Deciding whether or not to open up your rental to Section 8 tenants is a big decision. While you’ll easily encounter landlords and real estate agents that swear by Section 8 and others who vow it off, it’s important to do a little research and figure out if it’s the right fit for you.
According to the Housing Authority of the County of Los Angeles (HACLA), “the role of the Section 8 Program is to provide decent, safe, and sanitary housing to a tenant at a reasonable rent”. This means that low-income households are able to get clean and safe housing, typically through the voucher choice program. Based on the tenant’s income, the tenant will dedicate a percentage of their monthly income to the rent and Section 8 will pay the remaining portion (the voucher). In some cases Section 8 will pay the entire rental amount.
So what are the benefits to renting out to Section 8?
Guaranteed rent. While it’s been known to take the Section 8 Housing administration awhile to process the first rental voucher, once you’re in the system you can expect timely automatic payments. Additionally, you won’t need to get your lease approved. According to HACLA’s handout, you be able to use your own lease. You’ll just have to attach the supplied HUD Tenancy Addendum with it and submit the completed lease to the family’s program specialist. Assisted living leases are one-year with potential lease renewal terms of one year. If you encounter a lease-breaking problem, you can rest assured that the same eviction rules apply to section 8 tenants as they do with your previous everyday tenants.
One big positive of renting to Section 8 families is that there is always a high demand for housing and that there is no shortage of available tenants. By advertising that you accept Section 8, you increase the amount of applicants you get. You already have good judgement when it comes to selecting quality residents, but it’s good to know that alongside your own tenant screening process, your applicant is pre-screened before they’re even at your door.
While there are a lot of benefits to renting to Section 8 families, it can be a lot of work. The rental process isn’t as clear-cut, so there’s a definite learning curve when you first accept a Section 8 applicant. Some of these curve balls are the deposit and utilities. Section 8 Housing (for the county of Los Angeles) does not cover the deposit or the utilities. The tenant must handle the deposit and monthly utility costs themselves, which for assisted tenants can be challenging. Additionally, and more importantly, there is a maximum rent that the Section 8 Program will pay. This amount is dictated by your area’s fair market rent for that year and can be calculated here. Another thing you’ll have to get accustomed to is if you decide to evict your Section 8 tenants, you’ll have to give 90 days notice (versus the typical 30 days).
Unfortunately when it comes to renting to Section 8 families there are a lot of stigmas among landlord, real estate agents and tenants alike. The first one is the idea that renting to Section 8 families means potentially more damages. While there are certainly horror stories that circulate, your rental has as much a chance of getting destroyed by a Section 8 tenant as your average tenant. It’s understandable that you want to do everything you can to protect your rental, but that’s why you use tenant screening, call prior landlords, and use your judgment to select who you deem best meets your rental criteria. One bad experience does not represent the whole.
Secondly, if you decide to rent out to Section 8 and advertise that fact, your average applicants might be deterred from applying. There are tons of negative stereotypes that surround Section 8 housing and its tenants, and as unacceptable as it is, it’s something you might have to deal with. The best you can do to combat these stereotypes is maintain your rental’s appearance and select quality tenants, no matter if they’re Section 8 or your standard renter.
Finally, it goes without saying that if you rent to Section 8 tenants, your rental will need to be inspected by your Housing Authority to make sure you provide “decent, safe, and sanitary housing”. While this inspection might seem like a hassle (as it occurs annually), it’s a good opportunity to make sure your rental property truly is safe. If you fail to meet Housing Quality Standards (HQS), you’ll receive a list of items that need to be repaired and then have an opportunity to reschedule the inspection at a later date.
Whether you decide to rent to Section 8 tenants or not, learning the requirements your local Housing Authority has is important to making the choice. The Section 8 process is an opportunity to secure rent and branch out into a new market, but it’s not for everyone. It’s up to you to decide if it’s the right fit for you.
UPDATE: The House unanimously approved the “Housing Opportunities through Modernization Act of 2015” in early February, 2016. This bill would streamline the Section 8 voucher program’s property inspection process by allowing immediate occupancy if the apartment home has been inspected within the past 24 months. Read More.
Do you have any experience with renting to Section 8 residents? Do you have any tips that could help first-time Section 8 properties? Let us know in the comment section below and be sure to subscribe.