Invest in Section 8 housing?

[dmcummins]

It looks like the democrat's are going to be in control, and with housing prices down I'm wondering about becomming a slum lord. I have a friend that does this and seems to be doing alright. He picks up a dumpy house in the hood, cleans it up alittle and get's it to pass the section 8 requirements. He claims he never has to advertise. When he is working on the house all the single moms come by and tell them how much section 8 money they have coming and can they move in.

He claims that they generally take care of the place because they don't want to lose out on there section 8 money. And the government checks always clear.

Anyone else doing this or looked into it?

[legion]

Bad idea IMO.

You might gave good tenants.

But there is also an increased chance that you won't. When people have everything handed to them, they tend not to take care of what they have. With the single moms especially, you are likely to have a revolving door of boyfriends who will live there, and they aren't paying for ANYTHING. One of the boyfriends might open up a business in your building.

And there is also great political risk. In Chicago, they periodically "crack down on slum lords". Sometimes they pass new laws that make your costs go up, most of the time it's really a shakedown for political contributions. It's no coincidence that some of the most politically powerful (Tony Rezko) both built their wealth and avoided prosecution (for their housing) by being politically-connected slumlords. Do you really want to sell your soul for that?

[gr8fl4porsche]

It's hit or miss. Good section 8 tenants can be had. The rent checks always show up but their copay can be a problem. Usually the tenant has to pay a portion of the rent. Now there are programs set up to pay for any damage caused by bad tenants. All it takes is the ability to document and fill out paperwork. Also helps if your local HUD employees are good at their job.

I had mostly good experiences with section 8 in the past. I do have to be honest and tell you that my greatest experience as a landlord was the day the check cleared when I sold my building.

[GG Allin]

I know someone with a couple townhouses that he rents out section eight. Everything has worked out for a few years so far, but what makes him sick is the one chick he has renting from him has a 60" plasma and an Escalade.

[berettafan]

I do it and it works out for me. i figure if i'm going to be forced to pay into the welfare system i might as well let it buy me a house or two.

i will admit i got somewhat lucky on having tenants who keep a decent home.

[MatthewBrum]

I would stay away from section 8. I have a couple of rental properties and always able to find good tennants with honest jobs. Plan on buying a property in a decent neighborhood with good people. You may not make as much initially but you will be better in the long run.

[berettafan]

long term is a good point. almost by definition section 8 housing is neighborhoods/communities in decline.

[Bill Douglas]

I've been a landlord for over 20 years and a number of places I've owned have been in dodgy/borderline/bad neibourhods. They are SO much trouble I won't own them any more. Most of the time it starts out as "Terribly sorry Mr. Douglas, my uncle died last week and I had to pay for his funeral" "The large Rotwieler is not actually mine, it's my sister's and she's got cancer so I'm looking after it". "All the holes in the walls arn't from me, they're from my gansta boyfriend, but don't worry I threw him out". "The bank made a mistake, I payed a whole months rent". Then when they get grumpy they ring up and tell you they are going to come around and kill you - I'm usually OK with this sort of stuff but finacially it's bad and it wears you down after a while. I now have only high end places that professional type people rent and they are a joy to have as tenants (plus they pay a lot more money each week )

[turbo6bar]

It could really suck or you could slowly become filthy stinking rich. You just have to try it and see if your stomach lining is proper for this stuff. I am personally drifting towards commercial RE, but timing a good entry point and finding a good buy has been challenging.
good luck, jurgen

[KFC911]

Originally Posted by matthewbrum

i would stay away from section 8. I have a couple of rental properties and always able to find good tennants with honest jobs. Plan on buying a property in a decent neighborhood with good people. You may not make as much initially but you will be better in the long run.

+1

[jhynesrockmtn]

I've had several rentals over the years. Only did section 8 once to tenants who came with multiple references, etc. It was a nightmare. At the end when I kicked them out after months of (*&%$# and no help from the housing authority my son and I spent a day filling up a walk in dumpster with trash. I walk in, I could have parked two SUV's in and had plenty of room left. Never again, Never. Did I say Never? If you can afford a property manager and be a truly absentee landlord, then maybe.

[MBAtarga]

BTDTWGB! (Been There Done That Won't Go Back!)

[arerrac]

Another thing to consider is Insurance. I'm a broker doing strictly Apartment Building in Ca. Most competitive companies have a limit to the number of Section 8 tenants or will not offer a policy at all!
Make sure you can insure it (and afford it) before you make an offer.
-W

[dmcummins]

Thanks guys. I'm still going to look into it. But I havn't pulled the trigger yet. There are hundreds of homes in the St. Louis area that you can buy for less than 20k. Not that I would want to live there, but they should cash flow. Of coarse you have to get the rent.

[LakeCleElum]

I tried it in a building I used to own. My experience was similar to Jerry's.....Was a very happy day when I sold the building to the wife of the town's Mayor!

[pwd72s]

IF you can stomach all that goes along with it, might be a good investment move, considering the results of last night's election. (edit) Personally, I wouldn't have the stomach for it. I echo the sentiments of those who were very happy to get out of the rentals biz...

[The Gaijin]

No. Unless you live there, know the area, and willing to deal with the day to day.