Section 8 Rentals – Good or Bad Investments:

As a real estate investor who aims to own cash flow properties one of the first choices you will have to answer for yourself is do you want to rent to Section 8 tenants? In my investment area the lower end of the rental market is dominated by Section 8 tenants.

First I should be honest I support this program and see a lot more good than bad from the program. The two main reasons I like the program are first and for most a portion of the rent shows up on time. In addition I come to appreciate the yearly inspections they perform on the rentals to insure the unit is in good condition. I want my tenants to have safe and sound homes and the inspections insure this to a greater degree.

The downside is these inspections frequently come up with miscellaneous items that were actually tenant damaged or never reported by the tenant. This can cause a large repair bill around inspection time but I see these repairs as small investments aimed at stopping bigger problems.

Another issue some landlords discuss is the limits on rental rates, rent increase and required notification periods. If you are buying cash flow properties with the intent to hold long term this will not be a problem but if you hope to flip the house inside a year you might want to look for a non Section 8 tenant to give yourself greater flexibility.

Another question I hear from new investors is don’t you have a bunch more problems with these tenants? The simple answer is No. Now I do have problems but I see these as more people problems and when I look back over the years most of my tenant issues and evictions have been with no Section 8 tenants. As a landlord you are in the people business and everyone deserves a safe and secure place to live.

My final thought on this subject is I get some personal satisfaction out of supplying safe, sound and secure housing for families. I grew up very poor so I see this as one simple way to give back.

Good Investing