By Leslie Tucker, Esq.
Across the country, more states and local governments have been moving toward laws that prevent landlords from having blanket “no Section 8” housing policies. But a New York appellate ruling has brought a new question to the surface:
When a state requires a landlord to accept Section 8 vouchers, does that also require the landlord to accept the inspections, access to records, and contract obligations that come with the federal Housing Choice Voucher program?
This question sits at the center of a New York case involving source-of-income discrimination, Section 8 housing assistance, and the Fourth Amendment.
The court does not conclude that the Section 8 program itself is unconstitutional or eliminate all source-of-income protections. But it does create a serious compliance question for New York and a warning signal for other places with similar laws.
THE BACKGROUND: THIS WAS ABOUT MORE THAN RENT PAYMENT
New York’s Human Rights Law protects against discrimination on the basis of lawful source of income in housing, including wages, public assistance, Social Security, child support, alimony, foster care subsidies, and housing assistance such as Section 8 vouchers.
This means that housing providers could not simply say “no Section 8,” refuse voucher applicants, delay applications because of a voucher, or treat voucher holders differently because of how rent would be paid.
The case began after two prospective tenants alleged that Ithaca landlords refused to rent to them because they used Section 8 voucher.
WHAT THE COURT RULED
The court recognized New York’s housing affordability concerns and the role Section 8 plays in expanding access to housing. However, it held that New York’s source-of-income law was unconstitutional to the extent that it required landlords to accept Section 8 vouchers.
The concern was not the voucher payment itself but the program obligations attached to it, including inspections, access to records, and the HAP contract. In the court’s view, requiring landlords’ assistance. The New York Attorney General brought an enforcement action, arguing that the landlords violated New York’s source-of-income discrimination law.
The landlords challenged the law, arguing that mandatory voucher acceptance effectively forced them into the federal Housing Choice Voucher program, which involves mandatory inspections, rent reasonableness reviews, access to records, and a Housing Assistance Payments contract. The
landlords were asking the court to view Section 8 as more than just another way rent is paid, but rather on what accepting a voucher requires after approval. to accept those obligations as part of source-of income compliance raised Fourth Amendment concerns.
The ruling was narrow. It did not strike down the Section 8 program altogether or eliminate all source-of-income protections. It focused specifically on mandatory Section 8 acceptance and the government access and contract requirements that come with the Housing Choice Voucher program.
WHAT THIS MEANS FOR NEW YORK HOUSING PROVIDERS
For New York housing providers, the ruling creates a serious compliance issue, but it should not be treated as permission to ignore source-of-income protections.
After the Appellate Division ruling, the case moved to the New York Court of Appeals, the state’s highest court. That means the Appellate Division decision may not be the final word. New York law also provides for a stay of enforcement in certain appeals involving the state or a state officer or agency.
In practical terms, housing providers should not assume they can now refuse Section 8 applicants based on this ruling alone. The New York Attorney General continues to describe lawful source-of income discrimination as illegal, identify Section 8 vouchers as protected, and accept source-of income discrimination complaints.
The safer takeaway is this: New York housing providers should continue treating source-of income compliance as active and should not make voucher-related policy changes without legal guidance.
WHY OTHER STATES SHOULD PAY ATTENTION
The issue behind this ruling is not limited to New York. Many states and local governments have source-of-income protections, and some specifically prohibit discrimination against Housing Choice Voucher holders. In some of those jurisdictions, there have been similar challenges based on the same arguments as those made in this case.
The ruling in this New York case does not mean that other jurisdictions’ source of income laws are
automatically unconstitutional. Different states may have different statutes, procedures, ordinances, or
constitutional standards. But the New York ruling will certainly become part of the conversation in
places where voucher acceptance is mandatory.
The key question for other states is this: Does the law require voucher acceptance in a way that effectively requires housing providers to participate in the Housing Choice Voucher program and
accept inspections, records access, and contract terms that may raise constitutional concerns?
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HOUSING PROFESSIONALS SHOULD USE THE WATCH METHOD
When a ruling like this comes out, it is easy to either overreact or dismiss it as someone else’s problem.
The better approach is to stay alert, understand your local requirements, and avoid making rushed policy changes. The WATCH method gives housing professionals a simple way to remember the next steps:
WATCH THE ISSUE WITHOUT JUMPING THE GUN.
This case is now before New York’s highest court, so housing providers should not treat the Appellate Division ruling as final permission to change voucher policies.
ASSESS YOUR STATE AND LOCAL REQUIREMENTS.
Source-of-income protections often exist at the state, county, or city level, and the rules can vary widely.
TRACK AGENCY AND COURT UPDATES.
In New York, watch the Court of Appeals, state agencies, local governments, public housing agencies, and local human rights commissions.
CONSULT LEGAL COUNSEL BEFORE CHANGING VOUCHER POLICIES.
A blanket voucher-refusal policy may still pose a risk, depending on the jurisdiction, advertising rules, and enforcement guidance.
HANDLE APPLICANTS CONSISTENTLY AND CAREFULLY.
Avoid rushed decisions, inconsistent treatment, or statements that could create a separate fair housing risk.
THE BOTTOM LINE
New York’s ruling does not end source-of-income protections or invalidate the Section 8 program. But it does raise a serious constitutional question about mandatory voucher acceptance. For New York, the immediate issue is the tension between source-of-income protections and Fourth Amendment concerns. For other states, the ruling is not a command. It is a caution sign.
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Provided by Bigger Pockets
According to the media and average Americans, landlords are all rich, lazy leeches growing fat off of honest workers.
It’s an easy narrative to spin. Too bad the numbers prove it’s not true in the slightest.
Most landlords actually lose money. I did, back when I still bought properties directly.
Here’s why so many landlords quit—and a few alternative ways to invest for the same cash flow, appreciation, and tax benefits without all the headaches and costs.
Average Landlord Size
What’s the most common portfolio size among landlords?
To hear the media tell it, you’d think those evil landlords own entire blocks and neighborhoods. But a study by Doorloop found the most common portfolio size is exactly one unit (42% of landlords).
That’s right: Most landlords own just one unit.
Another 33% of landlords own two to four units (often a single property), and another 16% own five to 10 units. That means 91% of landlords own 10 or fewer units.
In fact, a quarter of landlords never intended to own rentals in the first place. They became accidental landlords when they struggled to sell their home and ended up just renting it out instead.
That’s hardly the stereotype of a rich, greedy landlord that owns hundreds of units “exploiting the working man.”
Soaring Costs
You already know that home prices soared 55% between 2020 and 2025. But that’s not the only ownership cost that’s surged.
Property insurance premiums spiked 24% between 2021 and 2024. Property taxes are up 30% since 2019. As for building material prices, they’ve exploded 44% since 2020.
Meanwhile, rents are down around 5% over the last year, per Zillow.
The bottom line? It’s much harder to make rental properties pencil strong cash flow than it was before the pandemic.
Landlord Results
The Doorloop study found only a third (35%) of landlords say their properties are profitable year after year. The other two-thirds see only intermittent profits—or consistent losses.
This is precisely why just 44% of landlords have any interest in buying more rental properties. And even that unassuming number is up from a shoddy 35% in 2023.
Landlords aren’t exactly hitting it out of the park—or clamoring to keep playing the game at all.
Why Most Landlords Don’t Want More Units
I’ve owned dozens of rental properties over the years. At one point, I went to inspect a recently vacated property. The garbage was piled two to three feet high throughout the entire property, and I had to walk on top of it to get around and take photos.
All the curtains were closed, so it was dark despite being daytime. At one point in a dark room piled high with garbage like everywhere else, I stepped on something particularly squishy. I looked down to lock eyes with a homeless man who had broken in and passed out.
That’s what it was like being a landlord.
And sure, that rental was in a lower-income neighborhood. But even the rentals I owned in middle- and upper-income neighborhoods caused me huge headaches, such as constant hassles with contractors, renters, and city inspectors. I hired property managers, but they were just as much work to manage. Like everyone else in the industry, they had an excuse every time they failed to do what they said they would do.
Labor Required
Active investing is, well, active. It’s a business, whether a part-time side hustle or a full-time enterprise.
That labor is split into two broad categories: the labor and skill required to acquire new properties and that required to manage them once owned. Underestimating the labor is one of the many mistakes made by novice cash flow investors.
You can outsource some of that labor, but it takes huge bites out of your returns. For example, you can buy turnkey properties, but you won’t get a discount. You’ll pay full price and earn mediocre cash flow at best.
Scoring great deals on properties requires a marketing engine to find off-market properties. Read: work and skill.
So yeah, those professional landlords who own dozens or hundreds of properties? They actually do make money—but they’re a small minority of landlords, running a full-time business. They buy off-market properties at deep discounts, finance them with a network of lenders they’ve cultivated, renovate them with a team of contractors they’ve trained, refinance them, and fill them with uncommonly professional property managers.
I know because my co-investing club invests alongside those operators as a silent partner.
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How I Invest for Cash Flow Instead
In 2018, I unloaded all my rental properties. Today, I own a smaller interest in over 5,000 units (plus dozens of other real estate investments not measured in “units”).
In some cases, that means equity ownership through joint venture partnerships. In others, it’s equity ownership through syndications. For these equity investments, I enjoy the full tax benefits, cash flow, and appreciation that direct owners get.
I’ve also lent at fixed-interest private notes between 10% and 15%, secured by real property at a low LTV. These notes don’t come with any tax benefits, but the high yield sure is nice.
If you’re looking for passive income, check out these seven income investments paying 8%+ yield every year.
“But Brian, don’t passive investments require $50,000 – $100,000 as a minimum investment, and aren’t they higher risk?”
For a lower minimum investment, join a co-investing club. In mine, members meet online every month to vet a new investment and can invest $2,500 or more in the ones they like. That’s a lot less than the $50,000+ you’ll need for a down payment and closing costs for a rental property.
More Control Doesn’t Mean Lower Risk
As for risk, too many investors confuse risk with control.
Most novice real estate investors think that because they “control” a rental property, that reduces their risk. I can tell you firsthand: It doesn’t.
I was 24 when I bought my first rental property and didn’t know what I was doing. Sure, I technically had the final say over decisions like tenant applications and when to sell the property. But I underestimated the labor and skill involved, made every mistake in the book, and lost massive amounts of money.
Today, I invest small amounts ($2,500+) at a time with expert operators who are better at asset management and property management than I ever was. I don’t have “control” over decisions like which type of loan to use or which tenants to lease to, and good riddance. I’ve outsourced that labor to professional operators.
Don’t fall into the mental trap of thinking that control over the asset means control over the returns. They are not the same thing.
I’ve built a “set it and forget it” real estate portfolio. Every quarter, my bank account floods with passive income. And someone else fields those phone calls about leaky roofs and delinquent tenants.
Not sure how to vet operators or find passive deals to invest in? Join a co-investing club for consistent deal flow and to vet operators together alongside 50 other investors while putting small amounts in the deals you like.
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