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Buying a Rental Property Occupied by a Section 8 Tenant

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  • 04-20-2016, 12:41 AM
    billious
    Buying a Rental Property Occupied by a Section 8 Tenant
    My question involves landlord-tenant law in the State of: California

    I have opened escrow on an investment property in California. There is currently a tenant in the property that rents section 8, and per the signed contract between the seller and I, they have already given her a 90 day notice to vacate. Part of the agreement is that she will be in the property when we close escrow, as the 90 day notice will not be up by the time we close escrow. I also have the choice of negotiating a lease with her if I would like, but after looking into section 8 housing, it is not something I want to do and I would like to rent to someone on the free market. What are my options here? I know I can't be forced to rent to the current tenant, but I am worried about a situation where the tenant would not leave the house and I would have go down the path of eviction. The tenant is currently month to month and has been at the property for a few years. I can't be forced to rent to that tenant, right? Especially since I am not even a section 8 approved landlord (and I will not be applying to be one)

    What is the best way to go about it during escrow? Should I just wait it out? Or should I try to contact the tenant's case manager? Back out of the sale? The tenant is aware of the 90 day notice but I am new to the situation and I am not sure about what I am supposed to do as the future landlord. Any help is appreciated as I am a bit worried about the situation.

    Thanks
  • 04-20-2016, 03:40 AM
    L-1
    Re: Buying Rental Property with Current Section 8 Tenant Occupying
    You indicate the tenant has been there for many years. This suggests she has been a good tenant. Is that the assessment of the seller?

    I ask this because I own a Section 8 apartment building. While I have had problematic tenants, I've also had good ones. Currently, 50% of my occupants are Section 8, 25% VA Assistance and 25% no assistance. The Section 8 and VA assistance tenants are absolute jewels and I wouldn't trade them for the world. OTOH, I'm informed my no assistance tenants are noisy and a PITA to the public assistance tenants, who are quiet and mind their own business.

    The bulk of public assistance rent is paid for by the government via automatic bank transfer on the first of the month. My public assistance tenants are on time with their portion, they take care of their apartments, call in a timely manner if something breaks rather than wait until it grows into a major issue, and don't cause problems for me. If I have a question or issue, my Section 8 staff is friendly and very cooperative to work with. They even hold seminars to help Section 8 landlords navigate the system. In addition, Section 8 usually pays more than the market rent.

    If this is not a problematic tenant, you might give some thought to keeping them. It doesn't mean you have to take more Section 8 tenants.
  • 04-20-2016, 08:40 AM
    billious
    Re: Buying Rental Property with Current Section 8 Tenant Occupying
    Quote:

    Quoting L-1
    View Post
    You indicate the tenant has been there for many years. This suggests she has been a good tenant. Is that the assessment of the seller?

    I ask this because I own a Section 8 apartment building. While I have had problematic tenants, I've also had good ones. Currently, 50% of my occupants are Section 8, 25% VA Assistance and 25% no assistance. The Section 8 and VA assistance tenants are absolute jewels and I wouldn't trade them for the world. OTOH, I'm informed my no assistance tenants are noisy and a PITA to the public assistance tenants, who are quiet and mind their own business.

    The bulk of public assistance rent is paid for by the government via automatic bank transfer on the first of the month. My public assistance tenants are on time with their portion, they take care of their apartments, call in a timely manner if something breaks rather than wait until it grows into a major issue, and don't cause problems for me. If I have a question or issue, my Section 8 staff is friendly and very cooperative to work with. They even hold seminars to help Section 8 landlords navigate the system. In addition, Section 8 usually pays more than the market rent.

    If this is not a problematic tenant, you might give some thought to keeping them. It doesn't mean you have to take more Section 8 tenants.

    Yes the current tenant is fine, but I am wondering if as the new buyer am I forced to rent to the section 8 tenant?
  • 04-20-2016, 11:13 AM
    adjusterjack
    Re: Buying Rental Property with Current Section 8 Tenant Occupying
    Quote:

    Quoting billious
    View Post
    I am wondering if as the new buyer am I forced to rent to the section 8 tenant?

    No.

    But you do have to honor the notice period and take your chances about the tenant moving out by the deadline.

    By the way, you signed a purchase contract knowing and agreeing that there was a Section 8 tenant.

    You are stuck with the deal.

    If you want to back out of the contract you lose your earnest money and might face a lawsuit for breach of contract.

    Quote:

    Quoting billious
    View Post
    I am new to the situation and I am not sure about what I am supposed to do as the future landlord.

    Then I suggest you start educating yourself about what it takes to be a landlord. Owning a rental can leave you bloodied and broke. Been there, done that.
  • 04-20-2016, 11:45 AM
    L-1
    Re: Buying Rental Property with Current Section 8 Tenant Occupying
    As a side note, if you are unfamiliar with the process or just uncomfortable being a landlord, look into hiring a property management company to oversee your property for you. Depending on what you negotiate it will cost you 5 to 6 percent of your monthly gross rent and will take the burden off of you.
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