Section 8 housing has been compared to the old Clint Eastwood movie, The Good, The Bad, and The Ugly. Some landlords have properties which are entirely Section 8, while other landlords won't touch Section 8 with a 10 foot pole. If you're new to rental investing you need to know what Section 8 is and the pros and cons of the program to decide if you want to deal with it or not.
Section 8 Basics
The program started with the Housing Act of 1937 and now pays for more than 3 million low-income households. While participants have their choice of several programs, the most popular one is the voucher choice program. Section 8 will pay either part of or all of the rent depending on the tenant's income and financial situation. The standard rule of thumb for rent is 30% of the take home adjusted income, and this is also true for Section 8. The program takes into account the tenant's income, number of dependents, disabilities, and medical expenses. A tenant may be eligible for their entire rent to be paid by the Section 8 program.
Pros of the Section 8 Program
Landlords who like the Section 8 program cite not worrying about the rent coming in on time as the biggest pro. Another pro is that landlords are usually able to charge more for rent on a Section 8 rental property. Rent is set by the local agency sponsoring the housing voucher. Rent on Section 8 properties is usually higher than non-Section 8.
Cons of the Section 8 Program
The biggest con of the Section 8 program cited by landlords of rental investment properties is dealing with the government and the regulations. Before a Section 8 tenant can rent a property, it must have an inspection. All of the repairs must be done before the tenants can move in. The length of the process is also a con. Most Section 8 offices are backlogged and understaffed, meaning things move at a slow pace.
One con that concerns landlords about rental investing and Section 8 is the quality of the tenants. This is not to say anyone who is in the program would not be a good tenant. But don't let a guaranteed monthly check cloud your judgment about who to rent to. All tenants need to be screened and checked before you rent to them. Run background checks, call their previous landlords, and check for a previous criminal background.
Many times Section 8 is a love/hate relationship with landlords and rental investing. Landlords either seem to love it or hate it. Knowing the basics and the probable pros and cons can help you to decide if Section 8 is worth it, or a giant headache.
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Helping You Create Wealth Through Real Estate In Rochester, NY, I've bought, sold and represented hundreds of transactions, yielding hundreds of thousands of dollars in profit. Feel free to always contact me directly at 585-455-3352 or by email at ginny@ginnynorris.com. You can also go to http://ginnynorris.com/contact-ginny/ to fill out the form and I will be in touch with you.
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