– How do deal with S8 Tenants? The rule was eliminated by Trump not too long ago. Most Section 8 tenants want to keep their vouchers, so they will do their best to keep your property well maintained and to follow the lease agreement. There are companies that offer scholarships to Section 8 landlords to obtain advanced property management training as well as discounts on everyday property management supplies. Finally, in our experience, Section 8 tenants can be more difficult to manage than their unsubsidized counterparts. The Los Angeles County Development Authority (LACDA) subsidizes the balance of the monthly rent in direct payments to the owner. So we take our lumps, and still rent S8, because without it, we would struggle to find tenants that can pay the rent and don’t have a mile-long record (just recently rented a non-section 8 unit and I went through 50 applicants in a month and a half; only 2 passed the background and financial check). Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. I have 2 section 8 properties in Greenville, SC. Although your rental rate may stay the same, the amount paid to you by the government may fluctuate depending on the Section 8 tenant income. According to the HUD’s website, in order to qualify for Section 8, the applicant’s combined total family income cannot exceed 50 percent of the average income for the area, and over 75 percent of vouchers go to applicants whose income is 30 percent below the average income for the area. We’ll spare you all the dirty details, but it went from bad to worse very quickly and ended in a long, drawn out eviction, a house full of cockroaches, a death threat, and a few thousand dollars in rehab costs—plus months of lost rent! Where as if you live in an area where there aren’t many rules, it may seem easier; however, loose rules can create uncertainty and lack of organization. The Housing Choice Voucher Program is popular and most urban areas have hundreds (if not thousands) of tenants on their waiting lists. Another benefit for landlords is that tenants are pre-screened by the housing authority. The final risk of renting to Section 8 tenants is that there is a maximum amount that Section 8 will pay. These are tenants I call the “Inviter;” they get an apartment paid for by Uncle Sam, you approve and accept them, give them the keys, and soon-oh, so soon afterwards-some one has moved in with them. Another risk of renting to a Section 8 tenant is the belief that Section 8 tenants are very destructive. Kate previously worked part-time for RealWealth in 2012, but her passion for real estate brought her back to rejoin our marketing team in 2018. There are also no guarantees in real estate – it’s always possible that you can lose your Section 8 status, so you’ll need to stay prepared for that. Tenants have been forced to live in terrible housing, and neighborhoods have suffered from housing … This is mostly due to the administrative process, which can be quite slow initially. One of the issues with Section 8 is the list of allowed occupants. He is currently proposing an increase of the percentage that low-income tenants contribute toward housing, from the current 30% to 35%. Are there limits on what the security deposit can be? thank you for sharing your experience. COVID-19; List a Property & View Your Listings; Affirmative Marketing Toolkit; Homes for Veterans; Landlord … One bad experience we had with Section 8 involved an inherited tenant (they were in the rental when we purchased it), and it was really bad. Another great advantage of being a Section 8 property owner! These must be different types of units? Section 8 of the Housing Act of 1937 (42 U.S.C. Worse yet, local housing departments often require extra steps in the eviction process, delaying … A place to begin your search is the U.S. Department of Housing and Urban Development. Typically, you will not be paid by the housing authority until after the tenant moves into the property. Why or why not? HQS Inspection Process - Step by Step Guide. Certainly, this can happen. By paying landlords who have several tenants receiving Section 8 one lump-sum check, the Section 8 administrators create more problems, too. RealWealth has been on the Inc. 5000 list of America’s Fastest Growing Companies... for three years in a row! It may be difficult to sell your property with Section 8 tenants later down the road. There have been horror stories about floors being destroyed, cabinets being pulled off the walls, toilets being cracked, garbage and filth everywhere and many more people living in the unit than are listed on the lease. Grant Cardone Is Both Very Right and Very Wrong: Let’s Pick Apart His Advice, You Can Avoid After-Hours Phone Calls From Tenants—Here’s How. I assume this is a state-to-state issue but curious because I always read the “three-time-rent” rule of thumb but then also read about S8. If you wish to collect a security deposit, you’ll have to collect this directly from the tenant. A foreclosure and eviction moratorium was declared by the President for the COVID-19 National Emergency. I know how to change fuses and reset circuit breakers. We have had both good and bad experiences with Section 8 tenants. Family, friends, usually a boyfriend. We have it stated clearly in our lease five times about this type of lease violation, but I guess some folks still think they can get one by us. Prospective Housing Choice Voucher (HCV) Landlords. That said, if a Section 8 tenant is delinquent on their rent you can evict them as you would a normal tenants. With benefits like government-subsidized income and free advertising, it’s not hard to understand the appeal. California's property managers, landlords and investors have to stop advertising whether or not they accept Section 8 applicants. This makes sense, because Section 8 tenants want to keep their Section 8 vouchers so they can continue enjoying the benefits that this program offers. Why Do Some Landlords Not Accept Section 8 Vouchers? The good thing about the first unit is it is duplex down to the basement. The Section 8 Housing Choice Voucher (HCV) program is a federally-funded HUD program that provides rental assistance for quality units chosen by the voucher holder in the private rental market. I wouldn’t have a problem with these but for the fact that the housing office (HO) does not-at the end of the contract , when the tenant is moving out-make the tenant show all municipal utilities are paid up, nor do they complete a move-out inspection that requires the tenant to return the property to the landlord the same as they got it. In NYC, landlords accept Section 8 tenants because, at a minimum, they will receive the rent from the voucher. I am in the process of closing on a Multi-Family Home in Austin, IL. Our standard lease has a provision for police calls, if the police get called 2x in 30 days then there is a violation of the lease and the renter is in breach (this is in ALL of our leases). You will need to contact your local public housing authority. In addition to qualifying a tenants income, the housing authority also performs criminal background checks and drug testing for all household members that are 18 years of age and older. An example of a hazard that could cause you to fail an inspection would be a broken handrail. Never send funds directly to a seller but instead, use the services of professional title and escrow companies. Many landlords are wary of Section 8 tenants. Hi Schumway, The fair rental value is the value of your apartment with all its problems and code violations 51 (see box following this section). They will use a government. In some more expensive metropolitan areas Fair Market rent is set at the 50th percentile. seriously! And it’s on your dime. PasswordUse at least 8 characters. Inspections here are also strange. If you are buying a property with current voucher tenants, you may keep this status with those tenants by both the seller and you, the buyer, signing a landlord exchange on a W-9 form. In other words, Section 8 will help pay all or some of a tenant’s rent. Tenants do know, however, that if they receive a court eviction order, they will lose their voucher so, more than likely, they will try to fix the problem before hand. ? The tenant-based voucher is attached to the tenant. However, these problems can happen with any tenant you rent to. It might just be a phone call to that existing landlord to know if their property is for sale. Real Wealth Network, LLC is an educational company and is not acting as a real estate broker. In order to accept housing vouchers, your local housing authority must approve both you, the landlord, and your property. Guaranteed Rent. The risk of property damage may or may not increase with tenants in the program. By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions. Affirmatively Furthering Fair Housing (AFFH), 23823 Malibu Road, Suite 50419 Malibu, CA 90265 |, Consistent Rent Payments Made by the Government, Constant Tenant Base (Lower Vacancy Rates), Less Turnover (Another Reason for Lower Vacancy Rates), Tenants are Motivated To Pay their Portion of Rent, The Joy of Being Able To Help People in Need, Don’t Receive Voucher Payment Until Tenant Moves In, Difficulty Selling Properties to Free Market, City authorities ignoring water/safety issues in the area. Membership is always 100% free! This is intended to help increase housing options to Section 8 recipients other than just low-income areas. Section 8 is a rental subsidy program funded by The Department of Urban Housing and Development (HUD) and run by local public housing agencies. Continue reading to learn more! Here’s how to ensure you rent your properties to the right prospects. While there are many benefits of renting to Section 8 tenants, there are also some potential disadvantages. Benefits. Section 8 is available to low-income, elderly, and disabled tenants to help pay their rent and utilities. The U.S. Department of Housing and Urban Development has a website that prospective tenants can use to find qualifying low-income housing. The tenant will pay you the rest. The building has eight units. Several local housing authorities also maintain websites or a separate lists of landlords who accept housing vouchers in their areas. Subsidized Housing. But they just about refuse to raise rents on current renters staying in their current unit. It is important to be aware of potential HUD changes to the low-income housing program. contact the local housing authority and they will condemn. Renting to tenants with housing vouchers is a great option for many landlords. This is a responsibility that you’ll have to deal with if you decide to … In many places, there’s up to a two year wait for housing assistance because the program is so underfunded. Participants find their own housing to rent in the open market, and pay a portion of their income towards rent. Also, tenants will typically pay their portion on time, because failure to do so can cost them their housing voucher. If I owned the building and wanted non-stereotypical tenants, I’d do the same. The Housing Choice Voucher Program, which was founded in 1937, is an affordable housing initiative that allows landlords to rent homes at lower market rates to qualified low income tenants. Not a single subsidized tenant that we have evicted has lost their subsidy. We accept our fate, but we strive to get better at our part, and hope S8 can improve their end with some oversight and better interaction with landlords. When the renter moves in, the market value rent might be fine, but after two, three, or 5 years your rent allowed by Section 8 may be far below market value. I heard Good and Bad stories about S8 people but I am open minded. After the initial housing inspection, you will need to be ready for annual re-inspections by the housing authority. If the Democrats aren’t able to win these seats and take control of the Senate, then it will be a lot harder for Biden to pass his plans for housing. The basement is unfinished. – Should I finish the basement and add a bedroom so that the first unit becomes 3 bed/1Bath for more money? There may be properties that are currently rented and simultaneously for sale. In Some areas, there is a shortage of Section 8 housing so landlords can also count on a decent rental rate from HUD. How Will Biden’s Presidency Impact Landlords? Chief Ben Carson of the Department of Housing and Urban Development (HUD) is known to oppose aspects of the housing assistance program. He is a nationally recognized leader in the real estate education space and has taught millions of people how to find, finance, and manage real estate investments. Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! The Section 8 program has several advantages. HUD provides housing vouchers that pays toward the tenant’s monthly rent, public housing authority does not pay security deposits (which are typical for most rentals). If you do not think that the landlord is handling the situation with the neighbor correctly, or if the tenant continues damaging common areas or other property, you have the right to co… Tenants must meet and adhere to certain requirements of the Section 8 program or potentially be faced with being dropped from the program. One of the biggest problems landlords face is getting the rent on time every month. The PHA provides a family with the housing assistance that enables the family to seek out suitable housing and the PHA enters into a contract with the landlord to provide housing assistance payments on behalf of the family. –, How a New HUD Rule Changes Section 8 Housing Vouchers –, HUD chief Ben Carson proposes hiking rents for some low-income Americans getting housing subsidies –. Potential buyers who are not interested in accepting housing vouchers may not want to deal with the hassle of ending leases to be able to rent to the free market again. We’ve typically found that Section 8 tenants cause more damage to the property and often allow more garbage and junk to pile up than our other tenants. We listed this as a “con” since it requires that the landlord adhere to the government’s standard of habitability, not their own. While that statement can be … This has changed the calculations of FMR in metro areas because calculations are done by zip code and not just areas within a zip code. Home » Learning » Is Section 8 Good For Landlords or Not? With Section 8… Section 8 is part of the housing choice voucher program, in which qualifying individuals receive vouchers to find their own housing. HUD-owned property is still available and now may be a great time to invest in section 8 housing! Hundreds of landlords have been fined and/or debarred from doing business with the federal government as a result of failing to provide safe and decent housing for the poor, while enriching themselves on taxpayer-funded subsidies. It is going to be my first time dealing with S8 people. Whether you’re a brand new landlord looking to rent your very first income property or an experienced one with a massive portfolio to rent out, chances are you’ve at least considered renting to Section 8 tenants. I’m looking for more 3 bedroom houses to buy and add to the section 8 program. If a section 8 inspection failed, you as the landlord have time to make the fix before a re-inspection date. They will once again send the inspector to determine if all issues have been fixed. You will be providing valuable information that may help GoSection8, HUD, and housing authorities offer better service and information to families as they search for new housing… One restriction is the number of bedrooms in a rental unit. I feel bad for the new landlord, who took possession of the building in September, for having to tolerate her crap. This could be an issue because the tenant has already shown to have income problems. The Section 8 Program offers tenant-based assistance. We are all aware that government leaders and the financial stability of our country are always changing. I want to give it a try and have an S8 in the first unit. Finally, I have to agree with Tom Geier when he mentioned unwanted guests. If you are consistently doing your own inspections and fixing issues as needed, these inspections can go smoothly. NYCHA's HCV program is the largest in the country. He is a nationally recognized leader in the real estate education space and has tau... Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. Each Unit pays their own Gas, Heat, and Electricity. Solomon Greene of the Urban Institute was on the team that drew up the 2015 fair housing rule. u been in house 20 yrs on section 8? Half my renters are S8. However, the opposite could be said because tenants have more incentive to stay in good status with the landlord’s policies to avoid losing their voucher. Thank you. Tenants who uses GoSection 8. It wouldn’t OCCUR to me to call my landlord about light bulbs (?) Find local real estate meetups and events in your area. In this article you’ll learn what it means to use this strategy and the pros and the cons associated with accepting housing subsidies for low income tenants. Then, once a month, the housing authority will mail you a portion of the rent or directly deposit it into your bank. With that said, how well it will work for you as a landlord largely depends on how you run your business. If vouchers were eliminated, would you have a difficult time renting your unit to full-paying tenants? With budget cuts projected to continue throughout the next decade, we are left to wonder how the Housing Choice Voucher Program will be affected. – Should I run a Background check on the S8 tenant living in the Second-Unit? If you say “income must be 3 times rent”, is it legal to turn down S8 if they don’t meet that income requirement? If you do fail the inspection, you will be given a list of items that need to be fixed. If the repairs aren’t finished by the next inspection date, the subsidy payments for rent … HUD has also recently enacted a change in Fair Market Rent calculations. The security in real estate and of affordable housing opportunity for all is always a balancing act. Landlords cannot decline a tenant based on the … Control of the Senate will be determined by two runoff elections in Georgia on January 5, 2021. (Note: the Investor Portal is only accessible by RealWealth members. For Current Section 8 Property Owners. When the tenant moves, the assistance can move with them. In other words, tenant vouchers are extremely limited and many individuals and families must put themselves on long waiting lists. In this case, the landlord must qualify for the voucher and then qualify tenants independently (the tenant does not have to work through HUD directly). Although most of the six other tenants are more recent, historically very few of our neighbors are or have been transients. 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