Investing in Section 8 Housing

NORFOLK, Va. - Jan. 21, 2014 - PRLog -- Real estate investors have a love/hate relationship with Section 8 (http://www.biggerpockets.com/section-8-hud.html), a financial housing assistance program provided by the U.S. Department of Housing and Urban Development (HUD). I’ve heard horror stories about tenants completely wrecking properties, tenants moving large numbers of adults and children into the home, and other flavors of major drama.

There are certainly some downfalls to renting under Section 8, but for my husband and I the positives far outweigh the negatives.  Particularly in these tougher economic times, we are enjoying the benefits of Section 8 and here are 5 key reasons why we will continue to leverage this government funded program:

#1:On-time and convenient payments

I receive my rents (either full or a large percentage) from HUD on time every single month via direct deposit into my business checking account.  I don’t get excuses from HUD about why the rent is late.  The money is there.

#2: Protection from tenant’s financial hardships

I’ve had a tenant go on an unpaid leave of absence from work for 4 months due to health issues…if this tenant wasn’t on Section 8 she likely would’ve been evicted unfortunately due to non-payment of rent (and we’d be faced with a short term vacancy).  Instead, HUD picked up 100% of the rental payment until the tenant could get back to her job.

#3 Higher Rents

Not only are our rent payments guaranteed and stable despite a tenant’s hardship, but HUD is like the best the game in town when it comes to the rental rates.  We’re able to get $1200-$1600/month in lower income neighborhoods (we don’t do war zones though….) where the purchase prices are less than $75K.   In higher end areas, we’d pay twice as much for the house, but still only be able to get $1400-$1600/month in rent.  There would likely be higher and faster appreciation in those nicer areas, but we always look at appreciation as icing on the cake anyway.  It’s worth researching in your own local area!

#4 Free access to a pool of potential tenants and low-cost marketing

With GoSection8.com (http://www.gosection8.com/), I’m able to list our properties and review tenant profiles.  For a small fee, I’m able to do a premium listing to get more attention on my property when tenants are searching.  I used to think that perhaps the applicant pool was unlikely to have internet access to review profiles, but that doesn’t seem to a problem and I believe that HUD also provides paper listings in the offices for those without internet access.

#5 Short Vacancies

Perhaps not every city has a list a mile long of Section 8 participants with vouchers who are seeking housing, but ours certainly does.  Filling a vacancy is a pretty quick process once your property has already been inspected and approved for the program.

These are just a few reasons why I believe investors should take a very good look at the Section 8 programs in their respective cities.  The horror stories that you may have heard could happen even with non-Section 8 tenants and I feel that with careful screening, landlord references, and a general attitude of respect for your tenant and pride in the condition of your property, you will reduce the probability of experiencing your own horror story.

www.cashhomesva.com