Are you considering expanding your real estate portfolio to include section 8 properties?
Section 8 vouchers provide stable housing opportunities to low-income residents and families. Since vouchers cover rent payments, landlords receive consistent and timely rental payments while tenants enjoy safe, affordable housing.
Let's dig deeper into the pros and cons of investing in section 8 homes.
The Advantages of Buying Section 8 Properties
The reason why section 8 rental income is so consistent is the voucher payment goes directly to the landlord. Tenants don't deposit vouchers into their personal bank accounts and write rent checks from there. This consistency helps reduce tenant turnover, saving money on move-out inspections, new tenant screenings, and marketing.
Tenant screening is so essential to the tenant selection process. Since section 8 tenants must apply for vouchers, they're already partially screened. Tenants can also access a city-wide section 8 landlord database, filling housing vacancies quicker.
These databases and local directories are essentially free marketing. Thus, you don't have to worry about buying rental ads or social media marketing.
Since both tenants enjoy section 8 perks, tenants are more likely to renew lease contracts, creating less paperwork for you and your legal team.
You can still set your own rental prices as long as they remain within HUD's set thresholds. Section 8 payments also cover the majority of tenants' monthly rent, including utilities.
Navigating the Challenges of Section 8 Properties
Owning any type of property comes with challenges for investors. Fortunately, section 8 mitigates some crucial roadblocks, like cash flow and turnover. However, you may run into some obstacles along the way.
Section 8 property owners are subject to more city-mandated housing inspections than other private landlords. Typically, if you accept section 8, your city will inspect your property at least yearly.
Yearly inspections are part of a more extensive bureaucratic process for section 8. Despite checking all the boxes, you may wait a while to become an approved landlord. Therefore, you'll need a plan to maintain cash flow until you're approved; a property manager can help by screening and filling vacancies as you wait for the approval.
Eviction can also be a complicated process. If you need to evict a tenant, you will go through your local housing authority. A property manager is also helpful here since they can run additional screenings and background checks before accepting a voucher.
Property managers also quickly address tenant selection, repairs, ground maintenance, move-out renovations, utilities and internet, and complaints. Letting repairs go or keeping units vacant costs money daily. Property managers experienced with section 8 can mitigate these issues promptly, including scheduling mandated inspections.
Start by learning more about property management services, like rental valuations, rent collection, financial reporting, and real estate marketing.
Learn More About Section 8 Housing Opportunities
Are you curious about the benefits and challenges of buying section 8 properties?
Consider advantages like consistent cash flow, pre-screening, low turnover, free marketing, and more perks for real estate investors.
Remember these tips moving forward, consult the blog, find a great property manager, or simply contact us today to learn more about your options!