Anyone adjusting strategy after the Section 8 news?

As a real estate investor, these talks about HUD budget cuts and potential changes to Section 8 have definitely caught my attention.

While it's a bit concerning, I also see it as a chance to think creatively. If some investors decide to step back due to the uncertainty, it might open up opportunities for those of us willing to adapt—maybe by exploring workforce housing or considering flips in areas that were previously too competitive.

These recent discussions about HUD budget cuts and potential changes to the Section 8 program are definitely causing ripples across the real estate space. For wholesalers, the impact could be significant depending on how the changes play out.

If funding is reduced or voucher availability becomes more limited, demand for rental properties that typically attract Section 8 tenants could drop in some areas. This may force wholesalers to adjust their acquisition criteria, shift target neighborhoods, or rework their buyer lists to focus on cash-flow investors less reliant on government-backed tenants.

On the flip side, uncertainty in the market can create opportunity. Some landlords may look to offload properties out of fear of losing guaranteed rent, which could give wholesalers an edge in negotiating deals—especially if they’re connected with investors pursuing value-add or affordable housing strategies not dependent on Section 8.

In short, any major changes to Section 8 will likely push wholesalers to sharpen their strategy, strengthen their networks, and stay hyper-informed on local trends.

Dispo Money Mike 

Appreciate you starting this thread, Jason — the Section 8 news is definitely something we’re watching closely, especially in Midwest markets like Cleveland and Kansas City where voucher-backed rentals have been a big part of investor activity.

Here’s how we’re adjusting strategy on the ground:

• Re-underwriting deals with margin cushions — we’re assuming higher vacancy risk and possibly lower rental comps in neighborhoods with heavy Section 8 saturation. If cash buyers are less confident in guaranteed rent, they'll want bigger spreads to feel safe.

• Shifting focus to workforce housing pockets — think B and C-class neighborhoods with stable employment bases (distribution, healthcare, light industrial). These areas still cash flow without needing Section 8 rents to pencil.

• Flagging sellers with tenant issues — landlords who rely on vouchers may panic at the thought of policy changes. We're targeting absentee owners with aging properties where deferred maintenance and turnover risk are already pain points. Now’s the time to offer them a clean exit.

• Tapping into out-of-state investors — many of our buyers from higher-cost markets (like California or New York) are still actively looking for affordable cash flow. They're less dependent on Section 8 knowledge and more focused on NOI and long-term growth. Messaging matters here — we’re emphasizing value-add and stable demand outside the voucher system.

If you’re wholesaling in a Section 8-heavy area, it’s worth revisiting your comps, buyer preferences, and dispo scripts. Things might shift fast, and wholesalers who position themselves as knowledgeable and proactive will build a lot of trust with both sellers and buyers.

Would love to hear what markets others are seeing ripple effects in.

These are all great points we definitely need to make sure we are looking out for &putting them into play moving forward.

​@Jason Withmore, thank you very much for bringing this subject up for discussion. This kind of initiative is extremely important for enriching the atmosphere here in the community!
 

​@Michael Harris, ​@Dispomoneymike and ​@Paul Rich thanks for joining the discussion!👏🏻
 

​@Peter Osmanski any thoughts on this? I'd be happy to hear them.

I agree the above points raised are excellent. I can only speak to my market which is the Chicago-area and I do know of some neighborhoods that this could certainly impact, many are lower end C neighborhoods close to public transportation that historically have provided excellent cash flow with section 8 tenants so, buy and hold investors were better buyers than fix and flip. Should vacancies rise and the owners look to sell, it will be critical to get them at a price below where we might have previously. I think they will still sell, but the buyer pool may shrink.

Hey ​@Jason Withmore! Welcome to our community! You’ve hit on a hot topic that’s definitely stirring the pot in the real estate world. The potential HUD budget cuts and the threat to Section 8 assistance could indeed shake things up, but it’s all about how you choose to navigate these changes.

For those targeting rental buyers, this could feel like a double-edged sword. On one hand, if Section 8 assistance gets cut, it could lead to a decrease in demand for rental properties that cater to those tenants, which might impact valuations and cash flow. But on the flip side, it could also create a golden opportunity to scoop up distressed properties.

Think about it: as some passive investors pull back due to uncertainty, savvy investors can step in, especially if they pivot towards workforce housing or even flips. There’s always a market for affordable housing, and if you can position yourself as a provider of that, you could really capitalize on the situation.

Plus, creative deal-making is where the magic happens! Whether it’s structuring seller financing, exploring partnerships, or getting innovative with your financing options, there’s a lot of potential to turn challenges into opportunities.

If you’ve got experience with policy shifts or operate in Section 8-heavy markets, your insights would be invaluable! How have you adapted in the past? What strategies have worked for you? Let’s share some ideas and see how we can all thrive in this evolving landscape!

Really interesting point, I’ve been thinking about this too. I work with a few rental-focused buyers, and the potential Section 8 cuts are definitely raising eyebrows. But honestly, I also see some upside. If funding dries up, we could start seeing more distressed deals hit the market, and that might be the perfect time to shift toward flips or workforce housing. I think a lot will come down to how fast people can adapt. Creative deal structures and flexible strategies might end up being the real winners here. Anyone already making changes based on this?

Great topic to kick things off!

In my opinion policy shifts like this can cause some short-term uncertainty, but they also create opportunity if you're nimble.

I’m seeing two key dynamics right now:

1. Landlords are getting nervous - Especially the ones who leaned heavily on guaranteed rent without a strong management backbone. That fear is creating more inbound leads for us, and some are willing to offload portfolios at a discount just to de-risk quickly.

2. Buyers are split - The buy-and-hold crowd is being more selective, but flippers and value-add investors are stepping in where they can reposition or improve tenant quality. We’ve shifted some of our marketing to highlight alternative exit strategies like BRRRR-to-workforce rentals or short-term owner-finance flips.

I also think this is a moment for wholesalers to stand out by bringing more clarity. If you can help buyers understand what’s really happening in these neighborhoods - not just headlines - and back it up with solid comps or exit strategy suggestions, you become a lot more valuable in the chain.

Would love to hear how others are approaching it.

I think that is a great point about educating the buyers - be honest about the fact it is only available because the potentially lower rent rates (assuming repairs are not extensive) don’t meet the previous investors criteria so they will need to run their numbers using adjusted rent rates. Another challenge will be that same educating to the seller for why the price needs to be at a point the next buyer can cash flow. In my area the ones that cash flow heavy from section 8 are not seeing much appreciation, there purpose is cash flow. So a sale may result in little gain or even lose to get out from it, as long as they have utilized the tax benefits, the unit likely served its purpose.