Section 8s - pros and cons

[longhorndb]

I am looking at purchasing a property in south Dallas, it says it is section 8 approved. I understand what this is but I don't know what the pros and cons are. I've heard the gov't can be slow to pay. What are some other cons. I think the market rate right now is lower than what section 8 would pay so if anyone has any insights at all I'd love to hear from them. Thanks.

[Admin]

Dave,
Sorry for the slow response and welcome to the board.

For a while here in the Austin area, Section 8 was significantly higher than market and many investors were adding properties to the Sec 8 list.  It seems to have slowed some lately.

My checks usually arrive around the 3rd or 4th of each month.

Pros are that
- so far the checks have always been good... :D
- tenants can be kicked off the program which is decent leverage
- tenants are now responsible for some damages they caused
- if you provide decent housing, tenant turnover will be much less

Some of the cons are:

- that the initial check takes a while to get to you
- inspectors can be extremely thorough on initial and renewal inspections
- tenant frequently has no financial risk
- may be difficult or slow to collect tenant's portion of rent
- additional paperwork

Some of the same as non-Sec 8:
- still need decent tenant selection criteria
- still have to manage properties well

This certainly isn't all, but it's some of the main features.  Section 8 can be fine and actually better than a regular tenant depending on the effort you put into it.  The one house I have which is kept up the best by the tenants (who've actually made improvements to the property) is a Sec 8  property.

I think it's a good addition to a portfolio, but I wouldn't want all my properties to be that way.

Hope that helps....