Many landlords wonder whether they should accept Section 8 Housing Voucher tenants. There are advantages and disadvantages to the decision and strategies to improve the returns. When deciding to consider or accept tenants in these programs, consider several factors.
1. Comply with state and federal law
You must agree to comply with state and federal equal housing, non-discrimination policies.
You also must agree to have and keep the property in compliance with minimum property condition standards.
Maintaining minimum property standards is good business anyway, whether leasing to a market-rate or government-assisted tenant.
Tip: Working with a property manager or contractor familiar with minimum property standards and the inspection procedure eases the impact of the additional requirements of Section 8 Housing Voucher rentals.
2. Your location
Consider your property’s location. In some areas, there may be very few market rate tenants to lease your property. These are typically low- to moderate-income areas. Government subsidized housing may be the best or only option for rental prospects.
If your property is located in a middle-income or higher-income area, there will likely be an abundance of market rate tenants. In these areas it is likely the amount a market rate tenant is willing to pay is above the reimbursement Section 8 Housing Voucher will pay, causing the economics to favor a market rate tenant.
Decide whether your property is right for a Section 8 Housing Voucher and whether you're willing to comply with state and local fair housing provisions and minimum property standards. If so, you’re ready to evaluate the advantages and disadvantages of these programs.
3. The advantages
The advantages of accepting Section 8 tenants often outweigh the disadvantages.
- Accepting Section 8 tenants increases your tenant pool. Many quality tenants simply cannot afford rent.
- The rent is guaranteed and deposited at the same time each month, provided the property is maintained. In some cases, the government pays 100 percent of the rent. In other cases, the tenant pays a portion of the rent and the government pays the rest of the rent.
- The landlord’s risk is greatly diminished. Section 8 Housing Voucher tenants tend to stay longer than market rate tenants, increasing the time between tenant turnover expenses.
4. A disadvantage
A disadvantage with Section 8 Housing Voucher tenants arises if there is damage to the property. This applies both during their tenancy and upon move-out. Section 8 tenants have little or no income or assets to go after to compensate you for repairs.
The reality is if you are renting to a market rate tenant in a low- to moderate-income area, most market rate tenants will also have scant resources to claim against if they damage the property. Note that if there is damage to a property beyond normal wear and tear, the tenant may lose their right to continue to participate in the program.
5. Apply the same screening standards to everyone
As with market rate tenants, you can screen your Section 8 Housing Voucher tenants provided you consistently apply the screening standards. When you screen tenants with Apartments.com, you can see past evictions, credit reports, and criminal history. Here’s what you can do:
- Set minimum credit standards.
- Establish maximum residents per bedroom.
- Limit pets.
- Check previous landlord references.
- Require that the tenant be employed or have a minimum income.
Applying standards improves your odds of having responsible tenants. Just because the government guarantees the rent does not guarantee you have a responsible tenant. Subsidized or market rate, a responsible tenant is the key to a happy ownership experience.
The bottom line
The choice to accept Section 8 Housing Voucher tenants is up to an individual owner. It requires a multi-level evaluation and still requires tenant evaluation. Owners that select responsible Section 8 Housing Voucher tenants are generally happy. Owners that focus on the guaranteed rent and fail to select responsible tenants often are disappointed. Professional property managers with experience in this area will assist owners.
