No one really liked Janie. And there were a lot of reasons why. For a teenager, she was pretty much a
know-at-all. Stubbornly obnoxious. She would not let you get a word in
edgewise. Always right. Rude. Cocky. Maladjusted.
And that was just her award-losing personality. And physically? Her scrawny frame, big glasses, and overflowing
braces (often full of food scraps) made her equally unappealing.
Now fast forward 5 years in the
life of Janie. After years of dejection,
she has softened a bit. Instead of
looking completely past you before beginning her monologue on her life’s recent
happenings, she’ll toss a few platitudes your way that make you feel a small
connection. “How are you doing?” “How’s your brother? “You get that mole taken off your back
yet?” She’ll still take the last
doughnut off the plate in front of both of you, but now she’ll pause and feign
a glance your way for approval. She
still texts constantly when you talk, but now raises her head for momentary eye
contact when you bring up your mother’s cancer treatments. And her scrawny body has filled out, she
started wearing contact lenses, and has a nice straight smile now; some may say
she isn’t bad to look at, relatively attractive even.
But Janie’s not for
everyone. Maybe not for most
people. But some people “get her” and
even go out of their way to be around her.
Some of your friends have even dated her.
Ever know anyone like that?
The Section 8 program is like
Janie in a way. Several years ago, I
wrote how we needed to get our landlords out of the Section 8 business because
it was impossible to get a good ROI for our owner clients. As a Charlotte property
manager, we couldn’t cost justify the lower rents, costly repair items,
poor communication, and overall effort needed to recommend the program. And I still get a little queasy thinking
about it.
As a footnote, we do have clients
that have kept their homes in the Section 8 program. The owners allowed the tenants to keep
renewing their leases (most at significantly below market rates) and the Section
8 tenants chose to do so. The advantages
to our owners are continued rental payments and not having to fix-up their properties
to get them market-ready for new tenants.
The negatives are that as Charlotte rental rates have been going up
5-10% annually, Section 8 has capped their permitted rental increases (if
approved) to 2% annually (in real numbers: $900 monthly rent = $18.00 rent increase-
not much to get excited about). Section
8 also conducts annual inspections which almost always lead to an owner repair
bill; some of the items would never have to be repaired if the house didn’t
have to meet many government regulations (re: peeling paint on ceiling, etc.).
However, in the past 6 months,
Section 8 has enacted 2 changes that I thought were very landlord friendly:
- Locking a tenant into a property if they have lived there for 18 months. The owner has the option of not renewing the lease, but the tenant does not have the option of moving if they want to stay in the Section 8 program.
- Changing house inspections from annually to biannually. So, now the repairs only have to be made every 2 years (which is a huge deal for landlords who have gone through the nightmare of rent abatement for multiple inspection failures).
This still doesn’t make Section 8
work for everyone, but it might start making sense for some people. And as responsible property managers, it is something
we will need to consider recommending again for certain owners (risk averse)
and certain properties (difficult to fill, long term investment holds, areas of
historically low rent appreciation).
While the private rental market might be compared to the stock market
(higher yields, more volatility), the Section 8 market might now be compared to
the bond market (lower yields, steadier income).
So… your best buddy saw Janie the
other day and said she was looking good and they had a nice chat. He said she asked about you. Your stomach still churns when thinking about
your past dealings with her, but since she’s interested, maybe she’s worth
meeting up for coffee? Maybe she’s
changed?
Anyway, it’s something to think
about- a definite maybe. Happy
landlording!
Brett Furniss is the head property manager of BDF Realty
(Charlotte
Residential Property Management), the trusted real estate advisor for Charlotte
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