If you're thinking about getting into Section 8 real estate investing, in this video, I'm going to
be going over all the pros and cons. I currently own several different Section 8 properties
in Washington, DC. So I have a good amount of experience with this. And to start the video,
what exactly is Section 8, in a nutshell, it's basically where the government is going to pay
either a portion or in some cases, the full amount of a lower income residency's rent. And this could
be for really any type of property. It could be a studio condo in the nicest neighborhood
or it could be a 10 bedroom house in "the worst neighborhood." So there's really just a voucher
and they can just use it wherever they want. Now, the first pro is that it is guaranteed income
from the government. And I can't emphasize this enough, because it can be a hassle,
almost like a part-time job tracking down rent from some of these tenants. I have one property
where there's five different tenants and they all pay in money orders and they all
pay on different days. And some of them are mailing the checks, some of them want me to
meet them around Tuesday at 2:00 PM. And there's all this back and forth. It's like hurting cats.
So just having an automatic deposit is a really cool thing.
Additionally, most counties and cities are going to have a website where it tells you exactly how
much rent you could get based on the amount of bedrooms and then based on either the neighborhood
or zip code. So Washington DC, it's like depending on what neighborhood it is and how many bedrooms,
I know exactly how much I'm going to get. A lot of real estate investors are like, oh, can I get
$3,000 a month for here or there? And there's still some question marks in the air. With Section
8, it's very easy and straightforward. And then if you want to increase the rent, because you got to
keep up with this crazy inflation, there's basically just a straight forward one page
document that you submit to the city, go through the process and then you can increase the rent.
So it's not too much of a headache and there's not crazy rent control or anything like that.
The next pro is that the rental rates are actually really good. There's a lot of misconceptions out
there that maybe Section 8 doesn't pay as much as just standard rates or maybe that it pays more.
At least in my case in Washington DC, I found out the rental rates for Section 8 are actually
slightly above market rates. And it is really going to vary depending on the neighborhood,
but some neighborhoods might just be extremely higher than another
neighborhood for whatever reason. So you really have to check zip codes, check neighborhoods.
And then another cool thing is that depending on the amount of bedrooms, you can get significantly
more. And yeah, that's obvious, any type of rental property with more bedrooms can get more. However,
I've found with Section 8 that you can really get extremely more than market rent if you have
like a five, six, seven or eight bedroom house, something crazy like that. I was actually just
looking at a 16 bedroom house. And that house, I didn't end up purchasing it because it had too
many zoning issues, too many things going on. However, you should really check if you can add
an extra bedroom with Section 8, because there's families that are looking that might have like
five or six kids and they need a big place. And there's not a lot of those properties out there.
So with Section 8, as long as you can have a legal, safe, clean, updated type of bedroom,
you can get significantly more. We're going to talk a little bit about the inspections in a
second here. Pro number three is that there are lower vacancy rates. So if you're a landlord,
one of your biggest expenses is going to be the turnover from year to year. So that's what
really kills you. You can get the premium rent, but if someone's moving out, that's going to be
almost a month of lost rent, unless you can get someone in there quickly, but showing the place
with them in there can be difficult, then you got to fix it up, then you got to find someone new.
So with Section 8, you don't really have that problem. There's a ton of demand for Section 8
housing. And because the government is paying some or basically all of the tenants rent,
they want to stay there a while, they don't want to mess that up at all. And additionally,
because it's lower income residents that are doing Section 8 and voucher programs and things
like that, they may not have the means to move to a new place every six months, every year.
So they want to stay there. They want to keep getting those vouchers and keep living
in the property so long as you maintain in. And it works for them. The next pro is that the
tenants that already have Section 8 vouchers have already been pre-screened by the city or county.
And there's different qualifications depending on the city or county, but there's an application
process to qualify for Section 8. And you should still do your own application process, but
anytime someone's already been pre vetted, that chances are that's going to be a better resident
than if you just chose some random person. Also, with most Section 8 voucher programs,
the voucher can be revoked for different reasons. If the tenant was to destroy the property or maybe
there was drug dealing or different things going on, that would make them a bad tenant, basically,
their voucher can be revoked. And vouchers are not always easy to get. So there's a lot
of incentive for the tenant to maintain the property and do a good job of keeping it up.
Pro number five is that besides Section 8 investing being extremely profitable if done
correctly, it feels good to provide good quality housing to lower income residents, especially if
you start adding amenities, like I have a property I'm about to add laundry, we're going to add
parking, we're going to make the landscaping look really nice. It just feels good to provide that to
lower income residents. You might not have had that opportunity before. And maybe previously
they were living in a building where the landlord didn't care. Maybe it was more a slumlord. So if
you fix it up, take care of the residents, take care of the property, it can be very rewarding.
Before we jump into the cons, if you're looking to get into Section 8 investing,
definitely reach out to me in one of the links below or you can reach out to me on social media.
I do different types of mentorships and I also have all the resources that I use as a real estate
investor below. So definitely check those out. Okay. So let's talk about the cons now, because
like any a good thing there's always pros and cons. So con number one is the amount of red tape
and bureaucracy that you need to go through to get set up with Section 8 real estate investing.
When I was first getting started, I tried to do this all on my own. I tried to reach out to the
government and say, hey, I'm looking to get some Section 8 tenants in here. And I was looking for
that fast response from the government. Didn't really happen that way. In fact,
I think it went several weeks of just reaching out, getting no response, getting answers, people
telling me to contact this person and contact that person. It was just this whole difficult thing.
However, what I realized is that in every city, for the most part, there's different companies
that specialize in placing Section 8 tenants. So I basically just said, okay, you guys handle all the
paperwork and I'll pay you your fee and we'll all be happy. So once I got set up with them,
it was obviously much easier because they handled all the showings, they screened the tenants, they
set up basically the payment options. However, it still took, I think 60 days to get paid and to set
everything up. So it took a little bit longer. And then there was just an extreme amount of
paperwork. It was basically three times the amount of paperwork as a normal transaction should be.
The second con is the Section 8 inspections. So I get the point that the property should be in
good overall condition and everything. However, my experience with Section 8 inspections hasn't been
so great. I'll get violations, because I don't have 10 smoke detectors in an 800 square foot
apartment. But then the inspector won't check that the water works or the hot water or things like
that. I had a property recently that I renovated. And so I probably should have double checked, but
I assumed that the water was working and heater was working, everything like that because it was
basically fully renovated. And then not only that, but I had the Section 8 inspector go over and
walk through the property and everything like that. It passed the Section 8 inspection
after all these smoke detectors and paint on the outside chipping, very minor stuff like that.
However, what I didn't realize is that the Section 8 inspector doesn't even check the water, the
heating, they check really weird and odd things that... I'm used to home inspections where home
inspector's just going to check everything because they want the house to be in working order. But
I've just found the Section 8 inspections to be a little bit tedious and just not for the most part,
honestly, not very helpful. So I was luckily able to get through that, but that is definitely a con.
The third con is that depending on the type of voucher or Section 8, and there's so many
different types of voucher programs in Section 8. So I'm more talking about Section 8 on a higher
level. But sometimes they're not going to cover all the rent. So let's say your rent is $1,000 per
month. The government might cover $500, and then the tenant's going to have to pay the other 500.
So that's why I prefer working with this company because I'm like, look,
I want 100% paid by the government. I don't want to have to track anyone down for rent whatsoever.
So I would highly recommend trying to find a company that can assist you with this,
or if you're doing it yourself, just make sure that the government pays
basically 100% of the rent, if you can. The fourth con, and this is more what people
say about Section 8 more of the reputation with Section 8, not necessarily my opinion,
but I say because it's lower income and the person that doesn't have anything invested because the
government is paying all the rent, that they're not going to take as good care of the property.
And my opinion on that, there's people in super high income, super low incomes, everything
between that can be difficult. So you just have to get a good feeling on whoever you're letting
into your apartment building or property. You need to find out why they left their last place,
you do your background check. If someone has three previous evictions,
maybe it's not the best person regardless of their income, maybe it's not the best person to let into
your building. So that's why you want to work with a good property manager and make sure you
choose someone that you have a good feeling about. The next con with Section 8 is that you're still
working as a landlord. Even though the Section 8 resident has a case manager and someone assisting
them, that case manager is basically just echoing whatever the resident says. They're not like the
property manager or anything like that. They're not taking any work off your plate. In fact,
if anything, the case manager's probably giving you more work because they're relaying what the
tenant is saying to you. So now you have two people asking you to, hey, fix this,
do that. So you still have to either find a good property manager or set up a good property
management type of system to handle all of this. If you're looking to get into Section 8 rental
investing, definitely reach out to me in one of the links below. And overall, I think Section
8 is great. There's definitely more paperwork and a little more hoops you need to jump through, but
you should definitely look into Section 8. You can get some times substantially more rent
every single month and it's guaranteed. So you never have to worry about chasing people down.
So thanks for watching and I'll see you on the next one. Bye.