Why My Property Management Company Doesn’t Work With Section 8 – And What You Should Know
Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.
Recently, John left a comment on one of our podcast episodes asking a great question: Why do so many property management companies refuse to handle Section 8 properties? It’s a topic I’ve had to explain countless times, both to clients and in mastermind groups I participate in with property managers across the U.S. and even internationally.
Let me start by saying – yes, there are property management companies that handle Section 8 and other government assistance programs. Absolutely. But many of us choose not to. And it’s not because we’re against helping people in need or because we’re trying to exclude anyone. It really comes down to practical challenges and serious financial risks that most landlords and property managers don’t want to take on.
The Ideal vs. the Reality
When you attend a HUD seminar or a local housing authority workshop, Section 8 can sound like a dream. These programs are pitched as the perfect solution for landlords—guaranteed rent, lower vacancy risk, and stable tenants. It all sounds great at first.
But the reality is often very different. Once you sign up, you’re no longer dealing with the cheerful workshop leader who sold you on the program. Instead, you’re dealing with government employees who are frequently unresponsive and difficult to reach. Communication breaks down. Paperwork gets lost. Processing times drag out. And everything moves at a glacial pace.
That’s where the problems begin.
Death by Paperwork
Government assistance programs require an enormous amount of paperwork – and not just at the beginning. There are constant renewals, documentation updates, inspections, compliance checks, and more. For property managers, that’s hours upon hours of admin work that adds little to no value to the day-to-day operation of a rental.
Most of us simply can’t justify that time unless we charge the property owner for it, which many aren’t willing to pay. And even if we are willing to do it, it means sacrificing time we could spend on more efficient and profitable parts of the business.
The Clawback Risk
One of the most concerning aspects of Section 8 – and the reason I personally avoid it – is what’s known as the clawback mechanism.
Here’s how it works: Let’s say you rent to a Section 8 tenant and everything seems fine. The housing authority pays you $6,500 a month for six months. Then, one day, they inform you that the tenant was ineligible all along. Maybe there was a paperwork error, or the tenant provided false information. Whatever the reason, HUD or the local agency says, “Oops, we shouldn’t have paid you that rent – please give it all back.”
And they mean all of it. Not just a couple hundred bucks. They’ll come after you for the full $39,000, even though the tenant lived in the property, used utilities, and caused wear and tear. You’ve already paid property taxes, the mortgage, repairs, and maintenance during that time. Now you’re being told to return all that income – money you’ve already spent. That’s not just frustrating; it can be financially devastating.
This isn’t a rare situation, either. I’ve heard horror stories from other landlords in my mastermind groups—stories of clawbacks going back nearly a year. And there’s really no recourse. As the landlord, you’re left holding the bag.
Other Issues with Program Requirements
Another barrier for many property management companies is the inflexible nature of these programs. They often require you to use their lease agreements instead of your own. That’s a problem for us because we have carefully crafted leases that protect both our owners and tenants, and we’re not willing to toss them out in favor of a standardized government version.
Also, to work with these programs, you often have to go through certification or training. We simply don’t have the bandwidth to send our staff to classes just to take on a small number of units with a high administrative burden.
It’s Not About Discrimination
Let me be very clear: we do not reject tenants based on their source of income. That’s illegal, and it goes against our values. If a tenant qualifies under our regular screening process – credit, background, income, rental history – we’ll rent to them, no matter where their money comes from.
What we won’t do is handle all the paperwork and deal with the government side of things for the owner. If an owner wants to go through the training, handle the compliance issues, and submit the forms, that’s their call. But we won’t manage that process ourselves.
So, What Should You Do?
If you’re a landlord who wants to accept Section 8 or other government housing vouchers, there are companies out there that specialize in that. You’ll just need to do your homework. Start with Google reviews—just like we do when we hire vendors—and see what people are saying about the property management companies in your area. Some markets have great Section 8-friendly managers. Others, not so much.
You’ll want to find a company that not only understands the program but is also responsive, organized, and committed to keeping your property profitable and in good shape.
At the end of the day, I’m not anti-Section 8 or anti-government assistance. These programs play an important role in society, and they help a lot of people. But from a business standpoint, the risk and administrative burden just don’t make sense for us.
That’s why my company has chosen not to work with these programs – and why many others have made the same decision. It’s not about rejecting the mission. It’s about protecting the long-term sustainability of our business and our clients’ investments.
Hope that helps clarify things. As always, I’m just a property manager here in Philly, trying to share what I’ve learned through real experience. If you’re investing in rental property, stay smart, stay curious, and happy investing!
