Recently I had the opportunity to chat with Todd Breen (South East Regional Director, FARPM; Faculty at the Property Management Academy in Florida) about how his company (www.624home.com) makes the Section 8 program profitable. While I was stuck in the office, Todd was actually spearfishing on a yacht in Florida…this is the fish he skewered!
AIMEE: Tell us a little about your property management business and your background in residential property management.
TODD: Sure Aimee, I started in the business in 1985 when I got out of college and have actually been with the same company for 24 years, I was a property manager there until 1993 when I bought the company and I’ve been the owner and broker there since 1993 – for 16 years now.
AIMEE: How long have you been working with Section 8 participants? Can you tell us a little about that?
TODD: Since 1985 we’ve been working with Section 8, some times have been better than the others but we’ve figured out a couple of ways to make Section 8 tenancies equal to or better than our non-subsidized tenancies. It’s actually every bit as easy and better than managing our standard tenants.
AIMEE: So you’re saying that it is profitable for you and your property owners?
TODD: Absolutely. When we find a good Section 8 tenant we take good care of them and the average tenancy is considerably longer than our non-Section 8 residents. Obviously this is good since reducing turnovers is the name of the game for profitability, not only for the owner but for our company as well. It’s truly a win-win scenario.
AIMEE: What are some of the things that you do to make it profitable?
TODD: In the mid 90’s we stopped taking Section 8 applications…and the reason was, there was additional paperwork you had to fill out, the inspectors were difficult sometimes to coordinate with, reaching the Section 8 case worker was not always easy and quite frankly it was just too much hassle. In addition we were finding tenancies were harder on our properties and we were having a much less profitable and much less enjoyable experience with them than with our non-subsidized tenancies and so we discontinued the program. After a couple years off of the program we approved an application from a women who came into our office to sign a lease and she asked “would you mind signing this additional paperwork for us”? I said, “Oh, I can’t believe it, you guys snuck under the wire here because we don’t accept Section 8. And she said, “No, there’s a way you can take Section 8, we just haven’t figured it out yet!” I said “I don’t like dealing with the government, so the only way I would do this is if you were my personal secretary and you did not only everything the government requires the tenant to do but also everything I have to do that’s over and above and beyond what a normal landlord transaction would be like. For instance, I’m not going to go to the Section 8 office to sign the lease, I want you to bring it to our office, we’ll sign it here, which is how we do our standard tenancies. She said no problem. I said, “I don’t want to have to deal with the case work at all, in fact if I never had to speak to the case worker that would be delightful.” She said “No problem, and you’ll see I’ll take good care of the place and renew the lease.” So we did that, she was true to her word and so now we have this policy that when we take a Section 8 tenant we actually have a little addendum that states that they’re required to be the liaison with their caseworker. It greatly reduces our interaction with the government and increases our profitability because we don’t spend as much time on it.
AIMEE: You also mentioned to me earlier that you do things like actually inspect their current residence?
TODD: The second problem we had with Section 8 was they were harder on our tenancies and lower on our security deposits than our standard tenancy. Not 100% of the time, but it seemed that was the case more often than non-subsidized tenancies. So to put a stop to that we just made a really simple policy: We have to personally inspect your current Section 8 residence before you’ll be approved for our residence. The rational behind that is real simple, we’re going to get a snapshot of how you’re going to live and how you going to treat our house. This is one of those beautiful systems where the people who say no thank you, or I don’t want you to come in they just automatically decline themselves and withdraw and we didn’t even have to go out to their residence. We actually are batting 1000 and everyone we’ve inspected we’ve approved and we’ve had really good results within the tenancies.
AIMEE: That sounds like you get responses from the right residents.
TODD: Right, and so the other part of that is we actually require them to still be in their current Section 8 residence so if they move and they are staying with friends they’re automatically not eligible for our Section 8 program. In addition, they have to be in their current residence for a year or more. So if you go in and see a home that’s well cared for, that’s a pretty good indication that that’s how they’ll take care of yours.
AIMEE: Is it legal to ask to see how they take care of their current residence as a condition for approval to rent your property?
TODD: Occasionally some of the residents will say, “Hey, that sounds discriminatory” and I say, yes it is. We’re discriminating against tenants who are not taking good care of their homes. So I’ve actually got a really good relationship with our Section 8 coordinators, area wide, countywide and they applaud me for our program. They actually get behind it and say I wish more landlords would do this. So not only is this legal, Section 8 actually endorses it and thinks it’s a great idea.
AIMEE: Thank you so much Todd, this was a great interview and we hope you have a great day!
TODD: Thanks for calling and looking forward to seeing some more good stuff on your website.