Section 8 Tenants Pros and Cons
Recently, we published an article about how to become a landlord. In that article we discussed a variety of topics to help get you started in becoming a landlord, but didn’t cover the topic of tenants and what kind of tenants are good to have. A common question among landlords is “Do I rent to section 8 tenants?
This is truly a great question and one asked by many landlords. So, In this article, we’ll go over and discuss some of the pros and cons of renting to section 8 tenants.
After dealing with dozens of section 8 tenants for nearly 20 years, we believe that it is a good idea to rent to them. Here’s why.
One of the biggest challenges of being a landlord is ensuring that you get paid the rent due each month. You have to have money to pay your mortgage( if you have one), taxes, insurance, expenses, etc. What’s the purpose of being in business if you aren’t making a profit? Collecting timely rent from your tenants is always a top priority.
If we told you that there was a way to practically guarantee you would receive income from your tenants, would that get your attention? Well, there is.
Most section 8 housing vouchers will be guaranteed income for your rental property. Section 8 tenants receive a housing voucher based on their financial situation and income. So, Some section 8 tenants will have a voucher that will cover 100% of the rent!
Not bad right? This is a HUGE pro for any landlord. Not getting your tenants to pay is by far one of the biggest headaches of landlords and can cause major cash flow issues.
You won’t have to worry as much about collecting the rent month to month versus traditional tenants that pay on a cash basis. Traditional tenants run the chance of getting laid off, having unexpected medical bills etc. If you’ve been a landlord for any period of time, you know what I’m talking about, if not you will certainly hear every excuse under the sun at some point during your career as a landlord.
By renting to section 8 tenants, their rent will almost always be deposited directly into your bank account on the 1st of the month. Which is another pro.
Then, others will have a partial voucher. Meaning they will still be responsible for paying a portion of the rent out of pocket every month. However, you won’t have to collect as much, thus reducing your risk.
For example, you may have a tenant who only has to pay 25% of the rent out of pocket. So, that’s at least 75% of your rent being guaranteed by the housing authority. Although you will still need to collect that portion with the tenant, it drastically reduces the risk and you know for certain that you will be receiving X amount of rent every month.
Go Section 8
Although you can still advertise your rental property on any online listing service such as Zillow, Craigslist or what have you.
A great resource for you to list your property to Section 8 tenants is GoSection.com
On this site you will be able to list your rental property for section 8 tenants as well as this is where most housing authorities send people looking for landlords who accept Section 8 as tenants.
Depending on the number of properties you have, most of their online listings are free. If you have a larger portfolio, they have premium features for larger investors. But, for just one or two listings are generally free.
High demand for section 8 housing
Since not all landlords accept Section 8 tenants, There is always a high demand for landlords who do accept and work with low-income individuals.
A lot of people have to go on a waiting list to even be approved to become a section 8 tenant and get a housing voucher. Thus, another reason why the tenants tend to be better tenants. Because the ones that have any sense realize that their voucher can be taken away from them for failing to take care of the property.
No, this doesn’t exempt you from your normal day to day maintenance or repairs, however, over the course of 20 years we have had some really, really good section 8 tenants who appreciate and value this and take care of the property accordingly.
Since not all landlords are willing to accept section 8 tenants. If you decide to, you can certainly benefit from doing so. Again, we consider this can be a BIG PRO in doing so.
Through our experience, we recommend that you go down to your local housing authority and introduce yourself and meet with the director or staff in person. They will be able to provide you with additional information as section 8 guidelines vary from jurisdiction. There will be an application you will need to fill out as well as for being a landlord.
Once you’ve decided that you are going to accept section 8 tenants, building a good relationship with the housing authority can help you tremendously in the long run.
Get to know the director and inspectors personally if you can. Once you have established a good relationship as well as a good and reputable reputation. A landlord who takes care of their property can really go a long way.
In addition, most housing authorities conduct yearly meetings just for landlords as to how they can better work together and get feedback. These meetings are informal and a great way to ask questions and get more involved.
Again, not all landlords accept Section 8 tenants, so they try to be polite and helpful to the ones that do.
Section 8 Inspections
Tenants who use the services will be subject to yearly inspections. This can actually be a good thing for you too. Your rental property will need to meet not only your local city and state guidelines for rental properties but they have their own inspection guidelines for section 8 as well . Just like with any inspection, you will have the right to be present for it.
We recommend that if you already have a maintenance person to have them present so you can go ahead and fix any minor issues. Right then and there on the spot. This can also help you build a good rapport. If not, they will give you a time frame to get it fixed. If not section 8 can and will suspend their payment to you until the issues(s) are fixed. This can be a con if you aren’t going to fix the issue as they will hold your payment until the issue is fixed.
Common things section 8 inspectors look for are: The overall safety of the home, duplex or apartment. Ensuring the smoke detectors are working properly, no water leaks, proper electrical wiring and outlets, no peeling paint inside or outside the home, windows, and even cleanliness.
Do section 8 tenants destroy property?
Most inspectors, at least the ones we’ve worked with over the years, are really tightening down on the fact that section 8 housing tenants must take care of your property. Failure to do so can result in them losing their vouchers.
Check with your local housing authority to find out their policy and procedures for this particular topic. No, this isn’t the case for every single situation. However, what we have observed, this tends to be the case moreover than not. Maybe we’re fortunate?
Whether or not a section 8 tenant will destroy your rental property is truly a case by case basis. During our 20 plus years of experience in rental property management, we honestly only had one bad situation with a section 8 tenant. Regular tenants can damage your rental property just as equally as a section 8 tenant.
Only one bad experience
It involved one was one who was apparently stealing water from the local water authority and they got caught. The local water authority tried to sue us over the water usage, however, we were able to come to terms with the situation as they ultimately realized that it was the tenant’s fault and not the property owners responsible for the water used by the tenant. Section 8 ultimately stopped their payment for these individuals and we had to evict them, just as a normal tenant for non-payment.
Evicting individuals for non-payment is going to happen no matter who you rent to. It’s simply part of being a landlord. If you have never had to do this, you most certainly will at some point during life. Section 8 or not.
Section 8 Deposits
Just as you can and should collect a security deposit for any tenant. You can also collect a security deposit from section 8 tenants. Check your state’s landlord-tenant laws for any security deposit guidelines.
In Virginia, you can legally charge up to two full months’ rent for a deposit. However, that may be a little harder for a section 8 tenant. This could be viewed as a con, however, in today’s market, we don’t see too many people charging this much even with traditional tenants.
Another helpful tip: Be sure to word your lease as a “Security DEPOSIT, and NOT first and last month’s rent! It needs to be separate. If you word it this way then that’s what it will be. Rent. And that’s something that can cost you money when and if you ever have to evict them. This goes for both regular traditional and section 8 tenants.
You also can’t discriminate or treat them any different than you would any other tenant. This also applies the same for their lease and every other aspect of their tenancy. Being professional and treating people fairly is also an important aspect to how we manage properties and recommend you do the same. Be sure you know your fair housing laws.
In our 20 year history of being a landlord, owning and managing dozens of properties, we have had both good and bad Section 8 tenants.
There is no iron-clad guarantee that a regular tenant, or section 8 tenant won’t destroy your property as shown in the photos above. We’ve had good tenants and bad tenants. Ones that pay on time and take very good care of the property and ones in which we’ve had to have the entire house completely renovated.
Being a landlord, just like any business endeavor, involves risk. If you don’t know what a sunk cost fallacy is, here is a great article on it. You can’t allow past bad mistakes or decisions interfere with following your dreams or career.
Simply because someone receives a section 8 voucher doesn’t make that person good or bad. Overall our experience has been good. But, ultimately the choice is yours.
Let us know what you think down in the comment section below.
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