“As the markets become more saturated with rentals, you may find these guys going to a Section 8 model -- if they don’t decide to sell -- simply because they don’t want these houses sitting empty,” Thornberg said.

Investors are buying houses for the potential value appreciation as much as the rental cash flow, and may be reluctant to commit to Section 8 tenants because those leases come with long-term constraints that reduce the ability to sell quickly, according to Raphael Bostic, assistant secretary for policy development and research at the U.S. Department of Housing and Urban Development from 2009 to 2012.

“These guys are not really rental people,” said Bostic, a professor of public policy at the University of Southern California. “They’re transaction oriented.”

Dangerous Neighborhoods

Landlord participation in the $18.9 billion HUD program is voluntary, as long as there’s no discrimination against Section 8 tenants based on their race or other protected status. The vouchers assist low-income families, the elderly, and disabled afford housing in the private market, paying landlords at or close to market rates, with tenants contributing 30 percent to 40 percent of adjusted gross income for rent and utilities.

Section 8 voucher holders occupy about 5 percent of the country’s 40 million rental residences, almost double the number in public-housing projects units.

Some single-family rental businesses, such as American Home, avoid purchasing properties in areas where many renters have housing vouchers, according to Chief Executive Officer Aaron Edelheit.

“We steer clear of dangerous neighborhoods,” said Edelheit, whose Atlanta-based company owns about 2,500 rentals in the Southeast. “Our experience in the past has been Section 8 involves lower-quality neighborhoods, higher crime, higher vandalism, higher delinquency and problems.”

Fund Buying

Blackstone, Silver Bay, Thomas Barrack Jr.’s Colony Capital LLC and self-storage billionaire Wayne Hughes’s American Homes 4 Rent started buying residential properties en masse in the past two years in cities including Phoenix, Las Vegas, and Atlanta. They’ve been seeking to take advantage of U.S. prices that fell as much as 35 percent from the 2006 peak and growing rental demand from some of the more than 7 million Americans that lost their houses to foreclosure.

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