Section 8 - Good Stories?
I was thinking about buying some houses, that are relatively low priced, and entering them into the Section 8 program. I looked at HUD's site as well as the local housing administration's site and thought it was a good idea but then I searched this site for posts on section 8 info and now I'm having second thoughts. I read almost every "horror story" here and wondered if we could get a thread started for people with POSITIVE experiences with section 8. To me, it seems like a win/win/win situation for the investor, the renter, and the housing administration but I'm still new to this so I might be missing the big picture. Please, any positive experiences?? Thanks[ Edited by WealthSeeker on Date 11/03/2003 ]
I think you have very valid concerns when you are considering renting to Section 8 tenants or to any tenant for that matter.
I recently purchased a property that has a Section 8 tenant in it and quite frankly, the property is as clean as can be.
Section 8 families usually have to wait an extended period of time to obtain housing assistance. While there will always be bad tenants, Sect 8 or not, its another factor that you have to account for.
Also, with the tenants receiving assistance from the State, you may or may not have more leverage in dealing with them.
The seller I purchased the property from has had this Section 8 tenant in two of her properties and couldn't speak of her highly enough. (The seller is a family friend for over 30 years.)
Do thorough research on each tenant and you should be fine.
Just remember, even Section 8 tenants need a place to live and you are in the business of providing housing.
I have been interesed also, but not sure how it all works. Do you get a check from the gov't and a check from the renters? Gov't decides what rent should be?
Christian "The Solutions Kid" Beebe
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Hi Wealthseeker,
I have used both section 8 and non section 8 tenants over the past 10 years or so. I screen my section 8 tenants just as hard as my non section tenants. The interesting thing is that I have had good and bad experiences with both kinds of tenants. So keep in mind that just because they are section 8 tenants, it doesnt mean they are bad tenants, you simply need to screen them well. If an interested section 8 party calls you, drop and application off at their house, and while you are there .............. look to see if their place is a mess or if it is well kept. I am just as hard on the financial ratios on my section 8 tenants as I am the non.
These tenants are given a 2,3 or 4 bedroom vouchers based on their situation. The government allots a certain amount of funds to be used in each circumstance. I always have someone who has a two bedroom voucher ask me if I will rent them my 3 bedroom house. The answer is always NO. Bring me a 3 bedroom voucher and I will provide you an application!
Each section 8 tenant is evaluated by the local housing authority to determine how much (if any) will be the tenants portion of rent. I have several tenants right now that the government pay 100% of the rent, and I have others that the government pays 80-90% and the tenant pays the balance.
If you screen well, it works great, and it is guaranteed money!
Best of Success!
BAMZ
[addsig]
So if you have a property that would be a great Section 8, how exactly would you get started?
Then does the gov't list your home somewhere or do you have to list it?
Christian "The Solutions Kid" Beebe
[addsig]
What does a voucher look like? Does it indicate on it the number of bedrooms they receive money for as well as the amount of money they receive and what amount they are responsible for? Also, if you did accept a voucher for a 3 bedroom but rented for a 4 bedroom, would that cause any problems from the governments side of things? Oh, one more question... when you are talking to a potential renter, are there any questions you "can't" ask (like certain questions that can't be asked during an interview like marrital status, number of kids, etc)? I know it's a lot of questions but the responses are very appreciated.
The local housing authority (HA) is the proper place to start. Many of them have landlord workshops to answer your questions. I attended one and it had great information.
The HA will keep your property on a listing of all section 8 properties, but you still need to advertise it in the newspaper. I did mine in the dallas news and got maybe 10 calls for the property. They must have an approved voucher, which is nothing more than 2-3 sheets of paper showing the information for the tenant, the program they are on, and the restrictions they have to find housing. If they have a 3br voucher, they can rent a 3 br or larger, provided they have enough $$ to do so and the HA approves, which 9/10 times they will not. If they have a 4br voucher, they can not downsize to a 3br.
Once you have a client that meets your needs and is interested in the property, you will fill out the necessary paperwork to get things rolling. An inspector will come out to the property within 72 working hours and look the place over. If it passes inspection, the client is free to move in. However, you will not receive your $$$$ until 30-45 days after all the paperwork has been submitted. The problem: Just because they have a voucher for the correct amount you want to make, does not mean you will receive that amount. If you choose to let the tenant move in early, you are locked into that amount. On the property I was going to section 8, this was the case. Since they were not willing to pay what the property was worth, I ended up leasing it conventionally. However, if you are into low end housing, this shouldn't be a problem for you.
If you have any other questions, I would be happy to try and help out.
-Chris
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I also have a mixture of section 8 and non-section 8 rentals. I was very concerned when I bought a property and then learned that the tenants are section 8. My opinion has changed drastically. Not only do the checks arrive in a timely manner, but I don't mind aggressive rent raises knowing that most will be covered by government money. Section 8 tenants are also a bit fearful of losing their subsidy so they tend to pay on time and look after the other terms of the lease.
In many areas there is a waiting list for section 8. You might find possible tenants by contacting your county housing authority who is administering the section 8 programs.
Overall, I am very pleased with section 8.
-Ed
I have had over the last 40 years varied experiences renting to Section 8's. Some good and some bad.
First the bad. Historicaly all cities since about the year 33 have had slums. A polite word for multiple lower income rental properties non owner occupied.
They feed on themselves and spread, somewhat like an Amoeba. Which for the record is the growth pattern of all large cities. In Rome the newly arrived Gauls (soon to be lower class) arrived and they went to join those that came before. So before you know it you had a slum filled with strange looking blue eyed blond hair foreigners, yuck.
Section 8 a strange failed policy to assist with housing cost so that the receivers of this largese can move into better housing. Here in Calif it has failed cause all the Section 8 is congregated in three major slummy areas.
Ok now you understand the underlying mechanics. The problem is that in a slum it is very easy to slide back, join in and before you know it three generations or so have passed and no progress has been made. The kids join gangs to compensate for the lack of proper parental influence. They just go elsewhere. Educationaly they slide back cause they encapsulate into a sub group that develops their own language, own customs, ways of wearing clothes and ways of walking etc.
In this environment if your units are within the magic circle you will probably have problems in rent collection and in the maintenance of the properties.
However, if your units are out of these deprived and depraved areas you will do much better. Remember we are a strange member of phylum mamalia, we want to group and emulate. If those around you have accepted a system of values which consists in paying the rent, not robbing the Seven Eleven everytime you are short a few bucks and not sticking a shive in your neighbor on small matters. You are on your way up or out into the larger more acceptable social groupings.
Race has little to do with it. In our society if you can play a ball game or dance on half beat, indulge in simple rhymes why you are out of the repetative circle and at function.
The worst tenant I ever had was a guy who was making a fortune dressing up as a cat and smashing his guitar every other night. He painted the walls and ceilings of a very nice house black and thru handfulls of glitter all over it. He refused to pay his rent, said he was above all those things. Once when I went to collect he pulled down on me with a double barreled shot gun. Of course I got down on my knees and put my hands together in the sign of prayer and begged for my life. He got laughing so hard I got the shotgun and then it was his turn to get down on his knees and crawl up the driveway to the house. We both laughed, had a drink www.together.I told him to change his brand of pills cause really too much. He gave me a check and I left.
I am now engaged in a great war, testing the principles of how to avoid slums of the future and still furnish proper housing to those in need.
The mother with the nine kids each with a different father who's nationality and looks are unknown cause they never took their hats off.
The imigrant family, father killing himself on two lowly paid jobs, and the mother doing section work in a garment factory whose sanitary facilities consist of an open window.
The kids have no direction and fall into the paths of their peers. No homework is done, mathematics and science an unknown and nobody to kindle that sacred flame which leads to knowledge and learning.
The answer is infill. We put a cheap house state of the art 2003 design right in the middle of a middle class area. The people who inhabit this house own it. A stake in the community. Their kids start to hang out with the neighbors kids and oops a thing starts, they join in and slowly become apart of the whole and they bring into this established society a slightly different viewpoint. And that dear friends is what makes it all so grand.
Well that was fun. I feel better, lets see where did I drop that work belt, and nail gun. You believe that? Don't.
The last time I had a nail gun I was on top of a 20 unit. The lunch truck gets ready to leave. I want lunch so I fire a long burst which hits the lunch truck roof. They stop I climb down and have lunch.
Contemplatedly Lucius
Hi Christian,
You can call the local housing authority and they will place your house on a list and tell all of Section 8 coordinators that it is available. This doesn't mean tenants will call you, in fact I rarely get calls from the HA office referral. I list the property in the local paper and say in the ad that the property is section 8 approved. The tenants with vouchers always watch the ads in the paper like hawks in my area.
Your rental must be in compliance with Section 8 code. For example the house must have:
1) GFI's in the kitchen/bathroom
2) no peeling paint on inside, outside, steps, fences, etc.
3) Pressure relief on water heater must be no more than 6 inches from the ground.
4) Must have a working smoke alarm
5) Must have screens in windows
6) Must have deadbolt on exterior doors.
7) etc
It may be a hassel to get each property updated to meet the code, but it is well worth it and you have a better property because of it.
How much rent can you charge?
The Housing Authority keeps a list of houses and what they rent for in each neighborhood. So if you are asking more rent then the neighborhood goes for, they will tell you up front that that is too high and doesn't meet their rent rate. I , however always keep my rent just slightly above average (because all of the properties are kept in excellant condition), and I have never had a problem getting what I ask.
WEALTHSEEKER:
"Are there question that I cannot ask the tenant"?
A- Yes, you must comply with the Fair Housing Act and also individual cities may have additional guidelines on how you can screen tenants. I would call the local tenant union or the local apartment owners association and they usually have a small booklet that will bring you up to speed on tenant/landlord rights!
Best of Success!
BAMZ
My first REI was a foreclosure that I rehabbed and rented out Section 8. It is true, you have to do your homework screening the tenants but wouldn't you do that regardless of whether the prospective tenant has a Section 8 Voucher or not?
I live in Cincinnati and my experience was painless. I had a clean, 2BR single family home. Rent was $590 and Section 8 agreed to pay $90 while the tenant paid $500. She paid on time for three consecutive months and when she lost her job the Housing Office paid 100%.
The Housing Office must inspect each property on a annual basis. Then, it will subsidize the cost of the rent at varying levels depending on the tenant's income. You rent the house out at FMV because Sec. 8 will not pay more than its FMV for that area.
I will continue to rent Section 8 if at all possible. First, if you get somebody who is a clean and decent tenant there is a chance where you don't even have to worry about collecting the rent. The Housing Office becomes your collector/payer. Second, I believe in providing quality low-cost housing options for those who can't afford them. In my case, I enjoy providing a nice single family home to a family that would otherwise be living in a slum or crowded complex.
I believe that generally, if you provide a great place for a good family, they'll reward you by taking care of the place and being a great tenant. It's worked so far for me so I wish you the best...
NOTE: Section 8 was originally started as a way to reverse the centralization of low-income, high unemployment urban areas. The thought was that once an area hits a critical mass of these residents, the area becomes a ghetto - with little infrastructure, low tax base, and the perfect setting for criminal activity. By creating Section 8, good landlords would be paid to decentralize the ghettos by spreading out these tenants into other neighborhoods. Unfortunately, many landlords take the FMV and provide less-than-quality housing for low quality tenants.
Ken