Section 8 housing

[crayon1973]

anyone ever owned any? I have an opportunity to own some property which will have section 8 tenants in it. As you know, the government pays $1200 of their $1300 rent so if they dont pay, I dont care. The issue is that I can buy the houses for $90K or so each. Anyone have advice?

 

[BigWill]

There a cash cow.

The only rub is, it's tougher to evict them. And, you can expect a % of druggies/gang-bangers.

 

[Bernard]

Be VERY careful.

You'll get your rent from Uncle Sam, but Section 8 houses can incur an incredible amount of damage. You won't be reimbursed for physical deterioration.

When people get something for free, they don't give a damn about it. Do not underestimate how much damage and deferred maintenance can occur in a short period of time.

How old is the house?
How old are the mechanicals?
How old is the roof?
You can get hit with very high capital costs over the holding period
Do you have a source of funds to cover these costs?
How will you finance the purchase?
How long is your holding period?
What's your exit strategy?
How does a rising interest rate environment affect your exit strategy?
Is your projected profit enough to offset the risks of signing a full recourse mortgage? Your credit rating is at risk.

Bernard

 

[Dead Horse]

It is not tougher to evict them in my experiences, if they break their lease they can be evicted just like any other tenant.

They are typically great tenants in my experiences because they get free rent if they remain in good standing with the program.

You do have to make sure you are specific with your lease as to what they can or cannot do. I like to do a walk through after 30 days after move in to point out EVERY minor or major violation of the lease and give them an ultimatum to abide by the lease or get out.

 

[Durkee]

You have my e-mail address, or you can PM me, but you REALLY need to contact me before you get into this!!! There are upsides, but the downsides can be terrible!

 

[GHOST HORN]

if the tenants are already there, u need to honor their lease, but one good thing about sec.8 is u get to interview the tenant. so, it is just like any other rentor, in many ways, but you know you are assured of being paid. plus, you can think of yourself as doing a svc to the community.

i actually put a family in a $1200/mo. home that sec 8 was gonna pay $1000 for. so it isn't limited to low income areas. you can buy ANY home and put it in sec 8 housing, and if they have a tenant, sec 8 will pay the bulk of the rent/mortgage. so don't necessarily think low dolla areas.

 

[politically correct horn]

Two years ago I went to Home Depot late at night and started talking to this police officer. I had a couple of rental properties and he just bought his first (a section 8). We exchanged cards and overtime got together on two more rental properties. The houses that we bought are much less expensive (both purchased around $25,000) and the officer and his brother fixed them up with a couple of thousand bucks. All three houses are rented and the government does guarantee a minimum payment. Being partners with the officers is a plus because they also act as rent collectors and make sure that the property is being taken care of. Most of the people that I know that specialize in these kind of investments complain about the things already mentioned on this thread (eviction, property damage, quality of renter). I would not have done it except for my business partner.