Accepting Section 8

I know this has been discussed before but I couldn’t find any of the thorough threads from search.I’ve been receiving a lot of calls recently from section 8 tenants interested in our units.  Do other park owners accept section 8, and if so how has your experience been?  Do you just turn the units that house section 8 into straight rentals, rather than rent to own type agreements?

Yes, we accept S8.  We have had good luck with it in Oklahoma.  We are just expanding into Kansas this month with a new MHP acquisition there, and do not yet have experience with S8 in that state.  From what I’ve heard, landlords’ experiences with S8 will vary widely from state to state.  Oklahoma is a state that actually holds accountable the participants/tenants to not do damage and to not skip out, or they are kicked out of the S8 program and loose their benefits.  Our S8 tenants have stayed longer than regular renters and done less damage (virtually no damage, in fact).  Of course, a good chunk of their rent is wired into our bank account on the 1st business day of each month, and we find that the S8 tenants generally paid their remaining portion of the rent on-time.  So for us in Oklahoma, it’s been great. However, I’ve heard nightmares about S8 tenants in other states where the government administrators do not expect the S8 participants to behave like adults.  I believe this is especially true in the south.  S8 tenants there are a nightmare.  So check with other landlords in your city/state and find out whether the program is administered properly where you are.And yes, you just regular-rent to a S8 tenant.  Government is all about increasing dependency on government, so S8 programs forbid landlords from selling homes to S8 participants to help them become self-supporting and get off the government subsidies.  You must only rent to S8 participants and keep them dependent on their government check.Use GoSection8.com to market to S8 residents.To your continued success,-jl-

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Jefferson,

If someone has a decent supply of empty homes, would you say it would be a good strategy to get some new homes to fill the spots, let’s say with legacys program, and infill those homes with section 8 tenants? Assuming they are in an area where S8 tenants and admin are a good fit like in your situation.

Great response, thanks Jefferson.  Do you still pay to screen the applicants that come to you through section 8, or do you find that the section 8 process has already screened out the bad apples with really bad criminal records?  Since most of their rent is coming from the government, do you waive your standard income requirements for acceptance?

dmaxwell -I think that would be a good idea.  The S8 program has worked so well for us, I am indifferent between taking a RTO-er and a S8.  If your market will support brand new homes (e.g. the lot rent is $250+/mo.) then I’d definitely go ahead and buy homes and infill with S8.  The only thing you need to watch for is to make sure the S8 person’s voucher will cover what you want to charge for rent (which would probably be $750/mo.+ for a brand-new home).  We had one glitch with our last S8 resident.  She was only approved to pay $550/mo. rent.  We had initially agreed to $600/mo. with her.  It was not until the day of signing the lease (e.g. after all government inspections, etc.) that the S8 administrator looked carefully at our lease and said ‘Oh, no, we can’t allow that.  We’ll pay $400, and she can only pay $150 and the total rent can’t be more than $550.’  That was quite a surprise!  Government had never treated us that badly before; we had gotten $600/mo. from other residents with vouchers.  But this was a new day and a new bureaucrat, and so everything was different.  Just make sure right up front that the S8 person applying is approved to pay what you are asking.  That tenant of ours did not even know, she was fine paying $600/mo.  But we all learned that government regulates the total rent a landlord is allowed to charge - not just the portion that S8 pays for.Noel -Yes, we still put our tenants through a standard screening process.  S8 reviews the lease and approves the tenant to sign.  We’ve never had a S8 person fail our background checking, I suspect S8 does a pretty good job of that, but we do it anyway.  We treat all our residents the same.Best to you both,-jl-

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Thank you Jefferson, I think that would provide a nice solution for having to fill vacant lots and have a reliable tenant base. So glad this was posted.

One thing that was not pointed out is that Section 8 does not allow the resident to ever own the property. So any rentals you do to Section 8 will always remain rentals – you cannot work a rent/credit program or sell for cash. If your goal is to own no homes, then Section 8 cannot, by design, ever lead you to your goal. But if you are just trying to fill up rentals, it’s OK for that. However, even then, the customer quality is pretty awful. I know someone who put Section 8 in his park in North Texas and those few tenants ran off all the rest. The entire park then became Section 8 out of desperation, and then that changed the exit rate cap rate to 14% because the park looked so horrible and nobody wanted a mobile home park/Section 8 apartment complex hybrid. So just be very careful with this concept, as it’s a little like playing with dynamite.

That’s a great point Frank. My thinking was definitely just to get some bodies in and vacancies filled without it turning into a long term solution or heaven forbid a situation like you mentioned.

Does anyone know with the S8 if you are stuck with them forever or if you want to shift to try and get rid of the homes to actual buyers, can you non renew the S8s?

If your goal is to get them in and out of the homes, why put them in to begin with? Why not put in regular, non Section 8 tenants?

Good point. My thought was really when you are getting ready to maybe sell. We plan on holding for a while, a long while so down the road if we get ready to sell it would be much more appealing to the next buyer to have owners and less renters.

What I did not like about S8 when I was taking them in my apartment buildings was the inspections. Every year I had to clean up and fix up my S8 tenant’s apartments that were a mess due to their trashy lifestyle. I was always treated as the bad guy by the housing authority as if I was the one frying greasy food in the apartment and not cleaning the splatter off the walls and never vacuuming the carpet. S8 paid a little more, but just about in every case, it was not worth it, it terms of money or the hassle factor. My bottom line on such things: Keep the government out of your life as much as possible.

I used Section 8 extensively in my apartment days, and Jefferson has given an excellent summation. Do your diligence about the local office because they vary quite a bit, even in the same MSA. We always screened Section 8 applicants using the same process we did for non-voucher applicants. Makes everything easy and clear to the site staff as well as double checking others’ work. What I liked about Section 8 was the “extra eyes” on potential problems and the general tendency of our residents to make sure that they didn’t do anything to place their vouchers at risk. I frequently found that a call from Section 8 addressed issues of cleanliness or an extra “roommate” more efficiently than filing for evictions. I also liked the security of having a large portion of the monthly rent received on a regular basis. What I did not like (not universal among Sec 8 offices) was the inspector’s delay before moving people in, having to make what I considered minor or unnecessary repairs, and having to call Sec 8 to remind them to make the payments or put a voucher recipient into their system for payments. The delays could be maddening, but once you’re on a regular system and have a good relationship with the office, you tend to have far fewer problems. I would strongly encourage you to accept “partial voucher” over “full voucher” recipients. While partial voucher recipients can cause you headaches with partial rent payments, I found that they were more conscientious about their tenancy and careful to follow community rules. These are generally people with jobs who are fighting to maintain stability in their lives, and they won’t usually put that at risk to help a troublesome friend or family member. Full voucher recipients tending to be a little less caring about our community standards.If you do go this route, I always encouraged our managers to take muffins or foodstuffs to the offices, bring big, glossy pictures of our community, and talk about how we had changed (I only handled distressed properties). Show that you are responsive and not trying to rip off residents or Section 8. With good relations, we had a steady stream of qualified, working families. It doesn’t always work out that way, but there’s no reason you shouldn’t set that as a goal.

As previously mentioned taking in residents on government assistance depends on where your property is located.
Where we are we would never accept any applicant on assistance as they are all either life time lazy leaches or drug dealers. When we bought our park we had a couple that we ended up evicting for that reason.  

When you take from the government they will control you–maybe not today but it will happen. We all have different business ethics but what has happened to the creative spirit that says we do not need the government to hold our hand to be successful. Apparently our president was correct ‘YOU DID NOT BUILT THAT BUSINESS’. My parents generation at least where I was raised refused any form of government help since their parents wanted a chance to have a new start in a new country that expected them to be SELF-RELIANT America is really changing I am glad I own parks that are receiving no taxpayer’s money. Intelligent buyers know what they are buying and for some the most important item is a cap rate even if it is slum. As an owner operator my residents are IMPORTANT and they know it since when they are in the hospital they receive a visit!!

I look at the section 8 issue completely differently. I do agree that it most definitely would depend on your area and the goal of your park. For me, if I can help people find housing that happen to be on government assistance, and everything else checks out, I think I would take that over an empty home that is bringing zero revenue.

I think it’s one of those subjects that’s ac park owner would have to do their homework on and make that call for themselves when their is such a variety of outcomes from the program.

Why is there such a thing as section 8 housing? When will it end and why in America is such a program needed? I remember LBJ program and Bill Clinton plan to solve those issues. Our government is not solving problems but creating new issues that just justify there involvement in EVERY part of our lives. .Our housing these people would be wonderful if there was an end game but no they qualify and then their children and their children are on the taxpayers back which also included you… I visit poorer counties that the USA and most of the time FAMILIES TAKE CARE OF FAMILIES without government assistance. We have been too passive as Americans to this down ward trend of takers vr. producers and not demanding less government involvement. Go to section 8 housing what year is their car, how big is the color TV or how much food they buy with food stamp they lack the skills to prepare. My wife 35 years ago in Brooksville FL was helping ADULTS on food assistance how to prepare food that was free now their grandchildren on still on the dole. For myself I refuse to take taxpayers money to assist people that did not equip themselves to be a self-reliant taxpayer–this is America were the poorest of poor can be successful–the tools are available but that is there freedom of choice and I REFUSE to house them and be an enabler I also refuse to own or buy parks that have vacancies–buyers choose what they will own and what it will become–I like to make money the first day I own a park–I am not a developer the risk is way to great!

Along those lines Carl, I’ve got to show you this:For the longest time I could not make any sense out of that logo. Can you see what it is saying?  Then it was explained to me that it is 3 arrows. The bottom one is people entering the Section 8 program. The middle one shows them being lifted up by the subsidized rent. The last arrow shows families then leaving the program at a higher level. I know working in the trenches as a low income landlord makes one something cynic, but the puffed up self-deluded regard that such agencies hold for themselves takes the cake. I understand that if you get free money you can up your lifestyle. But how anyone can think that once the freebie checks stop coming, that lifestyle will be maintained is beyond me.  A more honest logo would have a fourth arrow pointing straight down showing the people right back to the level where they started from, which is something I saw any number of times when people lost their voucher.  

I had several S8 tenants when I had SFRs, most were pretty good. I liked the auto deposit feature of the rent, and the S8 tenants portion was generally paid more promptly than the regular tenants’ portion of their rent. However, the inspectors, at least in my opinion, seemed to be lacking in technical building knowledge. They do an annual visit for S8 tenants at lease renewal time to make sure the property is ship-shape. I always kept my houses in real good shape, but I never had an inspector who left without dinging me on at least 2 or 3 ridiculous, almost made up, items. Whenever possible,I fixed those issues on the spot, having brought tools etc with me. So, I just figured that was how the game was played, that they had to show something on their annual inspection report as a way to earn their money, so to speak. But overall, I had good luck with the S8 system and would consider them when I finally find my first MHP.

Jim Allen

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Who needs to be under government scrutiny when it is so easy to rent out homes?My previous business was extremely regulated and I couldn’t wait to get away from the inspectors looking to "save the world"This is why I am constantly drawn to this area of MHP’s.The demand is incredible. Most of the time I put a sign in the window of the traileror list it for rent on the local facebook page and then I start getting calls almost immediately.

Your tax dollars at work!