Like Graffiti In Your Living Room? (Photo: Zoomar)
When I was in high school, I heard my first horror story about the danger of renting to a section 8 renter. A friend of my father, who had recently divorced, decided to rent out his too-large-for-one-person home.
He wasn’t a real estate investor, or expected to be the next Donald Trump; he was just a regular Joe the Plumber type-of-guy in a tight spot. He felt that if he rented out the property it would fix some of his cash flow problems.
He put an add in the local paper. In a few weeks, he found a family that he thought would be a “gold mine.”
The prospective tenant told him they had section 8 vouchers. The vouchers paved-a-way for the government to cut a landlord a check for a large portion of rent payment, they would be responsible for the small difference. Eighty percent of the rent would be covered by the US government! Very low risk of non-payment. Great, he thought.
A couple of months later, he found his former neat and tidy home…trashed, wasted, and ruined. It took my father’s handyman help and a $10,000 bank loan to bring the home back to a liveable condition.
That Nightmare on Elm Street experience ended his real estate property management career.
So what did he do wrong? It wasn’t his fault, it was the horrible section 8 renters fault for destroying his home, right?
Soon I will tell you who was right or wrong, but bear with me while I tell you another story.
I played football as a running back for Purdue University. Go Boilers! My red-shirt freshman year we were playing North Carolina State. Our senior fullback went out on a pass play. He was wide open.
The quarterback threw him the ball. A perfect spiral. But something went wrong.
The fullback never turned his head around to look for the ball… it hit him right in the helmet. The ball shot up 30 feet in the air, it was intercepted and ran back for a touchdown. We ultimately lost by one score.
When our fullback came to the sidelines, our running back coached ripped him to shreds. Then he became quiet, and calmly said something that I will never forget in my life. He said, “Son, it wasn’t your fault. It was mine. I should have never put you in.”
Our family friend should have never put that section 8 renter into his home. It was his fault. He should of followed some simple steps that would have protected him from having a bad tenant.
Here are 7 key steps you should follow to protect yourself from bad renters:
1) Have them fill out a rental application and charge at least a $25 fee. I want them to have some type of financial commitment. If they can’t afford $25, they shouldn’t rent your property.
2) Run a credit check, maybe use an Equifax program. I don’t care if they’re behind on the medical payments, but if they haven’t paid there car note and owe lots of money to the cell phone company, that’s an immediate red flag to me.
3) Call their previous landlord and drive-by their current residence. If you don’t live in the same city, pay someone to check out the place and take pictures. If they aren’t taking care of their current place, chances are they won’t take care of yours.
4) Contact the section 8 office to understand eviction rules and proceedings. In Mesa, Arizona you would visit http://mesaaz.gov/housing/Section_8/section8home.aspx There is no reason for you not to be fully aware of what you are getting into.
5) Have a 24-hour house inspection notice in the rental agreement. You must know the physical well-being of your property. Visual inspection is a must. You don’t have to do it. If you have a buddy that is in pest control, h/vac, or yard clean up, pay them to inspect and service. Have them give you an update on how the property looks.
6) Purchase a home warranty have the tenant agree to pay for the deductible.
7) Place the tenant on a month-by-month lease. A section 8 renter initially must sign a 12 month lease. However, in your application, state that from month 13 on the contract reverts into a month-to-month lease. Why? A good tenant will stay regardless. A bad tenant will try to use the landlord-tenant act laws against you.
Only time will tell if the person renting your property will care you for it. However, you can stack the odds in your favor on the front end by doing what Ronald Reagan said, “Trust, but verify.”
Moving Forward,
Kendall Matthews
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