Hello everyone and Welcome to another

episode of Selling Greenville your

favorite real estate podcast here in

Greenville South Carolina I'm your host

as always Stan Mccune realtor right here in

the Greenville area you can find all of

my contact information in the show notes

if you need to reach out to me for any

of your Greenville, South Carolina real

estate needs and just a reminder as

always please like rate review subscribe

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appreciate if you guys would just take a

second to do that today we're going

to be talking about the Greenville South

Carolina Section 8 program which is

for those of you that don't know it's

the way that our local government

subsidizes rent for people in certain

income brackets and in certain

situations there's a lot of confusion

about the Section 8 program and over the

years I've gotten a lot of questions

about it and even though I've talked

about it before on the show I feel

like it's necessary to have another

discussion about this and specifically

that's because for those of you who

don't know I have currently a client

that has listed 11 units in Simpsonville,

South Carolina a majority of which

of the 11 units all on one parcel

they have renters that are section 8

these units are bringing close to

$114,000 a month and I have it listed

for 1.625 million which is in line

with what other comparable multif family

units have sold for the past few years

now needless to say I've gotten a lot of

interest in this property even with

mortgage rates being where they are

but I've gotten a lot of questions from

people about the fact that several of

the rentals as I've said have Section 8

tenants and as I've already said I've

gotten a lot of questions in in

recent months the past year etc etc from

from people just in general about

Section 8 and so again it's just time to

to discuss this again and to try to make

sure that we're all on the same page

when it comes to this program for those

of you listening to the show that are

interested in rentals in the

Greenville area now before I start I

want to make sure that you guys know I'm

not an expert on the Section 8 program

and just quite frankly I have some

gaps in my knowledge about the program

because I always use property managers

for my rentals so a lot of the backend

process getting properties ready for

Section 8 negotiating the voucher

amounts visiting sorry vetting

tenants maybe visiting tenants as well

I simply have not done that because a

lot of that is handled by by the

property manager if you have one but

because I've had Section 8 rentals for

around 10 years now I can speak speak to

the program on a a high level and here

are my thoughts for starters the section

a program is designed as I've already

said to help alleviate homelessness for

people who simply do not have the income

to afford a home to purchase or a home

to rent now typically people who qualify

for the program are single parents with

multiple children although there are

some exceptions for instance homeless

veterans who tend to be single men

with no children that is a major

exception otherwise it's typically

single parents with multiple children

and the Greenville Housing Authority

takes into account several factors such

as criminal history family size income

Etc in determining how many bedrooms and

for what dollar amount the voucher that

they issued to a person is worth and

what they qualify for so for instance

they may qualify for a two-bedroom

voucher for up to $1,200 and at that

point they then need to find a property

willing to take a section a tenant for

that amount now the tenants with these

vouchers have extremely limited options

this is a very very important detail for

those of you interested in learning more

about this program a lot of landlords

simply don't participate in Section 8

for one reason or another that it could

be just due to not understanding it not

wanting to mess with it having

misconceptions about it who

knows long story short it's only a small

sliver of rentals available to those who

have section 8 vouchers and it's already

a pretty small sliver of

all real estate that's available to

renters anyway so those with Section 8

vouchers really really have difficulty

finding homes typically and I've

communicated with several renters with

housing vouchers in the past they almost

all run into frustration with not being

able to find not just a home that they

would like to live in but any home at

all and some quite frankly end up

homeless as a result they just can't

find what they need even though they

have a voucher I've also been to

meetings with the Greenville Housing

Authority about the Section 8 program

and they've seen and I've seen in the

program because they have printouts they

have stats and whatnot about all the

people who have vouchers who still don't

have a place to rent and the numbers are

huge and the Housing Authority seems

perplexed as to what to do about it even

though I tried to communicate to them

what to do about it others have and

that doesn't tend to go anywhere but it

is what it is new to say this is a

situation where there is a ton of demand

and low Supply and as a result sometimes

it's easier to fill a rental with a

Section 8 tenant than with a private pay

one but there's one more variable in

this the Housing Authority has their own

kind of secret way of determining the

market rent for a property so let's say

you have a house in career the Housing

Authority will look at the location the

type of property the number of bedrooms

in there and will approve you for a

certain amount of rent for a tenant now

you can request a number as landlord

so you might think you know hey it's

worth 1,800 a month this property and

they may or may not approve that and

when you have a Section 8 rental with a

tenant that is staying in it from one

year to the next each year the way I

understand you can request a rent

increase and they often allow rent

increases and I've heard from many

people in the past that even if they get

declined for the amount that they are

asking for that if they go ahead and and

and really press the Housing Authority

get someone on the phone and all of that

or or even in person that often they

can get their requested rent approved

assuming the tenants voucher goes up

that amount and it's worth mentioning at

this point that when a tenant has a a

Housing Voucher it doesn't mean that

they will have it forever obviously they

can get in trouble with the law and lose

their voucher they can do a whole lot

of things it's very strict who who

qualifies for these but also if they

start getting pay raises or work extra

and have more income coming in the

Housing Authority can tell them that

they are making too much money

unfortunately for their housing to be

completely subsidized by the program and

if that sounds like that the Housing

Authority is perhaps encouraging people

not to work well that's an argument

that you could certainly make in

these cases and and by the way the

Housing Authority would say that they

that they don't do that they really do

try to encourage people to work

and they they explain all these

things on the front end and and the the

people that are getting these vouchers

my understanding is they are required to

attempt to work right there it's not

just a straight you know just subsidy

for people to just have free housing

without work so I'll make sure that I

say that but anyway in these

cases when people start making more

income than what their voucher allows

for they should lose the entire voucher

all at the same time but now have to

pay a co-pay so if their voucher was

1,500 and Section 8 was paying all of

that now they might have to start paying

500 of that per month and the Housing

Authority will pay the other 1,000 this

doesn't usually end up being an issue

right because if the person you know the

the way the formulas are with the

Housing Authority they know what the

people can or can't afford based on

their income and so if they can't

afford the co-pay usually they don't

have the copay right hopefully that

makes sense so it doesn't usually end

up being an issue but it is a scenario

that can happen you can have Midway

through a one-year lease all of a sudden

the tenant that has to start making

payments directly out of their own

money as opposed to just having it

entirely paid by the Greenville

Housing

Authority so I think that that's

that's a detail that a lot of people get

confused about that you just need to

be aware of it and aware that it it's

not necessarily the end of the world if

part of of the housing voucher is

you know is having to be paid co-p paid

by the tenant it's still going to be the

same thing where if they if they

allow they still have to approve the

total rent right so they're not just

approving what the Housing Authority is

paying for it so they would still say

this tenant qualifies for up to

$1,500 and they have to bring 500 of

that and so they would still be it it

doesn't make a difference you can't say

well if the Housing Authority is

paying a thousand of this and they

originally said it would be worth, 1500

now my tenant is co-pay 500 well I'm

just going to raise that to 1,800 and

they have to pay 800 no it doesn't work

that way you can't quite gain the

system like that now most would probably

assume that market rents for Section 8

would be lower than Standard Market

rents but as I've already said we have a

major imbalance of supply and demand and

because Supply is so low the Housing

Authority will often approve rents above

Standard Market rents for an area and

so it it that might not make sense to

you right but I'm telling you I've

seen this over and over again that

section 8 rents in certain situations

exceed Market rents now with all that in

mind let me address for a moment a

message that I got recently from someone

interested in the 11 units I have listed

in Simpsonville this person told me

after sending me a gazillion questions

and having several phone calls that

that they were not interested anymore in

part because of the the future of the

Section 8 program is unpredictable they

said something to that effect now I have

been with the Section 8 program for

around 10 years my clients selling this

property in Simpsonville they've been

with it for roughly 16 years and I know

a lot of other people that have been

involved in the program and as far as I

know for everyone we've never seen rents

go down for for me for them for a lot of

others I've never heard of any people

involved in the program in the section 8

program that have seen rents go down in

a year in fact I mentioned before about

how from one year to the next you can

ask for rent increases and Section 8 is

usually very good about that usually

they will do at the very least a small

rent increase like maybe a 25 or or $50

per month rent increase that has been my

experience and that's been the

experience of many others in fact

with these units we have in Simpsonville

we saw a massive increase for one of

the units that had been renting for

around 900 a month that was on the

private Pay Market they switched over to

Section 8 and it instantly jumped to

almost $1,300 per month

so that I again unpredict AB ility is

you can make complaints about the

Section 8 program however you want some

people don't like government subsidies

some people you know are concerned

about this or concerned about that we'll

talk about a few concerns here in a

little bit but one of the things that is

not a concern I'm telling you that I

have is the unpredictability of the

Section 8 program we have not we don't

see rents go down they go up

consistently even in down rental markets

and yes there are down rental markets we

talked about this a few times on the

show I've seen multiple of them in my

years of real estate it can happen for a

variety of reasons you know usually

the rental market follows the broader

economy if the broader economy goes into

recession then that's going to be a

negative for the rental market but

the Section 8 program operates with such

a deficit of housing Supply that what

happens in the broader rental market

simply doesn't apply you cannot look at

what's happening in the broader rental

market and see okay rents we're in a

kind of a rent recession right now

foring rent deflation whatever the case

may be that typically in my

experience does not translate to what's

happening in the section 8 rental market

so the irony of this person being

hesitant to purchase Section 8 rentals

on the basis of unpredictability is

literally the exact opposite of of

his assumption is true not only is the

program very predictable very

predictable sorry I can't talk tonight I

am recording this at night that's

probably why I'm too tired but anyway

not only is the program very predictable

but I've actually found it to be far

more predictable and far more stable

than the volatility that you experience

in the general rental market

Additionally the system the Housing

Authority has in place is honestly

pretty amazing they just direct

deposit each month's rent straight into

your account within the first few days

of the month no hassle no checks you

have to deposit no chasing down tenants

or anything like that is just a direct

deposit now the tenant is still

responsible for their own security

deposit although I've seen instances

even where Section 8 landlords have

successfully negotiated for the housing

authority to subsidize a higher deposit

and of course even though the Housing

Authority does some basic screening of

people getting housing vouchers housing

vouchers and and the Housing

Authority also claims that they attempt

to educate these tenants on how to be

good tenants right how to take care of

property and whatnot tenant screening by

the landlord is just as important for

these renters as they are for any

perhaps more important because a lot of

these single parents come from abusive

backgrounds they might lack the

knowledge and the understanding that

they need in order to really be good

tenants even though they've they've been

quote unquote educated by the Housing

Authority so they still need to be

vetted by the landlord if you're taking

a Section 8 renter don't assume that you

know whatever they tell you that the

Housing Authority has done done in order

to approve them is enough you still need

to do your own research and still need

to look into these tenants to see what

their background is and ask hard

questions maybe even meet with them see

where they're living check out the space

that they're in to see where they

currently are to see if they're taking

care of it things like that assuming

that it's not you're not completely

violating their privacy

right so that's something to to keep

in mind but why don't more landlords

rent to section A tenants right here's

where we're going to get into the

complaints for a second by the way this

show is not going to be too long it's

been it's been a busy week and I just

want to get this material out to you

guys and then be gone I'm not going to

drag this out two reasons why I hear

landlords primarily complain about the

Section 8 program one is that they feel

like the tenants will be bad to their

property or they've had tenants that

were part of the section8 program

that did damage to their property but as

I already said you have to do tenant

screening so I don't really consider

this a legitimate excuse for not being a

part of the section a program if you

know what you're doing when you and you

do good tenant screening you will get

good tenants that don't damage your

property it's it's literally that

simple however the second reason I hear

frequently is more legitimate and that

is that the Section 8 inspections that

they do to make sure the property is

compliant with the Housing Authority set

of guidelines can be frustrating and

it's not that the house has to be pren

right their inspectors don't go in and

you know say that all these things you

know we need to have brand new cabinets

we need to have granite countertops you

know great paint everywhere none of that

kind of stuff it's just that there are

sometimes frustrating government

regulations that you just that you have

to comply with that don't make sense

think of it as needing to bring a

property partially up to code even

though the standard renter would not

care at all whether the home was up to

code or not it's it feels frustrating to

be penalized as a landlord or a land

lady knowing that I could rent this out

to anyone and nobody would care that

this railing is like half a foot lower

than than what code requires but because

I'm doing Section 8 the Housing

Authority is making me fix this railing

you know those are the kinds of stupid

things that can come up but

unfortunately it's part of what the

government does and what they deem to

be necessary in order to protect the

tenants I understand wanting to protect

tenants I'm not saying they shouldn't do

that it's just that sometimes what

the inspectors require to be done really

don't protect the tenants in the way

that that they might think it does

the other frustrating element of these

inspections is that sometimes you'll get

different inspectors that have different

standards same problem that you have

with the with the zoning and and

and code enforcement all of that at

Greenville County and Greenville city

bad at sending different inspectors that

have different requirements same

thing when it comes to Section 8

inspection so you might have one

inspector that you know H comes from a

commercial Contracting background and

makes you do a bunch of stuff Beyond

even what the Housing Authority actually

requires because he simply feels it's

necessary based on his background right

he's he you know wants to be Captain

America over here and and and go

beyond the letter of the law to add

additional restrictions that are just

not necessary I had one one time tell me

my Foundation was shot on a property

that I had and it was like that's

absolute baloney he he didn't even go

in the crawl space to look at the

foundation he was just basing it off of

something that he saw on the outside

that showed that he didn't know what he

was talking about and then next time you

might get a a a different inspector who

has more common sense and lets certain

things fly that maybe even the letter of

of the law says should be corrected so

you just don't know what you'll get and

honestly that's more frustrating to me

than the Housing Authority inspectors

just being strict straight across the

board but at the end of the day those

are really the only two objections that

I hear from people about being in the

section8 program is the is the

tenants a misunderstanding that they

don't have to screen tenants or or maybe

they are screening tenants or just not

doing a good job of it and they keep

getting bad tenants and then also the

frustration with inspectors and the

requirements that they will impose on

the properties as well but all in all

the section8 program can be a great one

for landlords particularly for those

wanting a hedge against rent deflation

this is something I haven't said before

and this is a financial advice but

again sometimes Market rents do come

down for one reason or another but I

personally never seen that with Section

8 so if the only rentals you have are in

the private Pay Market you may want to

consider whether you need a rent

deflation hedge such as the one that the

Section 8 program provides discuss that

with your financial adviser because like

I said that's not Financial advice and

then once you do reach out to me

about the 11 units that I have listed in

Simpsonville and let's talk about that

let's talk about whether there is an

opportunity there for you in order to

diversify your real estate portfolio and

have something that perhaps you don't

have currently

but to to come at me and say that the

housing a program is unpredictable is is

really really outrageous first off all

real estate is unpredictable right if if

you're going to make that argument then

get out of real estate this is yes real

estate is more predictable than you know

a lot of other things out there but

there's always unpredictability there's

always fluctuation we we just had a

whole episode I talked about bubbles in

real estate and it's hard to identify

bubbles it should be easy in theory

right there's so many different people

analyzing analyzing the real estate

market so many economists looking at

things Realtors lenders the government

the the now the Department of Justice

all sorts of different eyes on real

estate and still we can't identify

bubbles very easily right I'm trying

to do that but it's it's hard and

same thing with all real estate it's

hard to know you know none of us

realized during covid when all this

stimulus was being pumped into the

economy people were getting all these

checks from first from president Trump

and then from President Biden people

didn't realize that that what ended

up happening is that caused a ton of

inflation in the rental market so now

people had all of this money that they

were sitting on they could afford things

that they couldn't afford before people

were putting higher security deposits

down than ever people were were getting

in bidding wars for for rentals it was

crazy that's something that you never

could have foreseen well guess what that

didn't really impact the Section 8

program the Section 8 program much more

stable much more steady and it it is

not impacted as much by all of these

fluctuations that we experience in the

market as a whole so I think that there

is and I'm not just saying this because

I have listings that have section 8

tenants in them I truly do believe that

having rentals that are a part of

Section 8 is a is potentially

depending on what your portfolio is is a

good way to diversify your portfolio in

in real estate in order to make sure

that you're you're not Overexposed in

the private Pay Market again that's not

Financial advice it depends on what you

personally are doing and you need to

talk to your financial adviser about

that but that is generally speaking

something that I feel for myself and

for others depending on their specific

situation so I hope that makes sense

that clear the air about the sex Day

program if you guys have any specific

follow-up questions on any of that

please let me know I'm happy to talk to

you about that my contact information

is in the show notes you can reach me

that way and then please if you like

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appreciate you guys listening watching

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again next time