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We own a home outright (no mortgage) in a depressed neighborhood. The house is in poor but livable condition (I lived there myself until recently).
We have had it on the market for a few weeks at $100k less than the average cost of a home in the nieghborhood. It is the second cheapest home on the market in the area.
However, we are getting offers 60-100K less than our asking price, mostly from people looking to be section 8 landlords.
So it dawned on us, since we have no mortgage on the home, and we are not under other financial pressure, why not simply enroll as section 8 landlords ourselves and use the approximately $20,000 yearly income to pad our current expenditures? 75% of that $20,000 would be guaranteed paid by the city.
Because the house is in a very depressed area, it is not worth fixing up much.
Does anyone have experience with this? Good or bad?
For starters you DO NOT need to be in a depressed area to be a section 8 landlord. I took section 8 and was in a really pretty upscale area. The money was decent because the rents of the surrounding areas were solid. You need to use the same sort of standards of livability as any other same landlord, and if your place is in bad condition then you will need to budget for the extra maintenance that a family may place on the systems -- from electric to water to gas appliances you can pretty much count on anything that is close to being busted WILL BREAK when you least can afford to fix it and the tenants know their rights to have things fixed.
That said in my experience tenants that are poor are NOT universally better or worse than well off tenants. With adequate screening and smart 'positioning' of your home you can get very reasonable tenants that will appreciate having a home that meets their needs. If you have a very small yard that is kind of a plus as that will make your "no pets" policy understandable. Ditto having only one bath, that discourages folks with mulitple adults living in the household. A place with too many bathrooms invites unrelated adults to live together and that can be a rough crowd...
I have other tips, but maybe if you start by telling us the current condition of the property that might save some unneeded warnings. How many beds / baths? Garage / off street parking? Quality of local schools? Distance to employment centers? Appliances? Land?
I've managed a number of Section 8/Voucher units... tenants are often the same as those not receiving assistance... some of my neighbors never knew the tenants had Section 8... at one place, the neighbor tried to hire me because he saw I did work at the neighboring property and thought the Section 8 tenant was the property owner.
Don't know where the 75% figure comes from... I've had contracts where the Housing Authority paid 100% and others where they only paid 1 or 2%... all dependant of family income and size.
A run down property will not pass Housing Quality Standards.
Go online or visit your local Housing Authority to get a copy of the move-in checklist... make sure everything on the checklist is OK...
Door Locks, Window Screens, Outlets, Plumbing, Roof, etc...
Screen your tenant just as you would any other tenant... just because someone is on Public Assistance doesn't mean you have to accept someone with bad credit... I never did.
Tip... try to avoid providing appliances... I found that up to 50% of my trouble calls were appliance related... I provide housing... not appliance service. The fewer appliances the better... generally, I don't have dishwashers, garbage disposals or washer/dryers... same goes for refrigerators and free standing ranges... if need be, I will find or give the tenant a stove and refrigerator... Housing only credits the Landlord $1 or $2 a month per appliance and who needs the Thanksgiving Day Emergency call about a Stove not working.
We had an agent who screens section 8 tenants come through the property and tell us what we needed to do to pass inspection-- basically paint the interior, fix a couple broken windows, replace a faucet. There are also some plumbing issues that need to be dealt with. So we would repair all that before renting it out.
The house is very dated-- metal cabinets from a 1950s remodel. Just looks shabby. It wouldn't be worth it redoing the kitchen/ bath/ adding a second bath b/c we would never get our money back.
It is located in an inner city area but is zoned for a school that is better than most inner city schools... there is a driveway, 3 BR/1bath.
I hadn't thought about calls for appliances-- I will ask agent if we are responsible for that.
The 75%/ 25% was told to us by the agent, I may have misunderstood. We are in NYC.
We had an agent who screens section 8 tenants come through the property and tell us what we needed to do to pass inspection-- basically paint the interior, fix a couple broken windows, replace a faucet. There are also some plumbing issues that need to be dealt with. So we would repair all that before renting it out.
The house is very dated-- metal cabinets from a 1950s remodel. Just looks shabby. It wouldn't be worth it redoing the kitchen/ bath/ adding a second bath b/c we would never get our money back.
It is located in an inner city area but is zoned for a school that is better than most inner city schools... there is a driveway, 3 BR/1bath.
I hadn't thought about calls for appliances-- I will ask agent if we are responsible for that.
The 75%/ 25% was told to us by the agent, I may have misunderstood. We are in NYC.
My experience is California... although HUD regulations are Federal... there is some leeway in implementation.
Hopefully the property is separately metered... no incentive to conserve when someone else is paying the bill.
Basically, a unit must be clean, safe and functional... cosmetics are not a major factor... peeling or flaking paint is...
Dont forget t put smoke alarms in every bedroom and the hallway and kitchen. We have a section 8 house ; sounds a bit like yours ; old house, very functional, in a commercial area so it was difficult to rent to a tenant. I did get a section 8 tenant and it has been a nightmare. While I am receiving the rent from the state ; I am in the process of evicting the tenant as she hasnt paid her $128 rent per month for 7 months. Was at court last week.
I only put a fridge and stove in the house ; no washer/dryer or dishwasher. Even with this, and the fact that she is responsible for oil, it has been a trip. The tenant cannot even put back in a window screen that she took out ; she cannot do a single thing. I dont know when the brand new stove was cleaned last ; we will need to trash it when she leaves. Garbage has been strewn around the property for weeks without her cleaning it ; its her garbage. I spent 3 hours one day picking it up.
That has been my experience with a section 8. Not all section 8 tenants are as helpless as this one. Not all regular tenants are as good either. We have another home and the tenant is great ; even put bricks around the trees to protect them.
Good luck. You may be lucky if the home is in a decent school district.
We had an agent who screens section 8 tenants come through the property and tell us what we needed to do to pass inspection-- basically paint the interior, fix a couple broken windows, replace a faucet. There are also some plumbing issues that need to be dealt with. So we would repair all that before renting it out.
The house is very dated-- metal cabinets from a 1950s remodel. Just looks shabby. It wouldn't be worth it redoing the kitchen/ bath/ adding a second bath b/c we would never get our money back.
It is located in an inner city area but is zoned for a school that is better than most inner city schools... there is a driveway, 3 BR/1bath.
I hadn't thought about calls for appliances-- I will ask agent if we are responsible for that.
The 75%/ 25% was told to us by the agent, I may have misunderstood. We are in NYC.
You will definitely have to provide a stove and refrigerator in NYC. Wow. You sound like a real slum lord trying to get over on needy people. Section 8 is not welfare working families are eligible also.
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