Is Section 8 Good For Landlords or Not?

Whether you are new to real estate investing and looking to buy your first rental property or an experienced landlord with a robust rental portfolio, you’ve likely considered renting to Section 8 tenants. With benefits like government-subsidized income and free advertising, the appeal is easy to understand. However, for many, the hardships of being a Section 8 landlord outweigh the potential rewards.

Below, we explain what Section 8 Housing is, how Section 8 works for rental property owners, what it means to rent to Section 8 tenants, and how to use this strategy, including the pros and cons of accepting housing subsidies for low-income tenants. We’ll also explain how you can qualify to become a Section 8 landlord and find eligible properties for sale. Continue reading to learn more about this controversial strategy and decide whether it is the right fit for you.

The Housing Choice Voucher Program (HVC), also known as Section 8, was founded in 1937 as an affordable housing initiative that lets landlords rent homes to qualified low-income tenants at below-market rates. In practice, the voucher program pays the portion of rent that exceeds 30% of a tenant’s monthly income. The federal program, run by Housing and Urban Development (HUD), is administered by each state’s local Public Housing Authority.

Before a landlord can be approved for Section 8, the local housing authority must inspect and approve the units, and the rent must be at or below the Fair Market Rent set by HUD. The local Public Housing Authority pays the subsidy amount directly to the qualifying property/landlord. Tenants must pay the portion of the rent not covered by the voucher.

There are two types of Section 8 Housing:

The tenant holds the voucher and can use it at any qualifying property. You accept the voucher and enter into a Housing Assistance Payments (HAP) contract with the local PHA.

It’s important to note that the demand for Section 8 housing far exceeds the supply. In other words, tenant vouchers are extremely limited, and many individuals and families must join long waiting lists. Once a tenant receives a voucher, they often must follow strict rules to avoid losing it and being forced to reapply.

The Project-Based voucher is attached to a specific property rather than the tenant. These units are designated for income-qualified renters, and the subsidy stays with the unit when a tenant moves out.

When tenants move into a property that participates in the Project-Based Section 8 Program, they receive the same type of financial assistance as tenants with a voucher. However, if they move, the program benefits stay with the property and benefit the next resident of that rental property.

In this case, the landlord must qualify for the voucher and then qualify tenants independently (the tenant does not have to work through HUD directly). Qualifying properties also tend to have long waiting lists.

Renting to tenants with housing vouchers is a great option for many rental property owners. There are several reasons: it can be profitable, the housing authority is not as difficult to work with as many people think, and properties usually rent faster (lower vacancy rates mean even more profit). That said, how Section 8 works for landlords, and how well it will work for you, largely depends on how you run your rental property business.

For example, large property management companies can easily handle the extra work that comes with Section 8 rentals, while private landlords may not have time to invest in the program. Below are the top 11 benefits of buying Section 8 rental properties.

1. Consistent Rent Payments Made by the Government
2. Pre-Screened Tenants
3. Constant Tenant Base (Lower Vacancy Rates)
4. Less Turnover (Another Reason for Lower Vacancy Rates)
5. Tenants are Motivated To Pay their Portion of Rent
6. Less Delinquency
7. Fewer Evictions
8. Better Profit Margins
9. Free Advertising
10. Business Support Scholarship
11. The Joy of Being Able To Help People in Need

The biggest perk of accepting Section 8 subsidies is that a substantial portion of the rent you are owed will arrive on time each month via direct deposit or mailed check. Tenants also typically pay on time because failing to do so can cost them their housing voucher.

Another key factor is that, even if the tenant loses their job or receives lower wages, the government will continue to cover the remaining rent the tenant can’t pay (after 30% of their income). As a landlord, this can help you avoid rental payment issues that could arise from a full-paying tenant facing a similar financial dilemma.

Another benefit is that the housing authority pre-screens tenants. In addition to verifying a tenant’s income, the housing authority also conducts criminal background checks and drug testing for all household members age 18 and older. This screening process may provide extra protection for your rental, as tenants must pass both your screening process and the housing authority’s.

The Housing Choice Voucher Program is popular, and most urban areas have hundreds (if not thousands) of tenants on their waiting lists. As a result, participating in the program makes your property marketable to a wider pool of tenants, increasing your chances of renting it quickly.

Because Section 8 guarantees rental assistance for eligible individuals (as long as there isn’t a major change in income or family size), most of these tenants stay longer. This is another major factor behind the lower vacancy rates Section 8 rental property owners usually enjoy.

HUD sets Fair Market Rent at a level that is in the 40th percentile for rents in the area. Put simply, this means that 40% of homes in the area rent for less than this amount and 60% rent for more than this amount. As a result, rents are slightly below the median rental price for that area. In some more expensive metropolitan areas, Fair Market rent is set at the 50th percentile.

This matters for Section 8 landlords because it means low-income tenants can afford their portion of the rent. These tenants also want to pay their rent to keep their Section 8 vouchers.

The vetted property teams we work with at RealWealth often report that tenants using Section 8 vouchers have fewer delinquencies than non-Section 8 tenants. This makes sense, as Section 8 tenants want to keep their vouchers to continue enjoying the benefits the Section 8 program offers.

That said, if a Section 8 tenant is delinquent on rent, you can evict them like any other tenant. In some cases, this process can take longer because you may have more red tape to navigate.

This Section 8 benefit goes hand in hand with the one above. Most Section 8 tenants want to keep their vouchers, so they will do their best to keep your property well maintained and follow the lease agreement.

While this may not be true in every real estate market, in many areas, you can charge more rent from a tenant using a Section 8 voucher than in a typical C (or even D) neighborhood. When you combine this with the consistent, timely rent payments you’ll receive from the government and Section 8 tenants’ willingness to pay, many landlords enjoy (and some even prefer) Section 8. Learn more about property classes and neighborhood types.

The U.S. Department of Housing and Urban Development has a website that prospective tenants can use to find qualifying low-income housing. Several local housing authorities also maintain websites or separate lists of landlords in their areas that accept housing vouchers. Both of these services are provided free of charge.

Companies offer scholarships to Section 8 landlords to obtain advanced property management training and discounts on everyday property management supplies. Contact your local housing authority to learn about these opportunities.

While there are various benefits to becoming a Section 8 landlord, one of the biggest is helping someone in need.

While buying Section 8 rental properties has many benefits, it also has potential disadvantages. It’s wise to talk to participating landlords in your area to learn how the strategy is working for them. In the meantime, here are 11 disadvantages to keep in mind. Please note that these will not apply to all Section 8 landlords or tenants!

1. Rental Pricing Regulations
2. Risk of Renting in Lower-Income Areas
3. Restrictions of Section 8 Tenants
4. Don’t Receive Voucher Payment Until Tenant Moves In
5. HUD Does Not Pay Security Deposits
6. Annual Property Inspections
7. Potential for Difficult Tenants
8. Property Damage Issues
9. Harder to Evict Difficult Tenants
10. Full-Paying Tenants May Turn Away
11. Difficulty Selling Properties to the Free Market

Please note: Section 8 varies by city, so check with your local housing authority for their specific rules and regulations before deciding to become a Section 8 rental property owner and landlord.

Complying with the Housing Voucher Program means setting rental prices based on the Fair Market Rent (FMR). HUD calculates these based on the number of bedrooms in a unit and, sometimes, the value of your property. This varies by county.

During the screening process, HUD approves tenants for a voucher that covers a one-bedroom or larger unit, depending on family size. To qualify as a Section 8 landlord, your bedroom units must match the dollar value of these vouchers.

For example, if HUD says the FMR in your county/community for a two-bedroom is $1,000, you will be asked to keep your rental rates at $ 1,000 or less. Therefore, if you are a landlord with a rental property in a higher-rent neighborhood wanting to receive market value, it may be nearly impossible to find renters of Section 8.

As mentioned above, if you own property in a higher-income area, accepting housing vouchers likely won’t make financial sense. While there is considerable profit to be made from the housing program in lower-income areas, there are some risks to be aware of, including:

• More crime and drug issues
• Increased property damage
• City authorities ignoring water/safety issues in the area
• Less appeal to potential renters

See more property management tips for landlords.

Tenants must comply with many HUD restrictions. One restriction is the number of bedrooms in a rental unit. For example, a household of 3 people qualifies for a two-bedroom voucher; therefore, the tenants will look only for two-bedroom units. HUD will subsidize this family on a two-bedroom rental, paying the difference after the tenant pays their required 30% of household income.

A common dilemma is when you will receive your first rental payment. Typically, the housing authority won’t pay you until after the tenant moves into the property. This is mostly due to the administrative process, which can be slow at first. However, once you receive the first payment, you should expect consistent monthly payments.

If you do not have the financial ability to wait a couple of months to receive the first month’s rent, you may want to reconsider renting to Section 8 tenants.

HUD provides housing vouchers that pay toward the tenant’s monthly rent, but the public housing authority does not pay security deposits (which most rentals require). If you wish to collect a security deposit, you’ll have to collect it directly from the tenant. This could be an issue because the tenant has already shown to have income problems.

After the initial housing inspection, you will need to be ready for the Housing Authority’s annual re-inspection. They look at 13 main safety categories, and it is not uncommon to fail in one of these areas (or more). A broken handrail is one hazard that could cause you to fail an inspection.

If you fail the inspection, you will receive a list of items that need to be fixed. Once you fix all items on the list, you can schedule a re-inspection with the housing authority. They will send the inspector again to confirm all issues have been fixed.

If you consistently conduct your own inspections and fix issues as needed, these inspections can go smoothly. However, if you have problematic tenants or don’t do regular managerial inspections, a housing authority inspection can be stressful and a nuisance.

Many landlords are wary of Section 8 tenants because they pay less for the rental and may have less incentive to keep the property in great shape. However, the opposite could be true because tenants have more incentive to follow the landlord’s policies to avoid losing their vouchers. The risk of property damage may or may not increase with tenants in the program.

It is assumed that Section 8 tenants are in a financial bind and, even with the housing subsidy, may still struggle to pay their percentage of rent. For example, many individuals who qualify for housing vouchers are physically or mentally unable to hold a job, or only able to work part-time. This may be from complications with old age, disabilities, or other health issues. Considering their personal hardships, they may not be able to maintain a high standard of property upkeep and cleanliness. They also may require more safety features and assistance throughout their rental period.

In a Section 8 eviction, you must follow state and local eviction laws, just like with any other tenant. Evicting tenants under Section 8 requires more work because you must send copies of documentation throughout the eviction process to your local housing authority office. This includes copies of notices sent to the tenant explaining the violation(s) and when corrections need to be made to avoid eviction.

Additionally, some states have rules requiring landlords to notify the housing authority that they have permission to proceed against the tenant in court. Tenants do know, however, that if they receive a court eviction order, they will lose their voucher, so they will likely try to fix the problem beforehand.

If your property has Section 8 tenants, full-paying tenants may be turned off by them because of negative stereotypes about low-income individuals. They may assume the worst of these tenants and not want to be your neighbors.

You cannot change how others feel, but you can keep your property well-maintained and appealing. Also, it’s wise to accept vouchers only from tenants with a good rent history.

It may be difficult to sell your property later if you have Section 8 tenants. Potential buyers who aren’t interested in accepting housing vouchers may not want the hassle of ending leases to rent to the free market again.

For more information on this strategy and how to be a Section 8 landlord, watch this episode of Kathy Fettke’s Real Wealth Show podcast, where she chats with a Section 8 investor.

Real estate security and affordable housing opportunities for all are always a balancing act. There are never any guarantees with real estate or government assistance, such as in the housing program. In 2018 and 2019, government officials made budget cuts in assistance programs for low-income individuals and families. HUD also regularly proposes changes to Fair Market Rent calculations, and in 2024, it implemented a 10% increase in the income limit. If you choose to be a Section 8 landlord, stay up to date on any potential HUD changes to the low-income housing program.

We are all aware that government leaders and the financial stability of our country are always changing. Currently, there have been substantial cuts, and according to the Center on Budget and Policy, “Among these are substantial cuts in low-income housing programs that would affect a broad swath of low-income households, including several million working families with children, seniors, and people with disabilities.” Having said that, there may be fewer vouchers or added regulations that will trickle down, making things more difficult for Section 8 landlords.

With budget cuts projected to continue throughout the next decade, we are left to wonder how the Housing Choice Voucher Program will be affected. If vouchers were eliminated, would you have a difficult time renting your unit to full-paying tenants? Is your rental located in an area where people want to rent and is well maintained to appeal to most renters? Real estate and federal funding are always changing; therefore, Section 8 landlords need to be extra prepared to switch gears in how they rent and what they rent.

Laws for landlords accepting tenants receiving rental assistance can vary greatly by city. In some cases, cities have laws to prevent discrimination against those with housing vouchers, and other cities may be loose in their guidelines for Section 8 rentals. If you live in a city with many rules and laws governing low-income vouchers, then it may be more of a hassle for you as a landlord than it is worth. Whereas if you live in an area where there aren’t many rules, it may seem easier; however, loose rules can create uncertainty and a lack of organization.

In 2018, the Small Area Fair Market Rent rule was enacted by HUD. This changed the calculations of FMR in metro areas because calculations are done by zip code and not just by areas within a zip code. This means that higher-income areas are included with the lower ones when calculating fair market rent. This is intended to help increase housing options for Section 8 recipients beyond just low-income areas. More recently, HUD instituted a 10% increase cap on income, which also limits rent increases. Continual changes can create uncertainty in both the minds of recipients and landlords.

If you’re an existing rental property owner interested in the program, here’s how the approval process generally works:

1. Contact your local Public Housing Authority. Each PHA has different requirements based on local affordable housing needs. You can find your PHA through HUD’s website.
2. Schedule a property inspection. An inspector will verify your property meets building and safety codes and confirm your rent is in line with comparable units in the area.
3. Sign the paperwork. Once approved, you’ll complete a W-9 and a Housing Assistance Payments contract to begin accepting vouchers.
4. Find your tenant. You can market your property independently or be listed through the PHA’s available units directory.
5. Receive monthly payments. The PHA deposits its portion directly into your bank account each month. The tenant pays you the remainder.

One thing worth knowing: if a Section 8 tenant’s income drops, the government can increase its share of rent rather than leaving you with a shortfall, up to 100% of the rent in some cases. That income protection is one of the more appealing features of the program for investors focused on cash flow stability. However, the opposite is also true; if your tenant’s income increases, their voucher can decrease. 

Looking to purchase preexisting Section 8 properties for sale? The U.S. Department of Housing and Urban Development is a good place to start if you’re searching independently. Some properties may be rented and for sale at the same time. You may need to call the current landlord to find out whether their property is for sale.

If you are buying a property with current voucher tenants, you can keep that status by signing a landlord exchange on a W-9 form with both the seller and you, the buyer.

A more direct path to finding a Section 8 rental property for sale is through RealWealth and our recommended list of vetted property teams that already specialize in Section 8 in markets like Birmingham, Cincinnati, Cleveland, and St. Louis. See our full breakdown of these four markets →

Buying a rental property with current Section 8 tenants can be a jump-start; however, you can become a Section 8 landlord anywhere you choose if you feel it is a wise business decision. You can rent all or part of your rental property portfolio as long as you follow the HUD guidelines.

As you’ve learned, there are compelling pros and cons to consider before becoming a Section 8 landlord and renting to tenants in the Housing Choice Voucher Program. Like any investment property, renting has advantages and disadvantages, and Section 8 is no different. Weigh the pros and cons and decide what matters most for your investment strategy and your purpose as a real estate investor. Demand for affordable housing continues to grow, and now may be a great time to invest in Section 8 Housing.

Section 8 tends to work well for investors focused on cash flow over appreciation, who want predictable monthly income with government-backed payment reliability, and who are willing to work within the PHA system. It’s a strong fit if you’re investing in affordable markets with experienced management already in place and plan to hold long term.

It’s a less natural fit if you’re prioritizing strong appreciation, planning a short hold, or want maximum flexibility on rent pricing.

If you’re not sure which strategy fits your situation, that’s a great question to bring to a strategy session with your RealWealth Investment Counselor. They work with investors at every experience level and can help you think through whether Section 8, conventional turnkey rentals, or a combination of both makes sense for your portfolio. There’s no obligation and no pitch, just a focused conversation about your goals.