“When the gig ain’t there, you still got to pay the rent. I learned that a long time ago.” Jimmy Scott

Many apartment owners, over the years have tried renting to Section 8 tenants. Some had good results and others not so much. The first Section 8 tenant I had was in a building I had syndicated in Long Beach, in the early 1980’s. I had a very old lady who had lived in one of the apartments for many years. It was a very small 1 bedroom unit. Section 8 paid me substantially more for the same unit and same tenant. Today, Section 8 is paying much higher rents. Is it time to think about trying it out in your building?

PRO’S There are some positives to consider here. It goes by zip code, but you can easily be getting $2096. for a 1 bedroom or $2666. for a 2 bedroom. Go to the hacla.org if you are in LA If you are in Riverside there is harivco.org and San Bernardino is hacsb.org. There is a website for just about every county. The higher rents are a great thing. Regular payments are another, as they will do automatic payments to your checking account. You can raise rents yearly , within the rent control limits for your locality. Another thing is that Section 8 tenants seem to be pretty stable, considering they can wait as many as 10 years to get on the program and they pay 30-40% of the actual rent. Quite a bargain and since landlords are not required to accept Section 8 tenants, they are more reluctant to move.

CONS As with anything, there are two sides to this issue. While the percentage paid by the government comes in like clockwork, you have to get the rest from the tenant directly and they may not be as timely. There is an inspection required at least every 2 years, and some repairs may be required of you. You may have tenants who spend more time at home, thus more wear and tear on your unit.There is also the red tape when you get started. The initial paperwork is more than with non- Section 8 tenant, and when you deal with government agencies, it can be time-consuming.

PREPARE If you have decided to go with Section 8, there are a few things you can do to protect yourself from potential losses, 1) Screen your new tenant well. Check the references, I always go to a tenants previous residence. That will tell you all you need to know about their housekeeping, getting along with neighbors and many other problems. After visiting an applicants current home, I have refunded many good faith deposits and moved on to another prospective tenant. 2) Section 8 pays the same with or without garbage disposals, screen doors and microwave ovens. You may want to rent a very basic unit initially. You can always add things later, if you like, after you see how the relationship between you and your new tenant is working.

Section 8 housing may be a consideration if you are experiencing vacancies or just want to improve your monthly income. As with any new thing, proceed with caution.

“The difference between the impossible and the possible lies in a person’s determination.” Tommy Lasorda

What we at PRS PROPERTIES CAN DO. We can help you with determining the value of your units and help you with rental comps so that you can see if you are at or below market for your area. We can recommend experienced licensed contractors who can perform any repairs or installations you may need. We can also look at your building for other changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.