By Rick Pridemore Mr. Pridemore is currently a REIA board member, and has been a real estate investor since 1989.  Over almost 2 decades he has developed vacant land, rented single family dwellings, and built new homes (both site built and modular.)  He has also traveled the country conducting training seminars and attending trade shows.  Rick is a licensed real estate agent, specializing in both high end and investment properties.   To submit a question, click HERE.			I'm a new investor and want to know your opinion on Section 8. Chris Yatooma, REIA's President, has been doing Section 8 rentals for over 16 years.  I asked him for his opinion: I have been doing Section 8 rentals for past 16 years. Section 8 is a federally funded low income housing program administered at the state and local levels.  Section 8 is so popular with tenants, in some cases there is a 5-8 year wait for an applicant to get on the program. I have had a lot of success with Section 8 and it has helped me keep my properties occupied with good cash flow. Tenants pay a portion of the rent based on their income, this is determined by Section 8. Annual rental increases are not a problem for tenant due to the fact they will only be paying a small portion of it if any. If at any time the tenant looses their job they can be re-evaluated by Section 8 and not only will Section 8 pay 100% of the rent in some cases they even give them a utility allowance. If the tenant does not pay their portion of the rent or their utilities they risk being removed off the program. I hope this information was helpful. Chris Yatooma, President REIA of Oakland A few more points about Section 8… Section 8 is a Federal Housing assistance program that provides low income renters with all or part of their housing costs.  A person applies to the Section 8 program prior to finding a home.  The Section 8 program evaluates a renter’s ability to pay rent based upon income, family size, and so forth.  Then, the renter is given a rental budget to work within.  For instance, if a house rents for $900, Section 8 might pay $800, and the renter pays $100.  Once approved, the renter finds a suitable rental home and asks the landlord if they will accept Section 8 renters.  If so, the inspection and all of the paperwork is done and the renter moves in.  Section 8 sends their portion of the rent directly to the landlord.  Therefore, in a Section 8 rental, the bulk of the rent is “guaranteed” by the government, and the landlord must collect the remainder from the tenant.  If the tenant doesn’t pay their agreed amount, the landlord can evict the tenant, just like any other tenant.  In addition, Section 8 can ban the tenant from participating in Section 8 in the future.  Since Section 8 is so attractive, the threat of being banned is usually a strong motivator.   Landlords that understand the Section 8 program, and work within its guidelines, usually find that it can be a profitable specialty.  Most bad experiences are the result of a landlord misunderstanding how the program works, or refusing to work within the Section 8 framework.    Some tips: Form a positive relationship with the Section 8 coordinators in your area.  These are the people that can give you the “heads up” about renters that are known to cause problems or that are ideal tenants.  These are also the people that can cancel a renter’s Section 8 eligibility for violating the rules.  They are very important people! Let the prospective renter know up front that you will not tolerate late rent, damaged property, etc.  Also make sure that you tell them that you report all lease violations immediately to the Section 8 coordinator.  The fear of losing the very lucrative Section 8 benefits will encourage most Section 8 tenants to honor the lease terms. Don’t be afraid of Section 8 inspections.  They are very basic, and if your property can’t pass a Section 8 inspection, you probably shouldn’t be renting it anyway.
			© Copyright by Rick Pridemore 2006 Permission is granted to reproduce and circulate this document, as long as it is maintained in its entirety and authorship is properly attributed.