Is Section 8 Good For Investors?

Is Section 8 Good For Investors?

That is a common question I hear all the time.  Some investors LOVE it and other investors HATE it!  How about you?

Leave me your comments below please and share this posting with your contacts so we can hear from them as well.

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What is Section 8

Section 8 is a government program that dates back to the Housing Act of 1937. Section 8 pays rent for over 3 million low-income households. A variety of Section 8 programs are available to low-income tenants, but the most popular is the voucher choice program. This program will pay either a portion of the tenant’s rent or all of the tenant’s rent depending on the individual tenant’s financial situation.

Most tenants pay about 15 – 20% of their take-home adjusted income for Section 8 housing. The adjusted income takes into account deductions for dependents, disabilities, and other medical expenses. If the tenant is unemployed or has a several children they may become eligible to have their entire rent paid by this program.  Some tenants have continual change in coverage as they work, lose their job, have more children, etc.


Why Investors Love Section 8

Most Landlords either love or hate the Section 8 program. They love it because they don’t have to worry about receiving full payment of their rent on-time, every single month. They don’t need to worry about checks being “lost in the mail” and a million other excuses tenants use to not pay their rent on time every month. When “Uncle Sam” pays your rent you can bet it is on-time each month!


And investors love it because they can charge a lot for their rent.  They can also rent houses easily in areas that tend to be rough neighborhoods.  This allows Investors to buy very cheap houses and create a ton of cash flow for themselves.

Depending on their voucher, tenants are fitted for a 1 – 5 bedroom property. Rent for each of these properties is pre-determined by the local agency administering the housing voucher. The good news is that the monthly rent is often a little higher than they can achieve with non-Section 8 tenants.  It is also easy to find section 8 tenants for your houses to rent.


Why Some Investors Do Not Like Section 8

One of the reasons that some landlords don’t like Section 8 is the government regulation involved. They don’t want the government involved with their rental properties. The government puts regulation on all Section 8 properties. The regulation includes a safety inspection when the tenant moves in and ongoing inspections at least annually. These inspections can be costly to the Landlord.  There are entire investing strategies on eliminating features in houses that can get broken by tenants!

After the inspection process, you’ll need to fix every item on their list before the tenant is approved for move-in. The inspection criteria is more stringent than most landlords expect, so the expense can be costly.

Because Section 8 is a government subsidized housing program, you can expect the process to move very slowly. The Section 8 workers are always under-staffed and over-worked. They are not able to provide the level of service you’d expect. This results in a slow process of getting through the inspections, the contracts, tenants moving in, and waiting for your first check to arrive.

Why Some Investors Hate Section 8

Another primary concern is the quality of the tenant. Landlords fear that Section 8 tenants will be rough on their property, not change the furnace filters, call the landlord for leaking water, and generally not properly maintain the house.

Sometimes the tenants have large families or invite others to move in with them to share remaining expenses or even sublet out the couch.  Extra people can lead to heavy wear and tear on the property.

The way to minimize this is to fully screen Section 8 prospects just as you would non-Section 8 tenants. Landlords need to pull criminal background checks, call previous landlords, and check everything regardless if the tenant is in the Section 8 program or not.

Do You Love It Or Hate It?

Some landlords love the Section 8 program. I know real estate investors who have 100% of their rentals filled with Section 8 tenants. Others hate Section 8 because of the challenges managing the whole process.

How about you?

What are your Section 8 experiences? Did you try it out, stay with it, or drop it as fast as you could? Share your Section 8 stories with us right here in the comments section.

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  1. I enjoyed the article. It was a good read. I plan on getting into the section 8 rentals and other forms of buy and hold. The article provided good insight on both sides of the equation.

  2. Good article, Jim. Makes total sense when you sit down and think about it. I like the point you raised that section 8 tenants should be treated as any other tenant. I too plan to delve into the section 8 arena later this year.

    • Jim Ingersoll says:

      If you screen them in a similar way, but realize they don’t pay their own rent, you can find good Section 8 tenants. I have had some great ones that have been with me now for 6-7 years in the same house.


  3. Great article Jim. I’ve had some Section 8 tenants and had some good experiences and some bad ones. What I learned is that Section 8 tenants can be great if you screen them like you would a Market Tenant. I’ll be sure to share this with my network.

  4. Steve Hamilton v.p. Team Hamilton real estate investments.. says:

    Jim I use section 8 on my low end cashflow properties. And they are great overall. I have found them easy to work with. And when they do want me to fix something it is something I would want to fix anyway, if I seen it first. And they have never been late on rent. In fact, I could set my clock with them. So they give me the ability to cash in on the high Return on investment of low end rentals, without the headace of collecting rent..

  5. Laurie Patterson says:

    You can’t be a slumlord and be involved in section 8. I love my section 8 tenants and my low turnover rate. I sign 2 year leases with them and enjoy the money deposited directly without hassle. I do extensive interviews and have never had any issues. Section 8 isn’t for every investor but works great for me.

  6. I administer a big Facebook group and they talk about this topic quite often. I’ve never rented to section 8 but I’ve always been nervous at the thought of it, especially from comments and stories I hear in the group pretty often. You bring up a great point here though, as long as you do the same tenant screening you should be able to find worthy tenants that will treat your property right. I am extremely thorough when it comes to screening and have not had a problem tenant yet. It’s work but the work is worth it.

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