Accepting Section 8

Thanks for the foregoing clarifications and expansions on S8.  I did not know about the regional differences. I remember that the S8 tenants could not have more than $N in the bank and their car could not be worth more than a couple of thousand dollars.  We’ve been told that ‘the poor will always be with you’ so one way or another we need to live in peace with them.  Yes, the gov’t is broken, but I intend to work with them as much as possible.  BTW, I work in the most regulated industry, hospitals, and still manage to get a lot done.  I particularly like all the learning available on this forum. Kudos to Frank and Dave and their supporting cast.
Thanks, Jim Allen

I have several section 8 tenants in my stick built duplexes. The average tenant is a single mother with 1-4 kids. Usually someone who would have to pay for childcare in order to work a minimum wage job. They are definitely harder on the properties with more repairs and damage. Do not underestimate how time consuming this can be. There is an annual inspection where they will find something to fail every time you are inspected. On the flip side you always get paid. My section 8 tenants have only left when they began making too much money and were removed from the program. Beware that in my region section 8 specifically excludes mobile homes from using the program. 

Toben, for clarification, what region are you in?  Also, the inspector tested for lead in the paint every year, even though she tested the year before, etc.  But I learned to take a vacation day for the day of the inspection and I would take all of my tools and stuff and fix everything right on the spot with the intent of having everything fixed by the end of the day.  That worked pretty good.  The kids were especially hard on the paint.
Jim Allen

Jim,I am in Northeast Oklahoma. I have had inspectors inspect the same unit 5 years in a row and fail items that passed in previous years. I heard that if you could fix it on the spot they would let you pass so I took all the screens out of the windows knowing they love to cite you for missing screens. That inspection they did not notice the screens and cited something that had passed the previous three inspections. In the end my section 8 houses are now in better condition than my non-section 8 houses due to the inspectors picking ridiculous little things that no one cares about. 

Would like to know of all the parks what % of Absentee Owners and Owner Operated Parks are using Section 8 at present , that us Tax Payers are paying for???

From a liability and insurance perspective, insurance companies treat subsidized tenants as riskier. Thus, they charge more or often preclude heavily leden subsidized renter parks from their park insurance programs (apartment insurance programs do the same and then some). The end result for park owners is often two fold. First, they pay more for insurance and get less coverage. Second, they will generally have more liability claims from tenants.

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we bought a community that came with around 20 section 8 tenants. within a year we are down to less than 10 section 8 tenants and plan on going to zero real soon. We do not like the government oversight as well as the additional paperwork. every month it seems that their income is changing which is more paperwork for us due to their subsidized amount changing. We have found it far better to let them move and put someone in their unit that wants to rent to own. We find they are far more profitable and eventually it gets us out of having to own any park owned homes. The scariest words a businessowner can ever here is "we are from the government and we are here to help"
we are located in pennsylvania

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I have a disabled family member renting a mobile home. The first year it worked out well. This year on renewal they drastically reduced her allowance, handwriting a note on the approval letter saying that the amount approved is the amount for mobile homes. I suspect this may be the allowance for land rent only (BTW,
some of the posters here have said that people with Sec. 8 vouchers cannot buy the homes, which is incorrect).

I want to ask them to re-evaluate the rent allowance. How does does HUD look at the rent for the homes you have rented? There are few mobile homes in this area overall, and they are rarely rented so the HUD office really does not have many (if any) comps. My thinking is that the rent for a 1B mobile home would be comparable to a 1B apartment. How do you establish the rental rates?

Any help much appreciated.

Sadly VERY true.

Must be 20 characters - Why???

Uhhh, and you live in California? LOL.

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If a current mobile home owner qualifies for other types of affordable low income subsidies…such as HUD because they are disabled and or a senior citizen, can the TOH switch from regular payments - do you have experience with this? I have read it is possible, but how common is it with aging populations?

So someone moves in, says they have two good jobs, and a week later they file for section 8.

Something doesnt sound right. What would you do?

I’ve been extremely reluctant to go against a basic tenet of Frank’s advice, but I have two small parks in Northern Minnesota. Filling empty lots is difficult as Minnesota aggressively regulates mobile home movers. So licensed mobile home movers are expensive and so it is very difficult to get new residents to move homes into my parks. But older mobile homes are readily available from local farmers and can be rehabbed to Section 8 standards. Mobile homes are treated the same as stick-built homes by Northern Minnesota Section 8 offices. I get as much rent for a 3-bedroom mobile home as for a 3-bedroom brick home. Meanwhile, with Section 8 I have almost zero credit risk. The government always pays. Yes. buying the home, dragging it into an empty lot in my park ,(as the mobile home owner, I am allowed to use country-highways - not state highways, that is legal and cost-effective), and then rehabbing the home takes time and money, but the payback is quick because Section 8 rental amounts are sky high. Plus there is a surplus of Section 8 voucher holders in Northern Minnesota, so you can be picky about which voucher holder to rent the mobile home to. --Selling the rehabbed mobile homes as RTOs might end up being superior, but eliminating the non-payment issue by having USG pay the (high!) rent makes the Section 8 solution very attractive. Again, in Northern Minnesota, mobile home living is widely accepted and Section 8 pays the same monthly rent for a mobile home as it does for a stick-built home, and Section 8 rents tend to go up annually with the market. RTO payments do not. Yet I can deliver an inspection-passing mobile home for a very reasonable cost and be 100% assured of filling vacant lots with a nearly AAA-rated paying tenant that fully expects healthy rent increases every year. Not sure what I’m missing, but it definitely worries me that Frank is reluctant and others are generally not going in this direction. What am I missing?

In your situation you are not missing anything. You are taking advantage of a capitalist system where the government funnels unregulated tax dollars to business owners. If not you it will be someone else.
In many other areas S8 does not work and should be avoided.

Every park is a custom creation based on every conceivable variable from market to temperament of the residents. In general, Section 8 is not a workable solution because it forces you to be in the rental home business at a time in which most everyone is trying to be in the parking lot business.

But if you’re finding it hard to find residents who will own the home and pay you lot rent, then Section 8 provides you with a steady supply of home renters and, yet, their rent is backed by the U.S. government so you will definitely get paid. Greg is completely right on this.

Remember, however, that if you go down the Section 8 path (and the home rental path) that it will have implications on your future cap rate and value when you go to sell, as most buyers prefer the “parking lot” model.