HUD--Preferred Housing


#1

My competition tells me that our double-wides, which we are renting for an average of $700.-, are priced substantially below market. They claim, and I’ve seen their ads, that they rent their double-wides for $800.- to $850.-;

on further inquiry, that they are renting to HUD on the “preferred housing” program.

I did not inquire, nor was offered any particulars, as I was going to ask members of our fraternity if anyone of you is familiar with that program.

Why would HUD pay $100 - $150.- more than the general market?

I suspect that this program must contain some negative attributes.

I would appreciate any all of your comments.

Thank you.


#2

“I suspect that this program must contain some negative attributes.”

I’ve had nothing but good results with my hud tenants (screened just like normal) and nothing but a royal pain in the *** from the admin of the program. Ask 10 landlords about section 8 and 8 of the ten are going to tell you to run like hell and half of them will tell you about a horror story a friend of a friend of theirs had. Ask all 10 again how many have actually have had section 8 tenants and you’ll might get one or two to raise their hand.

Most of the folks that I have found that have offered housing to hud tenants have had a decent experience with the tenants, most everybody else can


#3

If we are talking about Section 8, you trade one set of issues for another. The good news is that you get paid. The bad news is that you have to please idiot bureaucrats who are not rational and tend to dislike productive, profit-seeking people. Given that Bernd and I have similar feelings in re government, it is a mixed blessing:

  1. Downside: You have tolerate, and even be nice to, bureaucrats and grin and bear often unreasonable expectations that they themselves could never, ever fulfill;

  2. Upside: You are getting some of yours back from the beast. What Obama giveth, the landlord taketh away. Class warfare, with a profit and a smile.

Question: What happens if you give a drunk a beer? How about a single malt-scotch? Answer: The same thing, only you’ve spent more on the scotch. Now substitute “money” for beer and “more money” for scotch, and “government”, “government schools”, “Big Three Auto Makers” or other amusing nouns for “drunk”. I digress. Point is, I’m not looking to “give back” for what I allegedly received, I’m looking to “get back” for what I know I’ve been paying, and Section 8 is one way to do that. I did not make the rules, but I will play the game to win - and if that means playing kissy face with people I dislike, so be it, as long as the pay is right.

Based on conversations with some of my clients who do Section 8, geography matters. Inner-city section 8 staff tend to be very hard to deal with, while rural version tends to be more flexible and easier to deal with, and not coincidentally, more likely to accept MH as housing alternative. We are thinking about picking up a few regular REO’s (cheap, cheap, cheap!) and putting section 8 tentants in them. I will probably swap MHP mentoring with a local investor who is vey good at the Section 8 game and interested in owning a few small MHP. Will let you know how & if it goes.


#4

Bernd, 7 years ago I did 4 section 8 contracts. At that time my lease rates were higher than any other Section 8 in my county, the local office commented that my housing units were in better condition and therefore they would pay my price if I could produce verification that other comparable leased units were of similar to higher lease rates. I realize that you and Alexander have reasons for dealing with HUD. My experience was not disasterous, but I believe did damage my operation more than was gained. It basically was view as a detractor by those non-hud residents that were considering moving in.


#5

What about trying to get HUD to do a Lonnie Deal?

Maybe it’s a completely insane idea, but what if you could sell the home to the tenant, Hud makes the payments. I’ve got to believe that they would spend a lot less money buying out a mobile home for a tenant, than paying rent for this same tenant year after year after year…

The upside of course for Hud would be that it becomes a temporary situation. Once the home is paid off, they are done paying for this family or person.

It would be like giving the drunk free green tea rather than single malt scotch…


#6

I can’t share personal experience as I have none, but I can share what a good friend told me. He owns several thousand apartments here in So. Cal. and rents a good 30-40% to Section 8s.

Upside

  1. You get a nice check every month

  2. You still run a check before you allow them to rent from you

  3. They must follow rules or get kicked out of the Section 8 program (sounds like a much nicer incentive to follow park rules than those without section 8)

  4. When they leave, they have to leave it in good condition, or again they get kicked out of the Section 8 program.

Downside

  1. If other tenants get wind of it they will have their own prejudices against that “type” of person being a neighbor. But I’m not sure you’d be advertising the fact or that your section 8’s might do so (I have no idea).

So…that in a nutshell is how he put it to me when I was discussing the issue with him. He loves Section 8’s and continued to do quite well with them.

Hope you find this useful.


#7

Beck,

Makes way too much sense for government to go for it. If they do not have specific “program” for it, they will not do it. To be fair, they may not want for the tenant to be responsible for the home because Section 8 tentants are not the most responsible people in the world…govt bureaucrats would be quite aware of this fact, since their generation-to-generation excuse making and subsidies tend to foster that very lack of responsible behavior. In short, they WANT the landlord to be the responsible party, and ownership of the home by the handout recipient is inconsistent with that goal.

You simply make too much sense to ever function in the fun-house mirror-world that is government!


#8

Beck,

At one point a few years back our local Section 8 program was trying to help get people off of the program by providing downpayment assisstance for buying homes. I did collect one, maybe 2, downpayments from HUD for new buyers but after that the buyer was on their own to make the payments. That’s about as far as I have seen with Section 8 supporting LDs.

Keith

Post Edited (11-21-08 16:25)


#9

How much of a down payment did you collect?

Let’s say family has rental voucher up to 500/month. They are looking for rent at 900/month because they can afford 400/month.

Lot rent at the park is 285.00. Could HUD put down enough to make payment on the home 115/month?

I know most people on section 8 are seen and lumped together as freeloading, irresponsible people, and for the most part, I can definitely see where that comes from.

A few months back, a friend of mine asked me to rent his condo for him. I ran a regular old rental ad, and got about forty calls on a tiny 2bed 1 bath condo. About 30 of the calls asked if it was section 8 approved. I called my friend and said, we need to make this thing section 8 approved. (Insert long drawn out pain in the a** process) We did. We then ran an ad that said “Section 8 approved.” We pulled 214 calls in one week.

We had to choose between 214 people. It gave us leverage to pick the most responsible, best tenants we could find.

There is something here. I haven’t quite figured it out, but there is definitely something here, and I think it’s worth looking into.


#10

I think I collected around $1400 or $1700, can’t remember which but both of those numbers came into my head when you asked. I remember it being more than the normal 1K I would try and get for this small 2 bedroom.

I wouldn’t count on this sort of thing being available all the time or even in your area but it woouldn’t hurt to look into. I can tell you that the residents were a classic example of someone using the system as they trashed the place shortly thereafter.

There is a serious shortage of Section 8 available homes here as well. Like you, about 75% of the calls I recieved on my last For Rent add were tenants looking for Section 8 housing. Here there is no need to “prepare” the home to advertise it as Section 8 approved. You just tell the tenants that you accept Section 8 and they set up an appoinment for the inspection. After they inspect, you make the repairs, they reinspect (if you pass) then there is another appointment for the leasing signing. It is a sluggish system that can run on unless you stay on it. Because the re-inspect could take 2-3 weeks to schedule I used to set-up a re-inspect date as soon as my initial was done and then bust a@@ to get the repairs done by the re-schedule date. That cut some down time out of the picture.

You know the biggest problem with the program, as most have stated is dealing with the admin. Although it is ultimately the responsibility of the Landlord, I wonder if you could toss some of this responsibilty off on the tenant. Being there for the inspections, making necessary repairs and so on. IF you had 214 calls I would think that a few of the more responsible ones would jump at the chance to put in a little extra effort for the benefit they receive. Just a thought. I would certainly reconsider the program if the tenant pitched in a little.

Keith


#11

I think I collected around $1400 or $1700, can’t remember which but both of those numbers came into my head when you asked. I remember it being more than the normal 1K I would try and get for this small 2 bedroom.

I wouldn’t count on this sort of thing being available all the time or even in your area but it woouldn’t hurt to look into. I can tell you that the residents were a classic example of someone using the system as they trashed the place shortly thereafter.

There is a serious shortage of Section 8 available homes here as well. Like you, about 75% of the calls I recieved on my last For Rent add were tenants looking for Section 8 housing. Here there is no need to “prepare” the home to advertise it as Section 8 approved. You just tell the tenants that you accept Section 8 and they set up an appoinment for the inspection. After they inspect, you make the repairs, they reinspect (if you pass) then there is another appointment for the leasing signing. It is a sluggish system that can run on unless you stay on it. Because the re-inspect could take 2-3 weeks to schedule I used to set-up a re-inspect date as soon as my initial was done and then bust a@@ to get the repairs done by the re-schedule date. That cut some down time out of the picture.

You know the biggest problem with the program, as most have stated is dealing with the admin. Although it is ultimately the responsibility of the Landlord, I wonder if you could toss some of this responsibilty off on the tenant. Being there for the inspections, making necessary repairs and so on. IF you had 214 calls I would think that a few of the more responsible ones would jump at the chance to put in a little extra effort for the benefit they receive. Just a thought. I would certainly reconsider the program if the tenant pitched in a little.

Keith

Post Edited (11-22-08 12:56)


#12

John you nailed it with “playing kissy face with people I dislike”, I love the payments, don’t mind the tenants, and hate the people authorizing my payment…

I do have one LD that is on section 8, it’s set up as a lease option and the required inspections are the same. The only difference is that there is a definite end and I can tell the tenant that THEY need to make sure the place is ready to pass inspection and correct any deficiencies or they are going to loose the house because of repair issues… I’m made a big deal of it as her annual inspection came due but it looks like I might actually receive a total of 96 $255 payments on a $5500 investment from the government. I didn’t even see the inspector on her first annual inspection and I’d take many more from my experience so far.

Best wishes,

Ryan Needler


#13

A sincere thank you to everyone who responded to my query. I learned from every post.


#14

As I said before, I feel that there is something to this, so I did something that will either prove to be fruitful or the dumbest thing I have ever done.

I sent an email to our local Congressman asking for advice, or who to talk to who could steer me in the right direction. His secretary called me back the next day and scheduled a meeting for Tuesday morning!

I did not ask for a meeting, just some advice, but they called right away and now I’m going tomorrow. I will ask all of these questions and keep you updated on what they said…


#15

HI,

I have HUD tenants in Arkansas MHP, it works very well and the inspections are easy as long as you follow their list. The tenants are tougher, you must make them follow YOUR rules, they are not used to that but I find a written warning with a copy to the HUD office (it states on the bottom a copy is being sent to their caseworker) makes them shape up fast because the director of our office told me that if I give them a notice to leave for a violation she kicks them off the program. She even lets landlords put in a gripe clause.

Now, dealing with HUD in Nashville, TN is a whole different ball game, the tenants have the power and the office makes you jump through hoops. It is a nightmare, they don’t back you up with the tenants at all.

Good and bad, you just have to screen, screen and screen the tenants.