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Friedmaneconomics

Does anybody on here have experience in owning / operating Section 8 housing in NY or NJ?

A lot, but first and foremost, what kind of Section 8?  Project based voucher or tenant based voucher?  Makes an enormous difference

Yes,

I purchased 2 large class C multi family complex’s.

It is an insane amount of work and they tend to ruin the unit or have drugs everywhere.

You will need a really solid property manager and maintenance team if you want to invest in this area

Approval by the city is fairly easy. I forget to mention that in my original post. Just make sure every fire detector works and double check that small stuff

Friedmaneconomics

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Other than the tenants likely being a nightmare what are some of the common troubles?

Tenants are not always a nightmare.  If the building is project based (e.g. the vouchers don't leave when the tenant does) then you end up with a pretty good tenant base, generally on par with market rate renters, because the opportunity cost of being evicted and losing access to the voucher is too high.  Also, more generally, if you treat the building as an ATM and don't put money or work into it, your tenants will treat it the same way.  If you maintain it and keep it in decent order, your tenants will generally be more respectful.  Obviously exceptions to this in both directions, but worth thinking about - it's just expensive to maintain a building well.

Can you turn residential property into Section 8 if it's a poor neighborhood?

It is possible to rent to tenants with vouchers, which may require leaving units vacant for longer.  It is exceptionally difficult, if not impossible, to create new project based housing.

For example, I'm considering buying some existing houses in Paterson NJ and turning it Section 8. Buffalo NY is also a very cheap market.

How tough is the approval process with the state? Any other pitfalls that you may fall into?

It's not really an approval process.  You can rent to whoever you like as long as you stay within Fair Housing guidelines.  However, given the geographic scope of your post, it sounds like you won't be very hands on, which means be very careful about costs.

Any and all comments or information is greatly appreciated!

Thanks

Again, a lot of this needs a little more detail and I'll be happy to give a more specific answer.

Delete.

This strategy honestly sounds like a disaster.

Instead of buying in a distressed neighborhoods and then turn around and try to bring the apartments into Section 8, you should be focusing on the property first, buying in good locations with growing population, job growth, infrastructure, demographics, opportunity for value-add, etc and then work with the local HUD office for the placement of tenants. You can find little pockets of area's like this all over NY, NJ, and PA.

Management will be your biggest issue buying in D- neighborhoods and good luck trying to find an effective manager to keep things on course for these types of properties.

Regardless of collection of HUD payments, all of your income will be going to maintenance, capex, and tenant property damage.

I own property in PA with Section 8 tenants and the experience has been fine but it's in a gentrifying area and have good professional management in place.