Many property owners question whether to accept Section 8 housing vouchers. While there are pros and cons, choosing the right strategies can create a successful experience for both landlord and tenant. To make an informed decision, it’s important to evaluate several key factors.
1. State and Federal Law
You must agree (in writing) 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 the housing authority’s required property standards and the inspection procedure can help you to navigate the ropes!
2. Property 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 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 program will pay, causing the economics to favor a market rate tenant.
3. Advantages
The pros of accepting Section 8 vouchers often outweigh any negatives.
- Accepting Section 8 increases your tenant pool. Many quality tenants simply cannot afford to pay market-rate 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.
- The tenants tend to stay longer than market rate tenants, thereby decreasing tenant turnover expenses.
4. Challenges
Although the benefits may be appealing, being aware of possible difficulties can make you better prepared to meet challenges.
- Some landlords experience delayed rent payments, from either the housing authority or the tenant. Because Section 8 arrangements require three parties to a lease (the landlord, the tenant, and the housing authority), communication and receipt of payments can fall out of synch at times.
- The property must undergo inspection by a housing agent on an annual basis. This can require substantial time and money if repairs are deemed necessary.
- If a tenant does significant property damage during a move-out, there may be little to no income or assets to go after to compensate you for repairs.
5. Screening Standards
As with market rate tenants, you can screen your Section 8 housing voucher tenants by the same screening standards. When you screen tenants with Apartments.com, you can see past evictions, credit reports, and criminal history. You can also:
- 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.
The choice to accept Section 8 housing vouchers is up to an individual owner. It requires a multi-level evaluation and still requires tenant evaluation. Owners who select responsible Section 8 housing vouchers are generally happy. On the other hand, owners who focus on the guaranteed rent and fail to select responsible tenants often are disappointed. Subsidized or market rate, a responsible tenant is the key to a happy landlord experience!
The above information was originally published on 9/25/19 by Laura Agadoni.
FAQs
How do I rent to Section 8 tenants?
First, it’s important to have a clear understanding of how the Section 8 Housing Voucher program works. Under the program, tenants pay a portion of their rent, while the rest is paid directly to the landlord by the local housing authority. Landlords need to work closely with the housing authority to meet certain program requirements, such as completing an application and passing a property inspection.
How do I Section 8 a rental?
You will need to contact your local housing authority to obtain any necessary forms and guidelines. Generally, proof of ownership, tax documents, an approved lease, and a successful property inspection by a housing authority agent are required elements in making your property a Section 8 rental.
How do I protect my property investment?
As with any rental, protecting your Section 8 property starts with proactive measures, like tenant screening, clear communication, and maintaining the unit to high standards. With the right systems in place, you can enjoy the stability of guaranteed rent while safeguarding your investment. By balancing property protection with tenant respect, you create a win-win situation for you and your tenants.
