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View Full Version : renting section 8 who has the scoop



axkiker
12-05-2006, 05:44 AM
Hey I was approached recently by a friend who buys houses to rent on the section 8 market.
Anyone doing this, I know its the new fad. What are the pros and cons. His scheme is to buy them for very little $$. Spend several grand fixing them up and getting them appraised for alot more. Take some cash out and rent them out on a 15 or 20 year note.
Seems to me I would be worried about having the house trashed etc then having to spend a bunch more refixing it. Or by some chance not being able to rent it out and being stuck with a payment.
any ideas.
thanks

Mandelon
12-05-2006, 05:54 AM
If you can buy the properties cheap enough its a great deal. I used to be able to buy 2 to 4 unit junker buildings all cash, rehab them, then refinance all my money back out and still have 20% equity. It was like getting free buildings. Now properties just cost too much around here to make it work. But in a lower valuation part of the country it should work.
Section 8 tenants typically wait years to get on the program so they don't often trash the units. They aren't the cleanest folks in the world, so keep that in mind. Do more tile, and less carpet if you know what I mean.
You will have to meet minimum standards for habitibility, and maintain the units to a higher standard, but honestly, its still not that high. Its not a new fad, just more people know about it. Rentals can be a great way to make money over time. Once you get the section 8 deal set up you get your rent money every month like clockwork. Hey this reminds me, rents are past due today...

termiteguy
12-05-2006, 06:03 AM
with sec8 your rent is paid by tha state and so is the sec.deposit its always on time if the people trash the place the state will pay for the repairs and kick them out of the program.

axkiker
12-05-2006, 06:11 AM
with sec8 your rent is paid by tha state and so is the sec.deposit its always on time if the people trash the place the state will pay for the repairs and kick them out of the program.
OK so here is where im getting a different story. The guys who do it here say that if the tennents trash the house. Section 8 will tell the tenents that they must pay for the repairs or they will revoke their sec 8 privlidges. They say that section 8 will not themselves pay for the repairs. I dunno if its different from state to state or what but I have heard that several times.
Im just leary about the whole thing because I have heard horror stories etc. However I do want into the RE market.

YeLLowBoaT
12-05-2006, 06:37 AM
with sec8 your rent is paid by tha state and so is the sec.deposit its always on time if the people trash the place the state will pay for the repairs and kick them out of the program.
That is not ture. its very hard to evict some one on section 8. You also have to deal with "inspections" which if you run a prop right you will never have a prob with( you can get away with murder on some things others they will go ape sh*t on you)
Also if you own a multi unit house hold and one unit fails this inspection, you don't get paid for the whole unit. you don't get that money for that time ever. if you screen everyone extremely well, you will most likly be ok, if you don't, open your wallet...

axkiker
12-05-2006, 06:51 AM
ok so what do you mean by inspections. I understand that when you refurbish a house section 8 as well as the local guys must come in and perform an inspection. Is this all it is or are there additional inspections at a later date. If its just being up to code that does nt seem all that bad.

Focker
12-05-2006, 06:59 AM
talk to Blane aka INS MAN je is a section 8 Tenant :rollside:

YeLLowBoaT
12-05-2006, 08:16 AM
ok so what do you mean by inspections. I understand that when you refurbish a house section 8 as well as the local guys must come in and perform an inspection. Is this all it is or are there additional inspections at a later date. If its just being up to code that does nt seem all that bad.
they normally come out Quaterly or if thiere is a complaint... if you have something that needs to be taken care of or if you have had probs in the past they come out more.
You can be up to "code" and still not meet section 8 reqs.
They come out not only to inspect the prop, but the tenants as well.

Do F150's Float?
12-05-2006, 08:31 AM
Also rent increases are regulated by the government. Which may not be a big deal now, but it was to the company I worked for a few years ago. The market started getting huge and they couldn't raise the rent on the Section 8 tenants more than $50 or so... Also, the section 8 may only cover a portion of the rent, so you will get your guaranteed $$ from the government every month, but you still have to collect part from the tenant. :rollside:

Baja Big Dog
12-05-2006, 09:47 AM
Do you as the prop owner still have the ability to interview and decide who rents the prop, of does the "list " determine who gets the place?