants had to be given a 60 notice to move but with sec8 we had to give a 90 day notice to move. WHICH was actually a 120 day notice to move because we gave her a notice after the 1st of the month.

Personally, we will NEVER take section 8 again. You probably could have guessed that from my response though ::slight_smile:

One more thing, we would never buy a property in a “bad” area management or not.

11

My section 8 experience is great. Tenants, inspection and agency,all great. Sect 8 program participants don’t hold the market on problems.

It appears a lot of people have a problem with people who benefit directly from ‘entitlements’. I think that’s where the attitude comes from.

12
It appears a lot of people have a problem with people who benefit directly from 'entitlements'. I think that's where the attitude comes from.

Count me in that group!!!

Mike

13

Well, depending on the area you live in, all section 8 is routed through a local continuum of care. find out how your local area works.

some areas section 8 housing is much more involved, other areas, has a much more laid back approach. most, i guess, have a very strict adherance to codes and the like.

it’s a double-edged sword, some section 8 pick up the whole tab - other the clients/tenants are left to pay a portion.

when tenants don’t have to pay anything, it’s a complete gravy train.

when they have to pay a portion, they have monetary stake in their living space (they’re paying for it)

either way, check the local continuum’s to find out HOW TOUGH THEY ARE ON THEIR SECTION 8 CLIENTS. If they hold them to a standard and hold their feet to the fire, ie. you don’t pay your portion, you lose your section 8! well then that’s a better section 8 area to run a property in.

also, check out family sufficiency programs…

i know i am, there the family, usually a single mother, is trying very hard to get on her feet. she will faulter here and there, but generally, i think they take much more pride in paying their rent, and they have to impress their case worker - who makes home visits, so it can be a better situation.

funny, i may sound like i know what i’m talking about, but i don’t even own a property…i’ve just worked with Section 8 and Family Sufficiency clients and case coordinators before. Plus i’ve called a bunch of continuum’s - it’s amazing what you can learn. call em, people there are generally, very helpful - ask to speak to a case coordinator/manager - they’re even more helpful!

in the end, it’s about money, but if you can help people out - you are the better for it! i’m not into hand outs, and i don’t like the mentality of dependence - but bottom line is, if you’re helping out, and making some money at the same time…well then - it is good.

:wink:

14

TMCG,

Actually, it was obvious to me that you don’t have any Section 8 tenants (without you having to say so). In my experience, Section 8 tenants are not trying “very hard to get on their feet”. In fact, just the opposite - they’re not trying to get on their feet at all! Most Section 8 tenants are stuck in the lowest class of society and have neither the desire nor the skills to ever improve. They are content to live off the fruits of others (the taxpayers). As long as the taxpayers provide them a place to stay and enough money to buy cigarettes and beer - they are happy. The socialistic leftists in our country have so ingrained an entitlement mentality on these people that they will never be able to move out of poverty. Foremost among these socialists are the “leaders” in the black community (like Jesse Jackson) who have destroyed the American dream for an entire generation of young black Americans. With the exception of Bill Cosby, nearly every black leader has fostered this harmful entitlement mentality for their own selfish purposes. Shame on them!!!

You describe Section 8 tenants having pride in paying their rent. I have not seen this. In fact, for the most part, I have not seen pride in anything they do. Many live in filth and have absolutely no discipline (for themselves or their children). Their entire life is based on living on my tax dollars and they have no desire to change that. Worst of all is that they pass this “lifestyle” on to their children, which are the next generation of entitled victims.

It makes me sick!

Finally, it’s ALL ABOUT THE MONEY! I certainly wouldn’t operate a rental business to be helpful or for charitable purposes - it’s too much work. It’s much easier to help at a soup kitchen or volunteer at church than to deal with tenants.

Sorry to be blunt!

Mike

15

Hey,

Thats what we like about you Mike. We never have to wonder what you really think. :wink:

DB

16
17

Quote from: propertymanager on Sat. May 06, 2006, 06:05 PM

Property Manager, I thought the forum was for real estate questions and answers, but in looking at your post to me it almost came off with a little bit of hate mail to it. But I’m a big boy so I can handle it and if the moderators are cool with it, I guess it is what it is…As far as the validity of your post and you opinions on section 8, I beg to differ… I, unlike TMCG , who seems like a caring individual, have had section 8 tenants since I was 22 and it most cases they worked out find. They occassionally would be a pain in my but but so would my conventional tenants…no more no less… And in most cases the people were trying to get on their feet. But I suppose that could just be my experience, so i won’t pass it on as absolute.

As far as “them” being in the lowest class of society, well I guess you hit that one on the head but it would seem to make sense that the " “economically poorer people” are the ones that need help. Duhh… As far as not having the skillset, it would seem as though you went out and tested “these people” on their proficieny in Microsoft Office, Linux, Autobody, and Craftmanship. How did you find all the free time in between deals??

I mean cmon, the places “these people” are living in aren’t nice subdivisions…They are apartments with the basic necessities that are clean enough to pass a Section 8 inspection…no granite, no marble and no 42inch cabinets…So the place that I (a taxpayer) is helping to foot the bill for is I guess one of the things that comes with being a citizen…We get the good and the bad right…We pay for housing for the poor, as well as billions for a war in which the poor, who weren’t down right lucky enouugh to secure that luxurious section 8 voucher, signed up to go and fight for…Good thing is when they come back Section 8 will be waiting for them and their skillset with a little Malt Liqueur

And as far as taking a shot at “leaders in the black community”, on a Real Estate Investment Board, propert manger, with 400+ posts you couldn’t possbily think that was appropriate…I would hope that you at least thought 2x’s about it before you posted it, but in looking at the tone of the post looks like you started typing and just let it ride…

The American Dream has not died for a generaton of black people.Ask my sister who’s a highschool sr and got a full scholarship to the best shools in the Big Ten as well as an Ivy league school ! Or ask her mentor another black female (Harvard MedSchool Graduate w/ her twin)!!. If you don’t believe me and really think that the dream has died and I have made up this info, feel free to make a wager… We can bet 50 and “I’m not talking dollars b/c I got some doe with me”. And I am assuming that just as TMCG has never had a section 8 tenant, you aren’t black and don’t associate with many black people (without you having to say so either) b/c of the way in which you articulate your thoughts.

There is section 8 in Iowa, Utah, Wyoming, North Dakota and a ton of the other states where “those people”(Seems like the code word for black in your post) make up a small amount of the population and small amount of the Section 8 voucher holders. Even NON “those people” benefit from the program b/c income level is the common denominator, not ethnicity.

Property Manager have you really seen many of them living in filth? And their children too ? Or are you generalizing and using “COPS” as a reference point?

Section 8 has it’s good and bad points, don’t let the boogeymen on the posts spook you about “those people” or the other groups of people on the Section 8 program…Some tenants are good, and some are bad. If you make it past the inspection, your purple check will show up on the first of the month every month w/ no delay…If they drag their feet on their portion you give them a 5 day notice and call your local section 8 office and let them know… There is a very small number of people that have “stretched their skillset” to complete the Section 8 paperwork and go thru the entire process, that want to have the subsidized living taken away b/c they were a bad tenant, with no skillset, and loved to wake up in a filthy house with an ice cold 40 ounce, while plotting on a way to bounce their $14 portion of the rent…

P.S. I’m not the biggest Jesse Jackson fan but if he ever decides to run, I’ll burn my 1 vote on him…

Luxx

18
I, unlike TMCG , who seems like a caring individual, have had section 8 tenants since I was 22 and it most cases they worked out find. They occassionally would be a pain in my but but so would my conventional tenants..no more no less..

I agree completely. Section 8 tenants are no different from any other low income tenants - no better and no worse. I also agree that most of them work out fine, as do most non-section 8 tenants. However, most Section 8 tenants aren’t getting a hand-up, they’re getting a hand-out and have no desire to move on from that. Section 8 is the welfare of the 21st century.

Duhh.. As far as not having the skillset, it would seem as though you went out and tested "these people" on their proficieny in Microsoft Office, Linux, Autobody, and Craftmanship. How did you find all the free time in between deals??

No, I didn’t “test” any Section 8 tenants. If you’ve had Section 8 tenants or any other low income tenants, then you know exactly what I mean. Typically, low income tenants don’t work (or at least not more than a month at a time); they contain a high percentage of alcoholics; they spend their free time drinking and getting into trouble; and they have significant criminal records. Again, if you had any low income tenants - you would know that. Almost no reputable business would hire them.

There is section 8 in Iowa, Utah, Wyoming, North Dakota and a ton of the other states where "those people"(Seems like the code word for black in your post) make up a small amount of the population and small amount of the Section 8 voucher holders.

No, “those people” in my post clearly referred to low income tenants - not black people. It was not a code word (maybe you’ve been watching a little too much TV). I haven’t seen racism in years, except from a few black leaders on the liberal TV news. The black community has got to get over it and move on. Racism was a problem of the past - not the 21st century. Conflict between the upper and lower class is clearly the issue of the 21st century. The middle class is disappearing while the lower class and the upper class are growing. More and more people feel entitled to do nothing and get paid for it. Those of us that work are getting sick of paying for people to be lazy.

Does this all relate to REI? ABSOLUTELY! To be successful in REI, you must clearly understand the trends of our society. I believe that the future will be increasingly in subsidized housing as the wacko left continues to destroy our society. A disappearing middle class and increasing lower class means a hugh increase in low income rental demand in the future - exactly the business that I’m in.

So, on the one hand I think that the future looks bright for the rental business. On the other hand, I’m very disappointed that our society is creating an entire class of lazy people who expect the rest of us to pay for their lifestyle.

Property Manager have you really seen many of them living in filth? And their children too ? Or are you generalizing and using "COPS" as a reference point?

YES! I see people living in filth every day. In my experience, the majority of low income tenants live like pigs! Dirty dishes and uneaten food everywhere; empty beer cans strewn about; clothes strewn about; the inevitable roaches and mice - YES FILTH!!! Again, if you had low income tenants, you would know this.

Mike

19

Wow, this is turning into a socio-political type debate. I think the spirit of the original question was:

Would you reccommend renting to section 8 tenants. So how about a yes or no???

I say yes.

P.S. One of my Sect 8 tenants is a single mother of 2. She works full time and goes to college. Section 8 pays only 160.00 of her 750.00 a month rent and the balance is never late. She is graduating college with a degree this month.

Maybe I just pick better tenants. :slight_smile:

20

Jeff in CT, thank you for taking the time out to mention “your experience”, in regards to Section 8…I see it’s a touchy subject and I respect you for posting.

For the 2nd time property manager, I have had section 8 tenants and currently have them, I can provide you tenant ID numbers if you want to see them.

I’m sure I pay more taxes, because I know I make waaaayyyyy more money than you than and if I found out you were more successful than me, I would walk out into speeding traffic with a head full of regrets. If the taxes are killing you, close some more deals.

"I haven’t seen racism in years, except from a few black leaders on the liberal TV news. The black community has got to get over it and move on. Racism was a problem of the past - not the 21st century. "

This is one of the funniest but also one of the saddest quotes I’ve seen in years. Thanks for setting the record straight.

Out of respect to the forum I won’t comment anymore on this post. Obviously not the place for it.

Luxx
Luxx