Section 8 Housing: Is it worth it?
When my apartment became available for rent - I did all the normal things you would do to get it turned around quickly. We washed down all the walls and gave it a fresh coat of paint. Pulled out the old carpet and had it replaced with a new one. I even demolished the old countertops and had a new countertop installed as well as new sink to go with it. I knew the place would rent quickly and had no concerns about it whatsoever - after all everytime one of these units becomes available - I have plenty of applicants that want to rent the place. So I go my trusty ol'e craigslist account and post up the apartment and all its amenities. Now time to sit back and watch the money roll in. The response was.......
underwhelming
Not yet worried , but curious as to why it wasn't getting the traction I was expecting, I wait it out - after all , I had a few things in the yard to take care of and the apartment wasn't exactly ready yet anyhow - but I wanted to start screening in advance so I wanted to get someone lined up and ready to go. Besides, I figured, I hadn't posted up any pics to go along with it so maybe they didn't have enough motivation. I was going to hold the open house on a Sunday - the day after the carpet was installed - the last of my updates - so I still had a week to get some interest.
Almost a week had gone by and Sunday was approaching - only TWO people had responded to the ad to request the address. I don't want to say I was worried exactly - but something wasn't right. It'd been a while since I've had to rent the place, but it had never been a problem. So I decide to up the ante a little - after all - maybe Craigslist doesn't have the same punch as it used to. I decided to list my open house on Zillow. As soon as it was listed - they informed me that it was also being posted on several other sister sites to gain more exposure - not bad - I could use all the exposure i could get. After all, I had the apartment all cleaned up and ready to go, and only 2 prospects.
The next morning when I got up - I had multiple emails and texts - ALL OF THEM WANTED MY APARTMENT! Now THIS is what I'm talking about - this is the kind of response I'm used to. What i'm not used to , is how powerful Zillow is and how wide of a reach it actually has. I learned something new already and hadn't even meant to. So my text is blowing up, my phone is blowing up and so my email. Looks like I'm the "belle of the ball". So things are right and I'm pre-screening over the phone and inviting others to come look at the apartment.
I recognized a pattern that started to develop almost immediately. About 80% of the people who contacted me wanted to know "Do you take Section 8?" Iv'e been renting out apartments for over 17 years now. My standard answer is - "Sorry - I'm not set up for Section 8" which is absolutely true. I had never been interested in the hassle of dealing with Section 8 tenants and equally if not more hesitant to deal with government agencies telling me how to operate my apartments. As usual, I fell back to my standard answer and rejected the notion of Section 8 tenants.
What is Section 8?
It's a government program actually called "Voucher Choice Housing Program ( Section 8)" and provides assistance to very low-income families to afford decent, safe, and sanitary housing. Housing can include single-family homes, townhouses and apartments and is not limited to units located in subsidized housing projects.
Why I don't accept Section 8
When I talk to other investors about whether or not they accept Section 8 - there is mixed response. Some investors swear by it while others like myself have major reservations about it. Here are some the reason that I'm not a fan of it.
I have always had to pay my rent myself. From the day I brought home my first paycheck - I was paying rent. I didn't have government subsidies and giveaways - I was taught that a person earns their way in life. I started working at the age of 13 and have been paying my own way since I was 18. The idea that some people come along and get a free ride doesn't really sit well with me. After all, that ride isn't free - someone is paying for it - hardworking taxpaying citizens that pay their own rent. On top of that - they give you a list of items that you have to adhere to by their standards or the apartment won't qualify for the program. - So now I have to go out my way to make sure everything is up to par so that someone else can get there rent for free. So my feelings were that I do not want to reward a system that doesn't encourage self sufficiency.
Other reasons stem from wondering how well someone will treat the place when they don't really "have any skin in the game" . We all know that apartment dwellers typically don't have the same reverence for for the apartment as a homeowner does for his home. Lets face it - people treat things differently when it isn't theirs and especially if they didn't pay for it. What was someone who gets free rent going to do to my place?
A Case for Section 8
I've also heard some good arguments for Section 8 too. Some investors really love the program - they say that they get their rent paid on time every month. They like getting guaranteed payments directly deposited to their bank accounts on the 1st of every month. Among the benefits , I'm told - it takes a long time for a tenant to get qualified for the program, so once they are approved - they are inclined to maintain that status so they can keep getting their rent paid.
I had the opportunity to meet with an apartment manger who works for the city and deals with Section 8 on a regular basis - He came to my weekly real estate meetup group and explained to me and my group of investors in more detail how the program actually works. It turns out that there are a lot of misconceptions about the program.
To start with, Section 8 does not pay the entire rent - it is closer to 70-80% depending on the recipient. The tenant is still responsible for paying a small portion of the rent. He also said that they do inspections periodically and if the place isn't kept clean and in good condition, the tenants could risk losing their Section 8 benefits. He confirmed that it is however a long process to get accepted into Section 8 and so those who do typically do not want to lose it - so they have an incentive to pay their portion of the rent on time and keep the place in good condition. Some "skin-in-game" you could say.
Section 8 payments come on time and they are deposited into your bank account automatically on the 1st of the month. Every month. For landlords who are used to getting excuses instead of rent checks on the 1st - this is something that can sound like music to their ears.
There is not a lot required from the landlord to accept Section 8 - the tenant brings you a form and you fill it out - basic stuff like how many bedrooms , what kind of appliances you have there and, and how you would like to receive your payment. The tenant turns in the form ( or you could take it in yourself) Then they calculate how much they are willing to pay and will approve or disapprove the rent. If they feel the rent is too high for the area or the amenities they will reject it - however they will tell you the maximum amount that they are willing to pay. I found out that in my city , they were willing to pay more that I was already charging.
As I turned away one applicant after another - I met one applicant that I really liked. She was working part time for a staffing agency and and is going to school for business administration. She already lived close by so she really knew the neighborhood - which I felt was important because it's a little rough around the edges and I was looking for people who were familiar with the location. The apartment itself is very nice, and we don't really have a lot of crime, but we are next to canal - so we get a lot of transient foot traffic. This applicant already lived right up the street, and had the canal behind her house too. Things were starting to look good and it looked like I was going to have someone who was responsible and seemed well rounded and would be able to keep up the place - then she the dropped the question -
" Do you take section 8?"
As usual , I said no. I told her that I had never gotten set up for it before. She told me that neither had she and that this was her first time getting Section 8 . She had just gotten approved and was on the lookout for a place for her and her two children. I asked what was involved with it and she told me that I just had to fill out single form and if they approved the unit, they would start paying me the rent. She already had everything ready to go if only I was willing to approve it. We had just finished updating the place with new paint , carpet, countertops, etc. I didn't seem like it should have any problems passing their inspections.
I had an opportunity before me. I had never been involved with any government subsidy programs before so I thought that this could possibly be a learning experience. I could learn how the program works, and then I could share that experience that with my meetup group and tell then what Iv'e learned. I also had a chance to help make a difference in this woman's life - not something I typically put at the top of my priorities when it comes to renting the apartment. But I wanted to expand my horizons and after learning more about the program from other apartment managers - I was willing to give it a try and take a chance on this applicant.
The paperwork had payment information and requested my Social Security Number - so I didn't want to just hand it over to my applicant. I told her that I would meet her downtown and go to the appointment with her to turn in the paperwork. She was surprised, but accommodating. So we both met there on the following Thursday and I really wanted to be sure that I had filled everything out correctly on my end so that there wouldn't be any hold ups in the process. I also wanted to verify the order of operations - I knew that I didn't want to have a signed contract before my unit was accepted, but there was paperwork asking for the contract - so I brought a blank one to have it ready. So the staff was very helpful and it was a very quick and simple process - they verified everything and we were done. They told me to hold off on having her sign the contract until the apartment was approved. Now we just had to wait for the inspection.
Within about 5 days , the tenant called me to let me know that we had an inspection date and sent me a checklist of items that they would be looking for. Basically stuff like working heat, appliances , no cracks in the windows , holes in the walls, doors all close properly and standard items like that. I made sure everything was as it should be and prepared for the inspection.
The day came and I met the inspector and the applicant at the apartment. It was raining heavily that day , so it was a little nasty outside. The inspector was a very nice man and right away seemed impressed with the unit. He asked me if we had remodeled it recently. At one point he even mentioned that he wouldn't mind living there himself. So after doing a walk around and checking on the running water, checking all the electrical outlets and walking around the yard - he finally pronounced -
"OK - your all set - let's go inside and sign some paperwork"
The tenant and I looked at each other with big smiles and high-fived. We were in. The inspector had a few final things to confirm and signed off on us. Immediately, I pulled out the rental contract and had the tenant sign it. She also gave me the deposit and her portion of the prorated rent. She was very excited - and I was happy to get it rented. I'm also looking forward to those on time, automatic payments to my checking account.
One setback to all of this is that the apartment was ready to occupy on the 1st of the month - but because of waiting for paperwork, processes and inspections - my tenant was not able to move in until the 21st of the month - this means that I lost almost a whole month of rent just to get this set up. But now that it is finalized my rent should be showing up on a regular basis. I could have allowed her to move in sooner , but if the apartment did not qualify then we would have the hassle of having her move back out - or I may have had to make potentially costly repairs for it to qualify. I prefered to play it safe and just wait till I had final approval.
Was it worth it?
I cant say just yet. I have not even received my 1st subsidized check. But the experience up to this point has been rather painless and I haven't really had to go out of my way for much. I'm happy with the tenant so far - all of our interactions have been very cordial and I get a good sense from her and her well behaved children. I was previously getting much less for the apartment so Section 8 is going to pay me more for it than I've ever gotten for these units. She is only going to have to pay $124 a month so I don't think she will have a problem with that.
At this point I do not regret getting involved with the program and was happy to learn about how the process works, what the paperwork is like, and how the inspections take place. I feel like I am more educated and have something to share with others now. If things work out with this tenant - then I may be likely to open up more units to Section 8. If you manage apartments and have Section 8 available take a look at it and see if it's something that could work for you.
Please be sure to check out my others articles on real estate, investing , and cryptocurrency ( and some other random dog stuff)
I always upvote comments to my blog posts
I liked this article.. Never knew much about section 8 but I have heard a lot of people doing it. This is informative @jorlauski!
Thanks @davemccoy - I learned a lot about Section 8 throughout this process - A big part of why I did it was so that I could learn more about the program myself - and hopefully have some good insight to offer other investors when they ask me about it.
I have heard about it and only heard the negative side (the abuse)... so it is very cool to see an objective opinion firsthand. Good article and I'm glad you taught me something!
Your very welcome - I'm happy that someone else could take something from this. I still think it comes down to the tenant - administratively - they seem to have their stuff together - so I think it really comes down to choosing the right tenant and that will be the true test - at this point , only time will tell if I've chosen the right one. But if anything note worthy happens - I'll be sure to let you all know.
That's an interesting take on the process. I hadn't realize that so many people looking for rental units were Section 8. I'm also sort of surprised that the process for you to get approved was so "easy." It sounds like you have a good tenant. I hope it works out well!
yes.. I was surprised myself. The approval process was simple from my end... I'm not sure how much paperwork the tenant had to fill out - but I basically filled out two relatively short forms - the hardest part was waiting .... and wondering if everything would pass inspection - otherwise - it was very easy compared to what I was expecting. I hope things work out well too.... I like having long term tenants. Thanks for checking out the article
wow I have never heard it from a landlord's side but thanks for that. I am SO happy to hear you decided to give Section 8 a try. I wish more people would take a chance on it. There is such a stigma against people for getting government assistance and low income people in general. I think there's a drastic distortion of the low income community but no one takes the time to look into it. I have been waiting on Section 8 waitlist just to get a voucher for almost 10 years now - not even guaranteed one yet let alone a place. If I ever scored that voucher I would never jeopardize losing it lol
Then beginning was a bit discouraging to think there's a huge X put on my back when I do actually obtain a voucher from my state - but so I'm happy you changed your mind and i hope other landlord's out there will take a page from your book :-D
WOW! 10 years?? That's insane!! I had no idea the wait could be that long - I mean - I've heard of people waiting for like 3 years, but I think you won the award for longest in line. I guess it's safe to say that if you ever get approved - you will protect your status come hell or high water....
I'm usually a trendsetter - so if I'm accepting Section 8 , there's a good chance several other investors are giving it a shot too...there is a page on their website that has a listing of all the apartments available that accepts Section 8 - so when you do get your approval be sure to check out their website and keep an eye out for that - might save you some time and heartache....best of luck to you
3 years? wow what state are you in? Mass tells you the list is 9+ year wait and even New Hampshire is a 5+ wait list :-[ maybe it's an east coast thing.. I don't know lol I have never heard of a website with rental lists over here either.. Mass has a website to check if your app is actively waiting but that's it, they leave the renter to find a place all on their own over here.
Thank you for your well wishes! And all the best to you too!
there could be people who wait much longer than three years - but as my article indicates -I really hadn't dealt with too many tenants with Section 8 so I could be completely misinformed on how long it takes to get approved for it - I just know that a couple people I spoke to said they'd been waiting for s few years - but I never expected that it could take such a long process.
yeah, unfortunately I think it's a lack of vouchers to begin with plus once people get them they keep them for years so there isn't much movement lol oh well -using three quarters of your monthly income on rent isn't that bad, once you learn to get by with close to nothing - which isn't a bad thing as most people have more junk than they'd ever really need anyways ;-)
Amazing!!!! Breaking down stereotypes.. wooowwwwieee
Loved your article!!
In the UK we don't have a section 8, but we do have Housing Benefit. However I don't think tenants pay anything towards their rent, and the Housing Benefit section certainly don't ever inspect the premises.
My daughter was unable to sell her flat when she moved to a different part of the country with her new husband, so rented it out to a couple with a little boy, who initially seemed good tenants. However they developed a drug problem, and couldn't pay their rent. They applied for Housing Benefit and got it immediately. For understandable reasons my daughter asked for it to be paid directly to her.
Over the months my daughter got more and more complaints from disturbed neighbours. She took this up with the tenant each time, but had difficulty in actually visiting as she was pregnant with twins had a full time job, and lived far away.
Eventually the neighbours concerns became more and more desperate and she decided to try and sell the flat again, which she had wanted to avoid, as she was aware that the couple had a small son, and she didn't want them to be homeless.
To cut a long story short when she eventually saw the flat, it was in an absolutely filthy state, there were hugh knife holes in the kitchen units which had been used for knife throwing, and a large hole in the bathroom wall where she thinks drugs had been stashed. In fact shortly before it went on the market the flat was raided by police!!!
Sadly, she had no option, but to evict them!!
A lot of money and hard work went into making the flat reuseable, let alone resaleable, but I'm pleased to say she did eventually get a buyer.
However your system sounds an eminently better one to ours. If people pay just a small amount towards their rent they will value the property more, and regular inspections may have saved my daughter a lot of hard work and heartache.
that's interesting - I hadn't realized the UK has a similar program , but I guess that makes sense. I've had some pretty nasty cleanouts - but nothing where the walls were full of knife holes. It's too bad what happened to your daughter - I've heard stories like that a million times - it's one of the main reasons that so many people don't want to accept Section 8 - it's also the reason that many people use property managers - a lot of people think its expensive to have property management - but they help keep your rents up to date, do regular checkups, and deal with evictions for you - in a lot of ways , they can help you make even more money . At least she got it sold - I hope that didn't sour her on all investment property.
Thanks for checking out my article - I hope you find some of my other real estate articles of interest.
@jorlauski Thank you. I appreciate your have taking the time to explain all that.
Your very welcome... I enjoyed sharing it and hope you were able to get something out of it.
Hey @jorlauski
Nice thing to do!
I’m not sure how this ‘section 8 ‘ thing works over there, but I assume most people don’t ‘freeride’ - as you call it - voluntarily. There’s a reason for people not being able to pay for their own rents.
Anyway, I’m glad you decided to open your mind and give this girl a shot.
I truly hope this works out for you both, and you can become an example for others to help the less fortunate
while I agree that life can happen to anyone - and unexpected things can happen at any time - we also have a system that is riddled with abuse and the potential for abuse and I've seen it first hand. I don't have a problem with people needing help - I try to help people whenever I can - it's the people who abuse the system that really turns me off - when you lend a hand to someone and they take advantage - There are lots of people out there take advantage of the system and cheat it every chance they get. Many people are where they are because of the poor choices they continue making. It's not up to me to subsidize peoples bad decisions - in this case - after talking with the applicant - I got the feeling that she was someone who was working towards a better future for herself and her kids - I didn't get the impression that she was satisfied to languish in poverty like so many others I've met in this business, but was looking for a hand up - not a hand out. Because I try to help out when I can - I gave her a chance.
Another insight into the real estate industry. Thanks Jay.
Your very welcome - it felt really natural writing about real estate - it's been a while since I put out a real estate article. I still have a ton of real estate stuff to post if I can ever get around to editing my video and putting my still shots together.
I know you enjoy writing about real estate. I'm hoping I can get more eyes on this one for you. We can at least highlight you on our newbie account. That's a good start. :)
you're awesome as always!
There is a stigma to being part of section 8. I think your post touches upon this and would lead others to see beyond their own point of view and extend a hand out to others. Being with section 8 isn't a judge of character. It's a good post, I hope things do work out!
Hey, so happy to see you’ve been curied!! I hadn’t know that you’ve been curied in the past since I didn’t scroll that far back. Here is another deserved post!
thank you so much @beeyou - I couldn't believe my eyes when I refreshed the page - I really appreciate you nominating me for it - I never expected anything like that - makes me glad I spent two days writing / editing it - having your work recognized is a wonderful feeling - the SBD boost doesn't hurt either!
You're welcome @jorlauski. :) You wrote a good post and I was very happy it was approved. Having your work recognized is definitely the best part of all. Keep writing about your passion and sharing with us your stories. :)
comments like yours helps to keep me inspired ...
I figured it would be more of a hassle. I hope it works out well for yo and your tenant.
thanks for checking out my article! I was surprised myself too - I expected a lot of red tape and paperwork - but it was very painless - and I think if you keep your apartments in good condition - the inspection is a breeze to pass.
Thanks for posting this, I am looking at adding rental property to my investment portfolio and never considered of accepting Section 8. I will be subscribing to hear how this works out.
Thanks for checking it out! I also help investors purchase rental properties so if you ever have any questions about it , I'm more than happy to help you out. Thanks for the sub - I did a rehab recently that I posted pics of on Steemit - you may want to check some of those out if you get some time.
Heck yeah... I am in the middle of a renovation myself. Prepping the house to sell as we are building a new one.