How to Find the Best Markets for Section 8 Investing (Highlights from Affordable Housing & REI Podcast)

Why This Episode Matters
If you’ve ever wondered how to choose the right city or neighborhood for Section 8 investing, this highlight episode of the Affordable Housing & Real Estate Investing Podcast brings together insights from multiple industry experts who’ve been there and done it. Guests share not only where they invest but also how they evaluate markets in ways that protect investors from money pits and maximize long-term returns.

For affordable housing investors and developers, understanding how to pick the right market is everything. Section 8 can provide stable, government-backed rent, but the wrong property in the wrong location can quickly turn into a costly mistake.

This compilation episode distills proven frameworks, Detroit case studies, rental comps, and buy box strategies from past guests—experienced developers, investors, and operators—who’ve successfully navigated Section 8 investing.

How do you choose the best market for Section 8 rentals?
One common theme from past guests: most new investors make the mistake of chasing the “cheapest markets in the U.S.” The problem? Those markets often stay cheap because they lack reliable teams and property managers. The experts flip the script—the first step isn’t the numbers, it’s the team.

The right strategy is:

• Identify where you already have strong local contacts.

• Confirm if the numbers make sense for Section 8 cash flow.

• Only then pull the trigger on deals.

What are the best zip codes for Section 8 investing in Detroit?
Several guests highlighted that Detroit often gets painted with a broad brush, but 80% of the crime is concentrated in just 3–4 zip codes, leaving many safe and stable neighborhoods overlooked.

• 48221: Widely considered the most desirable zip code in Detroit.

• 48235, 48227, 48228, 48229: Strong Westside areas with solid rental demand.

• 48224: Includes Morningside and East English Village, two highly desirable subdivisions.

• Nearby suburbs: Harper Woods and Eastpointe also offer stable opportunities.

What does a successful Section 8 deal look like?
One past guest broke down a condo acquisition near Old Orchard Beach:

• Purchase Price: $197,500

• Rent: $2,020 via voucher (tenant pays utilities, $200 HOA)

• Cash-on-Cash Return: 14%

• Total Return (including appreciation and principal paydown): 24.2% in the first year

This shows how the right buy box, even with a 7% interest rate, can create serious wealth when combined with Section 8 stability.

What buy box works best for Section 8 single-family rentals?
Multiple guests emphasized a simple underwriting framework designed for durability:

• Price range: $85K–$105K

• Property type: 3-bedroom single-family home or larger

• Rent range: $1,350–$1,400+

• Target cash flow: $600+ net per month after debt

• Assumptions: 8% vacancy reserve and 8% maintenance reserve

How do housing authorities determine Section 8 rents?
Guests explained that rents are set differently depending on the housing authority:

• Some base it on zip code.

• Others use neighborhood-level analysis.

• Bedroom count is critical: 4-bedroom vouchers often pay $4,700+, while 5–6 bedroom vouchers can exceed $6,000.

Example: One investor turned a 3-bedroom into a 5-bedroom, 3.5 bath. The housing authority approved $5,462 rent, of which the tenant only pays $159. That means $5,300 per month is guaranteed by the government—stable, predictable income that de-risks the investment.

Key Insights from Past Guests

• Build your team before you buy. Numbers without local support = disaster.

• Focus on safe zip codes and ignore “cheap listicles.” Crime maps (like SpotCrime) are non-negotiable.

• Section 8 voucher rent is based on bedroom count and area. Bigger homes = bigger rents.

• Stable returns often come from value-add upgrades, like converting a 3-bed into a 5-bed.

• Always factor in vacancy and maintenance reserves. Long-term stability requires conservative underwriting.

Best Quotes from Guests

• “If we can’t onboard it and cash flow it long term, it’s worthless to me. It’s going to be a money pit.”

• “Detroit has a lot of great areas to live, because the majority of the crime can be narrowed down to just a few zip codes.”

• “The tenant’s portion of the $5,462 rent is $159. Whether they pay or not is almost irrelevant—the housing authority deposits $5,300 every month.”

• “Our buy box is simple: $85K–$105K, three bedrooms or more, $1,350 rent minimum, and $600 net cash flow after debt.”

Common Questions About Section 8 Markets

• How do I know if a Section 8 market is safe to invest in? → Use tools like SpotCrime to analyze shooting and crime data by zip code. Look for areas with stable rental demand and low reported crime.

• Do Section 8 rents keep up with the market? → Yes. Housing authorities adjust based on market comps, so investors can often raise rents while keeping tenants stable.

• What happens if my tenant doesn’t pay their portion? → The government pays the majority of rent directly to the landlord. Even if the tenant defaults, most of the rent (often 90%+) is guaranteed.

• How much should I budget for vacancy and maintenance? → Guests recommend 8% vacancy and 8% maintenance reserves to protect against turnover and repairs.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. His mission is to help investors, developers, and advocates create scalable impact while building financial freedom through affordable housing strategies.

DM me @kentfaihe on IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.