Are you more comfortable with Section 8 tenants because you are guaranteed the rent each month? Receiving the rent on time like clockwork is definitely good but its been said in the past that sometimes Section 8 tenants do not always keep the apartment in good condition which is something to think about.
Also, the current month to month tenants - ask the current owner what their payment history is? Are they on-time? In all reality if you choose option a - you may be spiting yourself for a while because until you actually get tenants for both floors - you may have no rent roll coming in. Also in order for a tenant to qualify for Section 8 requires that apartments be inspected and should there be a problem with the inspection - you may incur some additional costs to get the apartment Section 8-ready.
Last but not least, depending on which city in Essex County you are referring to - it may not be that easy to remove a tenant even if on month to month. For instance, in the Township of Caldwell, if the property was not owner occupied and even if there is no lease in place - you cannot give one month's notice to the occupying tenant to have them move. You should call the town where the property is located and ask if such an oridance takes place in the town you are interested in purchasing the multi-family or perhaps your agent may know the answer.
Gina Chirico, Sales Associate
Prudential NJ Properties
973-239-7700 ext 132 office
We do quite a bit of section 8 housing, TRA and other assistance programs and what a hassle that can be at times.
But section 8 tenants or not the important factor is to ensure you have good tenants, if the ones you have now are good and pay even if a day or two late. Stick with them! IF the you can have a talk with the current owner and hope he is being honest.
Section 8 tenants only get part of their rent paid by the government, they still need to come up with a portion of the rent. I dealt with the section 8 departments for several counties and they all say the same thing. You need to look out for your best interest and inspect your property regularly, if they are messing it up or not paying KICK THEM OUT!!!! This is what section 8 told me and I'd have to agree.
If you plan on being a landlord, You need to come up with an iron-clad lease and make it your business to know whats happening with your properties.
Section 8 or not you need to run their credit reports of all occupants to at least get some insight into what kind of people they are. Is it common and recent for them not to pay their bills and see what they are paying and not paying. If someone has bad credit because of a recent foreclosure, ask what happened there, INTERVIEW the tenants!!!
A good place to get lease info and discuss problems other landlords have come across and how to PREVENT them from happening to you is by becoming a regular over at sites like http://www.mrlandlord.com
maybe buy one or two of the creators best selling books on landlording.
PS. If interested I just got two new 3 family listings in East Orange looking for a new Landlord.
Good Luck and keep some Extra Stregth Tylenol handy. ;-D
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Anyway, in a neighborhood where section 8 housing is the norm, I myself would prefer all section 8 tenants. Let's assume a 3-family house, each unit with 3 BR, 1 Bth and each renting for $1,000 per month. Two units have section 8 tenants, one is vacant. As is typical, let's say that each tenant is paying $100 of the rent themselves, while section 8 pays the other $900. Given that the apartment, the building, and the neighborhood are by definition less than desirable, as I see it, there are only the following limited possibilities for filling that third unit - 1) get another section 8 tenant. Well, that's really about it because if a person can legitimately afford to pay $1000 per month on their own, they'll choose another area in which to live. Period. So, other than a section 8 tenant, what you're left with are people who somehow scrape together a security deposit, and from then on it's a monthly fight, whether they're leased up or not, to collect your rent, if you ever do.
So, the rent missed during the month or so it might take me to fill the vacancies left by insisting that all non-section 8 tenants are gone prior to closing, is nothing compared to the months and months of rent I'll miss while trying to evict the non-section 8 tenant who is now living in my property virtually rent free.
I don't have much actual experience as a section 8 landlord, but I've been considering it and researching it for a very long time. No matter what, all things being equal, I prefer section 8 tenants in a "section 8 area". But I'm still undecided about my current situation. Do I get rid of existing tenants (a bird in the hand) to fill the units with more reliable tenants (the US govt) or keep them (and end up with a handful of bird poop)?