Pros and Cons of Renting to Someone With Section 8 -- Experienced Landlord's Perspective --Worth the Risks!
/I’ve blogged about this subject in the past, but I’ve had more experience now. Some of my opinions have changed! Overall, my feelings about renting to someone with Section 8 are mostly positive, if you do it with some wisdom.
My Typical Tenant
My applicants who become my tenants mostly seem to have the same job. It seems like about 80% of them work at a nursing home. This applies to my tenants with or without a voucher. I do not target single mothers who all have the same job, but those are who call me to rent a house.
Almost all of my tenants are humble, pleasant, appreciative, hard-working single mothers who choose to live near family members or near a decent school.
Check out my blog about How to Get Section 8 and you will see the income and other requirements.
How I Changed my My Mind if they are Better Tenants or Worse Tenants
In my last blog, I said HANDS DOWN Section 8 tenants are better. I have learned with more experience and time that they are about the same as any other tenant. Some are good and some are not. But I still lean toward preferring to rent to someone with Section 8. But I have a rule that I rent to the first most qualified applicant. Sometimes the Section 8 applicant, once I have done the background check, is not the most qualified applicant.
See my blog and video on how I do the back ground check and which tip is my very best.
Pro: How Tenants Use Their Voucher for Good
I especially like to rent to someone who truly needs her voucher to make a difference in her life, thus making a difference in her children’s opportunities. I often see that having a voucher enables the voucher holder to afford to go to school and get a degree that takes them from a minimum wage job. Often they get their degree as a Certified Nurse Assistant.
Story Time:
One of our tenants earned her degree as a dental assistant. She had four children she was raising at the same time. She also held a part-time job. When she started renting from us, Section 8 paid her full rental portion. Once she finished school and got a job, Section 8 paid less and less but it was never a problem because she was always able to pay her portion. Pro: Section 8 tenants are required to pay 30% of their income toward rent and Section 8 pays the rest to the landlord. She finally graduated out of Section 8 because her income increased. She eventually. moved and bought her own house with a program through Section 8 that helped her with the mortgage downpayment. This all happened in a 10-year time period as she rented our house. In that time period too, she referred me to the dentist for whom she works. So I have kept in touch with her and I feel as though I’m a part of her success in that I provided her safe and nice housing to make a difference in her life. She tells me now about the scholarships her athletic sons are getting to go to college. I love it!
My first tenant has had Section 8 since 2008. She has a disability so Section 8 pays her full portion of the rent. When she applied for our house, she was with her mother. Her mother told us emphatically that her daughter just needs a safe place to raise her children and we will not regret renting to her. That has held true all these years. She has always been a very appreciative and easy tenant. Her children are now in the military and in college. She even has a grandchild now. She feels like part of our own family.
Tenants on Section 8 Who Do Not Work
I try not to rent to someone without a job unless they have a disability. People with disabilities also receive other government money. I’m able to see the income in the background check. I NEVER ask if they have a disability.
See my video about the ways landlords can get in trouble accidentally breaking Fair Housing Laws.
See my video about how I do a background check.
I have noticed, when they don’t work and do not have that disability check, that they do not have resources to fix damages their kids cause or to cut the grass or remove the snow. But the Pro is that we receive 100% of the rent from Section 8 when they are not working. It makes collections really easy.
Pro: They Tend to Stay Longer
I definitely have been seeing this trend since working with Section 8 tenants in 2008. If someone has Section 8, it means that their income is not enough to live on, which probably means they really don’t have enough money to move anyway. I rarely see Section 8 tenants moving every year unless they are avoiding slumlord situations.
Pro: Bigger Pool From Which to Choose a Tenant
Because I know how to work with Section 8, I am a minority landlord who offers to rent to people with a voucher. This gives me far more people from whom to choose when I run my background checks.
Con: The Cash Flow Takes Time
This is one of the hardest parts. There is downtime that the house is not collecting rent between the accepted application and the first rental payment. First, we have to wait for the PHA to process the paperwork we send. Then we have to wait for an inspection. Often the inspector will not pass the house the first time. It takes another week to get the inspector back. Then once it passes, the rent can start. But it can take the PHA a month or two OR THREE before they do their paperwork and we actually see that money retroactive from the day it passed the inspection and the tenant moved in.
Con: The Deposit Can Be Tricky
PHAs warn voucher holders not to pay a deposit because so many slumlords cannot pass an inspection. I tell the voucher holder that I understand her concern, but I do need a holding fee. It comes with a contract that states if I cannot pass the inspection, then I legally have to return that holding fee. We’ve renovated 100s of houses and we’ve ALWAYS been able to pass an inspection. It is also the fee I need to be paid in order to take that house off the market to someone else who has the money to pay now. It is not a security deposit. It is money that I will apply to their account. I essentially then apply it to their security deposit once they move in.
Note: Section 8 does not pay the security deposit.
See my video and blog about the Fatal Holding Fee. My contract did not matter to one applicant who demanded her money back OR ELSE!
Some voucher holders feel it is unethical for a landlord to charge the security deposit because the voucher holder is clearly low income. I explain to them that we have to treat everyone the same with the Fair Housing laws. I cannot charge everyone else a security deposit and not them. And I gently tell them they will probably not get a house except from a desperate landlord and, think about it, why is that landlord so desperate when every other voucher holder has the security deposit money and is willing to pay it?
Pro: The 30-40% rule
The PHA determines the voucher holder’s income in far greater detail than I’m able to do. Then the PHA determines how much Section 8 will pay and how much the tenant will need to pay. The tenant needs to pay 30-40% of her income to the landlord for rent. I love it! It is much easier for me to do the background check when I do not have to determine that income myself. And every time the income changes, I know their portion will adjust accordingly.
I don’t feel so awful evicting her if the tenant says she cannot pay her portion because I know she can. If she cannot pay it, it is because she made poor choices that month with her income and she did not prioritize housing. Or sometimes there is a life circumstance, as with any tenant.
Inspections Can Be Pros and Cons
Pro: I like to know my house is determined safe by an inspector. If anything legal arises, I can always show the inspection report that there were smoke detectors and safety features throughout.
Pro: I also like inspections because it’s a good way to find out how the tenant is keeping up the house. Maybe I need to send a lease violation.
Pro: It’s also good because sometimes tenants never call for repairs and they really should have. This is a good and nonconfrontational chance for us to get in the house to know how it is and to secure our investment.
Con: It can be bad too because there are some unfair inspectors who call out stupid things. I made a video and blog about how to handle that.
Con: It can be bad if you’re a slumlord and the house isn’t safe and reasonable. You shouldn’t rent to Section 8 tenants if that’s the case. You shouldn’t be a landlord at all!
Con: It can be bad if you fail two inspections. The house goes into what is called abatement. If that happens the rent payments stop. The tenant is still required to pay her portion, but she will fight that. Once the repair is made, you have to wait for an inspection time. Once the inspection passes then the rent can start up again.
See my video and blog on how to pass a Section 8 inspection and my other video & blog about how to report a Bad Inspector.
Pro: The Best Part — You Can Tattle on Them
The voucher holder is very motivated to keep her voucher. She knows that if she gets evicted, she can lose her voucher. She knows if she has a felon move in with her, she can lose her voucher. She knows that I’m supposed to send every lease violation to her caseworker, which could also result in losing her voucher. If there is a police report made of any kind and I send that to her caseworker or Section 8 finds it on their super search engines, she could lose her voucher.
See my blog and video on how to tattle properly for the best results and how Section 8 tenants lose their voucher.
Pro: The Very Best Part — Regular Rent Deposits Every Month
Like clockwork, there it is, rent money deposited right to my bank by Section 8. I can count on it. Even during a pandemic when people are losing their jobs. I still get rent. Even when the tenant is not paying her portion, Section 8 is paying theirs. It’s a lovely thing!