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Ask Dave

Section 8 Housing Dilemma

Marvin says the government wants to turn his property into low-income housing. Is this a good idea or should he find his own tenant?

QUESTION: Marvin on Twitter says the government wants to turn his property into low-income housing. Is this a good idea or should he find his own tenant?

ANSWER: Those are typically Section 8 housing is what that’s called, and it’s government-subsidized rent, which means that the majority of the rent is paid by the government, and the person living there is obviously a person who’s struggling with their income—a lower-income person. In my first life in the real estate business, I owned several properties and we put a few of them on Section 8. I managed many that were Section 8 property. It’s a good news/bad news scenario.

If you own a property in a lower-income neighborhood and you put it into the Section 8 subsidized housing program, the good news is you’re always going to get your money because the federal government sends you your money. The tenant is never late on their $20 or whatever because, if they are, they get thrown out of the program and they don’t want to be thrown out of the program. You get your money. That’s the good news. The good news pretty well ends there.

The bad news is that some Section 8 tenants are wonderful people. Some of them are not, and they’re on the government dole. They have an entitlement mentality. They’re unbelievably unreasonable to deal with, and it’s very rough to throw them out. So if they start running drugs or prostitution or whatever out of the house, it’s very tough to get them out. There are exceptions, but you’re dealing with a tough group of folks. You really are overall. Really, honestly, it’s irrespective of area of the country or race or anything else. It’s the economic situation around their lives.

The other bad news, and it’s not nearly as bad as that, is that the government, of course, puts a lot of stringent things on the condition of the property. The condition of the property has to be maintained to a certain level. Now, that wasn’t hard for us because we maintained our properties anyway, but where I ran into problems would be, like, I would put a new storm door on the front door because they would tear the screen door off, and then some government bozo would come out there and say, “That’s not the type of storm door we want. It doesn’t meet our guidelines.” I’m just kind of the kind of guy who just doesn’t give a rip about what kind of storm they want. It’s my freaking house. “Well, in order to stay in the Section 8 program . . .” So I’m constantly having to do crap that’s stupid because of some idiot government regulation that has nothing to do with reality on properties that we were already maintaining.

I got over it pretty quick and didn’t care for it, so I don’t own any property of that type today. I own a lot of rental property, but none of it falls into that category. If I did, I would be managing my own tenant instead of dealing with government low-income housing. And those are the reasons, and that’s the background on it, and that’s from somebody who actually did it. It’s not an opinion. It’s actual experience. “Well, the programs have changed since you were doing it.” Probably. They’ve probably gotten worse. Most things that are government-managed have gotten considerably worse in the last 30 years.