Anybody try Section 8 Tenants?

Wrecked944 · 06-09-2005, 11:32 AM

Okay, another question from the small time landlord trying to become a big time land baron.

A colleague of mine recently suggested that building low income housing and participating in the "Section 8" program might be a great way to make money. I replied that I refuse to be a slumlord and he said that the high rents paid by the gov make it possible to maintain a nice property and provide excellent service to tenants and still make a handsome (and recession proof) profit.

I am severely skeptical. Can anyone here change my mind on this?

motion · 06-09-2005, 11:36 AM

It might be profitable, but section 8 tenants will turn your property into a warzone. I have experience with them in Phoenix. I am constantly replacing shot-out windows, trash everywhere, leaking, broken-down cars, etc., etc., etc. I guess if the entire project is rented to section 8 it might be doable, but forget trying to attract "regular" tenants.

legion · 06-09-2005, 11:41 AM

Keep in mind that these residents have no "ownership" of their residence because they do not pay for it. Expect things to be broken, stolen, and defaced. Expect not to be notified of when these things occur.

My city has repeatedly been building "affordable" housing. Each time, the new development is pitched as having a target of 75% rent-paying residents with 25% section 8. Each time, the loud music, violent fights at 2 a.m. on weeknights, and repeated police calls end up making all of the rent-paying residents not renew their leases. Within two years, each of these developments is 100% section 8 and complete pits. It's also no secret down here that the Daley administration in Chicago has been quietly encouraging gang bangers and other criminals to relocate to these new housing developments in Central Illinois.

Eric 951 · 06-09-2005, 11:46 AM

My real-estate partner has (3 )section-8 renters in other properties that he owns--he says they are no more of a problem than "regular" renters--although these are in indvidual houses, and not clustered together in (1) single apt. building--That could lead to trouble.
The key is to interview and weed out the loafers, for folks really trying to improve their position.

craigster59 · craigster59's Garage

I have a rental (working on another if this market would cool down!) but my in-laws have 5. They used to rent section 8, but they have had problems, just to mention a few- carpet spraypainted to change the color, interior moldings torn off to burn in the fireplace, holes punched in the kitchen wall to tie into the plumbing to hook up a washer. I'd avoid it if I were you,not worth the headaches.

gaijindabe · 06-09-2005, 12:07 PM

I know of a guy who has built a mini-empire on section 8. But he comes from the hood, lives in the hood and is kept busy all day. A tough way to make a living..

In NYC I see it as a subsity of the aspiring middle class. Every other single family home in the Bronx has a floor or basement rented out for top dollar. It is amazing what the government will pay you for section 8. Most of the renters seem to be single moms - I guess it is better than being in the projects. But unfair to the rest of us who work hard to pay for housing.

island911 · 06-09-2005, 12:14 PM

Section 8's may be some guy in a wheelchair, or some old lady with a walker. (read: they're not all low-lifes ... will really depend on the area)

dtw · 06-09-2005, 12:30 PM

Question though - if you decide to accept tenants under Section 8, are you allowed to choose or at least approve who rents?

It changes everything if you can't pick the lady in the wheelchair and it's a crapshoot as to whether you end up with the trigger happy banger or not.

Tishabet · 06-09-2005, 12:32 PM

My sister lives in Section 8 due to her disability (she has Down's syndrome) and I'm sure she's a great tenant, but she's probably the exception to the rule.

Wrecked944 · 06-09-2005, 12:43 PM

Well, I am thinking it would have to be done with single family housing units like this...

Three bedroom house for just $24k? What is wrong with this?

...so as to avoid some of the problems associated with high density housing. I just dropped an email to my property manager to see how he feels about the idea (oh yeah, I don't interact with my tenants. I have a property manager who deals with them). I'm feeling even more skeptical after reading the replies on this thread. I see a Catch22 here...I'd definitely be motivated to provide high quality housing to folks in tough circumstances. But I fear that idea would not be profitable. How much does Section8 pay? Oh yeah, and dtw is right, can you screen out the scary guy with the needle sticking out of his arm and instead select the elderly nice lady who needs a first floor unit for her walker?

red-beard · red-beard's Garage

Quote:

Originally posted by Eric 951
The key is to interview and weed out the loafers, for folks really trying to improve their position.

I agree and amplify. Interview them at their present residence. This will give you an idea of what they are like.

Jay Auskin · 06-09-2005, 04:29 PM

I used to live next door to Section 8 housing. I was on the top floor of a 3-flat, and there were 3 3-flat buildings next door. Expect to sign a lease, and be told a family of 3 will live there. Then, be prepared for a family of 3 and 5 other people move in. Everyone will hang out in front, and there will be gunfire, and the police breaking down the door a few times a month to drag someone out. This isn't speculation, this is first hand experience at what I saw next door. It wasn't a particluar race either. White, black, hispanic, asian...they all lived there. The only nice part was that when I called 911 for gunfire, or someone setting a car on fire, the police were nearby, undercover. I received quick response.

I got to know the drug dealer, "George". He had a loud girlfriend who could swear 7 times in one sentence. Usually at their son...."baby George" He never did any 'business' on the property. But, he would of course have a lot of his business associates visiting, and this would bring a lot of the 'competition' into the neighborhood. It was a shame because a lot of the kids seemed like good kids. Some of them would hang out in my garage while I rebuilt a motorcycle. Nothing was ever stolen or damaged.

The "complex" was owned by a Lutheran Church organization. I've called the number on the side of the building a few times. They would just tell me I'm wrong. 911 was more cooperative.

Nope, I didn't live in a slum. It was Chicago's Wicker Park neighborhood 8 years ago. One neighbor....$1 million dollar mansion. Other neighbor....drug dealer. I think it's changed to $2 million and drug dealer these days.

I'd hate to see the troubles you'd have in a 'bad' neighborhood.

MBAtarga · 06-09-2005, 05:22 PM

I had a Section 8 rental for a while a few years back. One advantage is the check shows up every month on time! Other than that, I did have problems with the tenant- as it ends up she had a crack habit. I sold the property and didn't get back into rental property after realizing I didn't have the stomach...

jyl · jyl's Garage

Don't mess with that unless you have to. Can't you find regular tenants?

craigster59 · craigster59's Garage

You also mention that you have a property manager. Good thinking. A guy I work with who owns multiple homes he rents says after it's rented, don't drive by until you' re changing tenants, and always have a service do the repairs. It will just eat you up inside after you see what these people are doing to your investment.

vlocci · 06-10-2005, 05:44 AM

Janus,

I've got one section 8 tennant in Arlington. Single mom, kids and her family lives down the block. So far she has been an ideal tennat, and is genuinly grateful for having a chance to live in a nice neighborhood with good schools. Had I not met her and her kids, as well as her parents down the street, I would certainly have second guessed things.

For MA section 8 info go to:

http://www.massresources.org/pages.cfm?contentID=3&pageID=2&subpages=yes&dynamicID=753#rent

somwhere in there is a link to the 2005 HUD rents for a variety of units (2Br, 3BR etc) An initial inspection of the unit is required (a no brainer) as well as a yearly inspection. Tennants are on 1 year leases. At the end of a year your free to show them the door or renew. (rental increases must be approved by the section 8 authority however)

For me, it has worked well. An entire unit of section 8, I would probably rethink things pretty closely.

As an aside, know a good real estate attorney in MA to take care of some LLC work?

Tishabet · 06-10-2005, 05:59 AM

Arlingon, MA? I live on Jason Street.

vlocci · 06-10-2005, 06:25 AM

House in over on Mass ave near the border of Cambridge/Arlington

I live just up the street in Davis Sq. Kinda shocked we never crossed paths. We shoudl get together some weekend just to say hello.

Vin

Tishabet · 06-10-2005, 06:29 AM

Small world! Jason street is in Arlington Center, near town hall. I live about 8 houses from the intersection with Mass Ave. I drive through your area in my 944 pretty much every day, I work in Cambridge. What type of P-car do you drive?

vash · vash's Garage

our family apartments have 50% section 8. no issues at all. we did have this one lady that moved her entire family in. but the other tenants that were section 8 snitched her out. she moved. we keep the place spotless, and the lawn well groomed. the tenants have gotten used to this and keep it up. dont make it look like a slum, and it wont be.