Hi
Brand new guy here. Has anybody had any dealings with Section 8 housing? Is it next to impossible to collect from Uncle Sam?
Just browsing ads and found a couple of properties that appeared to have GREAT cash flow but seems to fall into the “too good to be true” category.
Thanks for any info
other posts on here that will give you a lot more info on this. I have S8 units. One of the best things about them is your payment comes like clockwork. there is no collecting. the important thing is to find out how much of the rent S8 is paying. Often times it is 100%, sometimes it is very little, in which case you have to collect the tenant portion yourself. The other good thing about S8 properties is the tenants normally won’t tear your property up too bad. If an S8 tenant destroys your property and gets evicted (or evicted for any other reason), they will lose their S8. The low income people you are dealing w/ are generally smart enough to not want to lose free rent. The negative to S8 is you get an inspection once a year, and at least in my area, no matter how nice you keep your properties, they ALWAYS fail you the first time. It ends up costing you 5-500.00 or more and a few hours of your time every year, but overall, a small price to pay.
S8 also puts out their own available housing list each month, so you also get free advertising when you have a vacancy.
Good Luck.
Buckeyes is right!
I’ve had several Sec 8 tenants, and I’ve had all the way from GREAT tenants to horrible tenants, the same with non-Sec 8 tenants.
And the annual inspection is for safety, which I can agree with, if the carpet is dirty when they come to inspect, the inspector tells the tenant to get it cleaned before the comeback. And they do it! They don’t want to lose the entitlement.
And if they trash to house on the way out, that exceeds the deposit, you notify the housing authority, and they’ll be removed from the program… just like that. The government won’t pay for the damage, but they will make sure the tenant never is on the program again.
If they don’t pay their “tenant portion” of the rent, just let the tenant know that they’ve got 3 days before you report them to the housing authority, and that rent will show up, otherwise they’ll be kicked off the program.
If you’re really considering taking on Sec 8 tenants, go speak with one of the couselors at the housing authority, and they’ll be happy to discuss the issues with you as a landlord. I learned allot speaking with them.
Good Luck!
Kirk
Good topic, I also have a small question. Does anybody know how much of the rent Uncle Sam pays for. I hear that the amount depends on the bedrooms and the features the unit has, is that true?
I also hear that Uncle Sam caps the contribution of a S8 tenant when it comes to rent. Also does S8 utilizes the FMR tables in determining the amount the tenant will contribute. Any info is helpful.
Thanks
The amount that Uncle Sam pays for is dependant on the need of the tenant, sometimes they pay 100% which is ideal, but it doesn’t tie into the size of the house.
The size of the house and features does determine what the rent will be paid and each section 8 department has formulas to determine what that will be. Unfortunately, I don’t know where they get their formulas.
Gratefully,
Tom Wood
When you have Section 8 tenants, is the lease set up as a month-to-month or yearly or indefinite? Reason I ask is what if you let in S8 tenants and then a year later decide to sell the property… are you forced to allow the tenants to stay indefinitely or what??
Howdy Enricosuave:
One year leases which can be broken by mutual consent. A new investor buyer would probably not want to lose the tenant.
LOL
AllCity,
The number of bedrooms, amenities of the house (a/c, ceiling fans, stove, refrigerator, ect.) affect the amount of rent S8 will allow you to charge - so, yes, they do cap the rent, but it is usually a very fair price (I get more from S8 than non S8 - but they can’t know that). The size of the house (sq.ft.) does not matter, its just # of bedrooms - so normally the smaller the better (rehab costs). If you stop by your local Metropolitan Housing Authority (or whatever org. handles S8 in your area) they will give you a packet and have a new landlord meeting once a month that will explain how they figure payment - both total rent and tenant portion based on need/income.
Enricosauve,
Outstanding name. In my area (and this could differ by area) the initial lease is one year, and then they prefer you go month to month thereafter. It’s up to the landlord in the end - it’s your lease. You want at least a year though, or you’re going to lose a lot of money on rehab. Also, M-T-M is sometimes good b/c it doesn’t force a tenant who is thinking they’d like to move into taking action. If they know they are tied in another year, they’ll often move even if not quite ready. M-T-M allows them to sit around and wait until a more convenient time - which may be 3 years by the time they build up the motivation to do it. I like the setup.
Good luck.
I am a novice investor, but I tend to agree with you! I am in position now to acquire a rental property that a tennant is already placed in. I love it! I don’t have to advertise at all nor do I have to set aside the mortgage payment each month until I get someone in there! The house is being rehabbed and once the rehab is complete (which should be this weekend) we will view the house and if all is well, I will purchase it to make a tidy little profit. The current owner has already taken the necessary steps to have this be a S8 home if I so desire. Guaranteed money is a wonderful thing. I think it would be a rare circumstance for an investor to not want a property with a tennant that is already in place.
Keep this in mind… year lease vs. month-to-month - if you fully rehab a property and get a Sec 8 tenant, Sec 8 will give you “bonus” money for the rehab but you can only get this once. So for example, they give you $850 for your unit. If the tenant moves out during the month-to-month period - then Sec 8 has the right to downgrade/decrease your rent since it won’t be newly rehabbed anymore. So, if your tenant is a good tenant - put them back on a new yearly lease and you’ll continue to get the higher amount because you are locked in. This also can save you in your financial planning strategies. If you have a month-to-month Sec 8 tenant and all of a sudden they want to move - they only have to give you 30 days notice in writing prior to when the rent is due. If you had a 3, 6 or 9 month plan going - this would blow it because you don’t know how long it will take to get the next tenant, especially if you want to get another Sec 8 tenant - you have to go through that who inspection period all over again which could take a month or so to get your rent determination.
Yes, I have some sect. 8. It works really well. The rent is not hard to get, it comes every month automatically. What you have to do is keep up the building. Sect. 8 will inspect it every year, and you have to keep it up. It also has to pass an initial Sect 8 inspection to get your first Sect. 8 tenant.
But the numbers with Sect 8 are fantastic.
I have one up for sale right now, that will blow your socks off. I have almost finished the rehab, and intend to sell without finishing. This is a 3 bedroom 1 bath in a tough Sect 8 neighborhood. I rehabbed it to go Sect 8, because they routinely give $750/mo for these houses, for tenants you don’t want to collect rent from in person, if you catch my drift.
This neighborhood is so bad that the city is in the process of a revitalization project of the entire area. If your house is one of the ones chosen to be torn out, the gov’t pays you $30,000 and up per house.
Personally, I’m scared of the neighborhood, and haven’t finished the rehab because of neighborly violence and thievery. I had a new furnace installed, and they came in and took it. So the house needs a new furnace, and carpeting. It has all new copper plumbing, electrical is grounded throughout with the RFI’s in all the right places, there is a new water heater and kitchen, and new bath and kitchen vinyl flooring.
I’m letting this house go for $27,500 because it scares me and I know I won’t work it. I just want out.
If you are interested, or know anyone who is, let me know. I will be listing it on the classified ads. I just want out of it. :-[
Any more questions about Sect 8, I’ll be glad to answer them.
Personally I’m not interested in owning in a neighborhood I’m afraid to go to. One of the landlording books I read said one rule of landlording is never own in an area you are afraid to collect the rent in. I’m not interested in danger or being a slum lord. I have dealt with section 8 but the tennent backed out. Seemed real easy to deal with. - Debbie
I think people have a very big misconception of Section 8. Section 8 is for “low income” individuals, not “low class properties.” Anyone who meets the guidelines of Section 8 can receive it. And, anyone wishing to ACCEPT section 8 can. So if you are a homeowner in a pretty decent area and you wish to rent it out to Section 8 - you have the option to do that. Section 8 needs homeowners to participate in the program. Not only does this provide the homeowner with good tenants, it provides the community with good people who otherwise couldn’t afford to live there. There are a lot of GOOD, CLEAN, DECENT people on Section 8 and this is only a SUPPLEMENT to what they get. So please don’t be discouraged or think that you have to go buy some property in some shotty neighborhood and then fix it up in order to participate. You don’t. And… no I don’t work for Section 8… I’ve been a Section 8 landlord for 15 years.
I agree. I have no problem with section 8. I agreed to rent my house that way and the tennant backed out. I just wouldn’t own a house in a neighborhood I was afraid to go to. Doesn’t matter if it’s section 8 or regular. - Debbie