I live in the Dallas, TX area and on my streety there are approximately 6-10 homes for sale. Most of them foreclosures and properties that are selling for a discounted price. How do I take advantage of these home prices and turn them into Section 8 housing? Would this be a wise idea to make some additional income?
It's not a good idea to purchase property for the purpose of creating low income, section 8 housing because according to the Dallas Housing Authority website, applications for new section 8 vouchers have been suspended as of June 1, 2004.
http://www.dallashousing.org/Dept6.htm
That means the home you buy will be eligible for Section 8 tenants who are relocating from other section 8 housing, which is a relatively small number of people. If you plan to only rent to section 8 tenants, your house may sit vacant for long periods of time waiting for someone who is interested in moving there.
Also, your rental home will be inspected by section 8, and must meet their standards before it will be eligible to be included in the program. If repairs or changes need to be made, for example painting or assessiblity issues, you must complete the necessary work before a tenant will be allowed to move in.
You say there are 6-10 homes on your street selling at a discounted price. Before purchasing, you should consider whether the price is discounted enough. 6-10 homes seems like a lot, and if the properties have been sitting on the market for a long time, then maybe they are not the bargain they first seem to be.
You may not be able to rent the homes as part of the section 8 program, but if you are able to buy them at a low enough price, and you still like the idea of becoming a landlord, your investment may still be a good idea.
The section 8 program would have guaranteed a portion of the rent to you every month, the rest you must collect from the low income tenant. Renting to higher income tenants, and collecting the entire rent payment from them, is not that much riskier if your tenant is carefully screened beforehand. Check their references, check the stability of their income, and do not rent to people with dogs or cats. Read Texas housing law regarding landlord/tenant rights, and become familar with every aspect of it.
Owning rental property can have an major impact on your income tax liabilty so check with a tax professional to review the numbers and see if it affects your situation favorably.
If things don't work out, hopefully you will have purchased the properties at a deep enough discount that re-selling them will be quick and easy (even if you have to pay capital gains tax).
Good luck.