The Ultimate Section 8 Buyer Checklist: Avoid These Expensive Mistakes

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🏠 Due Diligence Checklist for Buying Section 8 Rentals: What Every Investor Must Ask For

Buying a rental property with a Section 8 tenant already in place can be a smart investment strategy — but only if you ask for the right documents before you close. Whether you’re purchasing Detroit rentals or expanding your investment portfolio, doing proper due diligence protects you from hidden debts, compliance issues, and delays in receiving rent.

Below is a complete guide to what you should include in your purchase agreement, what to request during due diligence, and the Section 8–specific documents every investor needs.

🔹 3 Things You MUST Put in Your Purchase Agreement

1. Transfer of Security Deposits

Security deposits legally transfer to the new owner at closing. Make sure your purchase agreement clearly states that the seller must transfer all deposits to you and disclose the amounts accurately.

2. Escrow the Section 8 Portion of Rent

Section 8 payments can take time to switch to a new owner — sometimes up to a month.
For Detroit Housing Commission tenants, delays can run even longer.
Request that the seller escrow:

  • 1 month of rent for most Section 8 tenants

  • 3 months of rent if the tenant is through the Detroit Housing Commission

This ensures you’re financially covered until payments begin in your name.

3. Seller Must Pay All Blight Tickets

Whether blight tickets follow the property or the owner is debatable. One new person in charge, and it can follow the property and you’re stuck with the prior owner’s blight tickets.
If you don’t safeguard this in the contract, you could inherit hundreds or even thousands of dollars in fines. Require that all blight tickets are paid in full before closing.

Coming soon: a full guide on how to look up Detroit blight tickets and Certificates of Compliance.

🔹 8 Essential Due Diligence Items Every Investor Needs

Before you commit to buying a tenant-occupied rental, especially a Section 8 property, you must request these items:

1. The Current Lease

You must honor the active lease, so review all terms carefully.

2. Tenant Rent Payment History (Ledgers)

Request at least one year of ledgers.
Some investors also ask for bank deposit proof to verify rent was actually collected.

3. Tenant Contact Information

Phone number and email ensure smooth communication after closing.

4. Proof of Renter’s Insurance

Many landlords require this, and it reduces liability for both parties.

5. Notices Served to the Tenant

Late notices, lease violations, renewals, or communication related to rent issues — these all matter.

6. Maintenance Records

This tells you what repairs have been done and what issues may be coming.

7. Seller’s DWSD (Detroit Water Department) Account Number

In Detroit, unpaid water bills attach to the property, not the owner.
If you don’t verify this, you could unknowingly inherit the seller’s overdue balance. Tenant’s bills follow the tenant.

8. Proof of Certificate of Compliance

In Detroit, landlords cannot legally collect rent without a Certificate of Compliance. Good luck getting a tenant evicted if your house isn’t city certified.
This certificate stays with the house, not the owner.

🔹 Bonus Due Diligence Items

These aren’t required, but smart investors always ask for them:

Bonus 1: Move-In Photos and Move-In Checklist

These help protect you from disputes over condition when the tenant eventually moves out.

Bonus 2: Listing Photos

These give you a snapshot of the property condition before the tenant moved in. They expedite listing the house for rent again after the tenant moves out as you wait for your crew to get it back in shape.

🔹 4 Section 8–Specific Items You MUST Request

When buying a property with a Section 8 tenant, additional documentation is required to ensure payments continue smoothly after closing.

1. Name and Contact Information of the Housing Commission

Different commissions — Detroit, Southfield, Inkster, Plymouth, RPI — all operate differently.
You’ll need their contact info to complete the ownership transfer.

2. HAP Contract and Any Adjustment Notifications

The Housing Assistance Payment (HAP) contract outlines:

  • How much the tenant pays

  • How much Section 8 pays

  • Whether recent rent adjustments have been made

This is essential for analyzing cash flow.

3. Latest Passed Section 8 Inspection Report

This report is needed to:

  • Obtain a Detroit Certificate of Compliance

  • Understand when the next inspection is due

4. Signed Section 8 Transfer of Ownership Forms

Without these documents, Section 8 cannot legally transfer payments to you — meaning you will not get paid.

🔹 Bonus Item for Section 8 Rentals

Bonus: Tenant’s Voucher Bedroom Size

Voucher size determines rent limits.
Ask the seller if they can share documentation confirming how many bedrooms the tenant is approved for.

🔚 Final Thoughts

Buying a Section 8 rental can be one of the most reliable and profitable investment strategies — if you do proper due diligence. These documents protect you from unexpected expenses, compliance failures, and delays in receiving rent.

If you're serious about investing in Detroit rentals or Section 8 properties, make sure to subscribe — I’m creating more guides on:

  • How to look up blight tickets

  • How to check the seller’s water bill

  • How to verify Certificates of Compliance

  • How to ensure tenants don’t move out after you buy