Investing in Section 8 Housing Has Been a Goldmine
Business → Marketing & Advertising
- Author Dave Lindahl
- Published October 30, 2010
- Word count 524
Investing in apartment buildings that offer Section 8 Housing is so lucrative it's been called "a license to print money."
Of course, we landlords don't really have the power to print money. But when Uncle Sam guarantees your rental income, it's arguably the next best thing.
Federal housing assistance for low-income families began during the Great Depression as a way of moving people out of substandard shelter and into safer housing. When shanty villages disappeared and substandard housing was no longer the critical issue, the program focused on helping low-income families cover the ever-increasing percentage of their income spent on rent.
Today, low-income households that quality for Section 8 pay no more than 30% of their adjusted monthly income on rent and utilities. The government pays the difference. For example, if a renter makes $2,000 per month, he would pay a maximum of $600 (30% of his income) for rent and utilities. If the "Fair Market Rent" for his apartment is $1,100, the government pays the landlord the difference of $500.
One note of caution... the Fair Market Rent (FMR) is determined by the U.S. Department of Housing and Urban Development (HUD) so it's really not a "market" rate in the sense that the free market determines it. HUD decides it. Fair Market Rent varies by city. Understandably, San Francisco rent levels would be higher than Milwaukee Wisconsin.
Apartment building owners are not required to participate in the Section 8 program. There are some pros and cons to weigh when deciding if Section 8 is the right strategy for your building.
Common reasons apartment building owners take a pass on Section 8:
-
You don't want the government involved in your business.
-
You don't want the government inspecting your property for HUD quality standards.
-
You want to be able to charge rent levels above the FMR as set by HUD.
-
You are concerned that Section 8 tenants will not maintain their units or abide by apartment community rules.
-
You are concerned that a Section 8 reputation will negatively impact your property's marketplace value.
-
It's more time consuming and potentially costly to evict Section 8 tenants because judicial action is required.
Advantages to offering Section 8:
-
No shortage of tenants. There's a long waiting list.
-
Better quality of low-income tenant because if the tenant damages the unit or is late paying the rent they can be disqualified for Section 8 assistance.
-
Low turnover. Section 8 has had no measurable impact in transitioning people from government-assisted housing to independent living. Once you have found a good Section 8 tenant, you can have them for a long time.
In a Utopian world, the glossy brochure for Section 8 housing would say landlords benefit from stellar tenants who promptly pay their rent and lovingly care for their units. In reality, they are renters like any other and all the normal tenant trials and tribulations apply.
Thus, as with any apartment house, effective property management will ensure you have an investment that continues to appreciate in value and provides a steady cash flow. The fact that the government subsidizes your cash flow is just icing on the cake.
You Should Follow Me On Twitter: http://www.twitter.com/davelindahl
David Lindahl, also known as the "Apartment King" has been successfully investing in single family homes and apartments for the last 14 years and currently owns over 7,000 units around the US. David regularly shares his secrets and experience on the same stage as Tony Robbins, Robert Kiyosaki, and Donald Trump! Visit http://www.rementor.com for more information on how to invest in real estate and other property investing techniques.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- Do Compelling Marketing Pictures Unlock Sales Potential?
- Become an SEO Expert: The Benefits of Certification
- 8 Essential Steps for Hiring and Collaborating with Commercial Photographers
- Marketing Strategies for Mooncake Suppliers: Standing Out in a Crowded Market
- Discover The Hottest TikTok Trends Taking Over Your Feed!
- How Crypto PR Exists Beyond Traditional Marketing
- How To Automate Affiliate Marketing?
- Effective Marketing Strategies for Tradies: Boost Your Business in 2024
- The Dos and Don'ts of Creating Engaging Online Content That Keeps Your Readers Coming Back
- Unleash Your Inner Artist with Google's Mind-Blowing AI Generator!
- The Impact Of Social Media Algorithms On Marketing Strategies
- Redefining Success with a Holistic Approach to Marketing Measurement
- Dong Yuhui being accused of being racist against women because refusal to sell women's underwear.
- Creating Buzz in the Hallways: High School Advertising Techniques That Get Results
- How does social media marketing tie into a digital solution service?
- Custom DVI Cables: Everything You Need to Know?
- Diet Plan for Weight Gain
- Navigating the Dynamic Landscape of Hot Trends in SMM Panels
- Unveiling AI Brilliance: Leonardo Laboratories at the Fore of Innovation
- Unlock Your Career Potential: How Our Digital Marketing Institute Can Propel You Forward in Mumbai
- Social Media Marketing: Harness the Power of Online Platforms for Success
- Growing Your Business Online: How Gardeners Can Utilize Digital Marketing
- Measuring and Boosting ROI Across SEO, Email, & Social Media
- Navigating Challenging Business Conditions: The Power of Strategic Marketing
- Unlock Your Style: Fortnite Skins for Sale
- The Ultimate Guide to Color Grading: Techniques and Tools for Beginners
- Here Are Some Effective SEO Strategies For Startup Success
- How to Create an Effective Business Marketing Plan
- Traditional Direct Print Marketing Isn't Dead: Unveiling Its Untapped Potential
- New Age Student Recruitment: How AI is Revolutionizing International Enrollment