Section 8 of Housing and Urban Development (HUD) is beneficial for both the landlords and the tenants. However, numerous property managers consider this platform a hassle consisting of a lot of paperwork, putting up with low-quality standards of tenants, undue government involvement, needless expenses, and some legal complications.
It brings along considerable paperwork in the beginning with constant inspections and meetings with caseworkers. However, being a property manager and a landlord, section 8 can end up profiting you as much as the tenants enjoy the benefits of Section 8 housing.
What is Section 8 housing?##
Section 8 is also commonly known as the Housing Voucher Program. It lets private homeowners rent homes and apartments for approved low-income tenants at fair market rates. Approximately four million low-income households in the United States get rental assistance with this program. The tenants are not limited to subsidized housing projects; instead, they are free to choose any house that meets the requirements.
How does section 8 housing work?##
This program works in a way that the landlords rent out apartments or homes to low-income tenants with a rental subsidy. HUD covers part of the rent for the house. For instance, if the income of a section 8 qualifying household is $1200 a month, then they pay $360 (30% of their income), and Housing and Urban Development (HUD) covers the remaining rent. Families commonly avail Section 8, but singles also qualify for this program.
HUD regulates the payments with fair market rental guidelines. Guidelines vary and are based upon the unit size, geographical area, and how the utility payments are divided between tenant and landlord. A homeowner can participate in the Section 8 housing program for as long as they choose to. The renters, however, have a waiting list. The waiting list for high-demand areas can run up to 8 years.
Common misconceptions about Section 8##
A common misunderstanding regarding the Section 8 housing program is the free ride for applicants. That's not entirely true as the renters are required to pay a rental amount equal to thirty percent of their monthly salary. The federal cash allocated for this program gives the balance amount straight to the property manager or the landlord.
Losing money to non-paying tenants is the top concern why landlords don't prefer section 8. However, unlike other tenants, HUD covers a significant part of the rent. The rent gets deposited through recession and boom alike, even during the Covid-19 pandemic that has caused a massive job loss, impacting the rental income of landlords.
The Housing Choice Voucher program##
It is the most extensive housing assistance program in the US. There are two programs for housing assistance: the voucher choice can either be a project-based program or a tenant-based program.
The project-based vouchers are applicable for apartment communities working with public housing authorities locally. It benefits in a way that the voucher recipients aren't forced in projects, and landlords can have some pre-screened candidates for selection.
Similarly, the tenant-based vouchers let tenants choose the privately-rented units if the landlord joins the section 8 housing program. Voucher recipients in this program get the liberty to choose the housing.
How section 8 housing program fills vacancies for landlords?##
The acceptance of section 8 housing support voucher increases the tenant pool for the rental property in the market. It might attract several prospective tenants on the waiting list. The waiting list is considerably larger in major urban areas. If the landlord agrees to cooperate with the Public Housing Agency (PHA), they would fill out the vacancies from the waiting lists.
How can you become a section 8 housing landlord?##
Certain requirements must be met to become a Section 8 landlord. You can find resources at HomeKasa to read more about it. Federal requirements establish the majority of the guidelines, so most of the housing assistance programs function in the same way throughout all the states. Property owners need to look for any maintenance issues on their site and take care of them before registering for section 8. HUD inspectors follow a checklist to ensure that property is decent, sanitary, and safe. The inspection requirements for section 8 include:
- Inspecting all rooms for security, electricity, or potential hazard, including a thorough check of windows, walls, and floor.
- The kitchen is checked for safe storage options with the presence of sink, oven, and refrigerator.
- Bathrooms are checked for leakage, ventilation, vanity, and all the bathroom necessities.
- The general home check includes the inspection of the site condition with fire exits, elevators, smoke detectors, and much more.
- The heating and plumbing check includes the acceptability of heating equipment, ventilation, water supply, and connection.
- Electricity and water must be available during inspection.
Mandatory inspection required by section 8##
Before an official takes you onboard as a Section 8 property holder, they will perform some initial safety checks. A housing authority official will also conduct ongoing inspections if you want to keep your property listed under section 8. During the detailed inspection, PHA looks at the unit's quality, including common areas and exteriors. Further, the Section 8 unit shall meet the following necessary criteria:
- All door locks should have deadbolts
- Electric sockets must have GFCI outlets in the kitchen and bath
- Windows must be well-maintained and lockable
- Smoke and carbon monoxide alarms should work
Are the rental prices limited with Section 8?##
The rental amount for units under Section 8 is not determined by the local PHA. However, they must still be within the range of medium-income households within that area. If a permitted unit is situated in a zone demanding high rental rates, the rental amount might be high. Conversely, if a better unit is situated in an undesirable location, the landlord might not be able to ask for a high market payment that he or she might get otherwise if the property was not under Section 8.
Free advertising with the Section 8 housing program##
US Department of Housing and Urban Development has maintained a website that prospective tenants can use for locating options for section 8 housing. Furthermore, several local PHAs also maintain lists of available contacts and unit information for landowners. It is free to use for tenants and property managers for listing the units available under section 8.
All in all, registering your rental property under Section 8 can be beneficial for both parties, renter as well as owner. For further details, check local PHA's website and federal laws.
Should you accept Section 8 housing vouchers?##
Not all states and towns mandate section 8. In some places, it is illegal to discriminate against a tenant based on the source of income such as section 8 voucher. Familiarize yourself with your local laws. That said, we recommend checking the applicants' finances, criminal background, and checking references with prior landlords. We also recommend meeting the tenants. HomeKasa is all about treating people fairly and without discrimination. Use the same process you'd for any other applicant.