What is Section 8 housing? This government-funded program offers low-income residents in the United States housing choice vouchers. These vouchers are used toward housing expenses, like rent and utilities. Although Section 8 recipients can invest in homes with their funding, they often rent properties, as well.
Section 8 landlords have a decision in whether or not they accept government funding for their housing investments. Section 8 voucher amount totals are directly transferred to landlords who decide to rent to Section 8 tenants. If you are thinking about opening your property to low-income tenants that receive housing choice vouchers, be sure to review the pros and cons, first. Below, learn more information about what it is like to become a landlord that accepts Section 8 vouchers.
Section 8 Landlords
Many property owners ask, “What is Section 8 housing like for landlords?” As a property owner, you are likely looking to capitalize on your investment. However, with the housing market being in constant fluctuation, you may seek alternatives if you are between tenants. That is where Section 8 housing can work to your advantage.
There are many benefits to becoming a Section 8 landlord. To start, you have access to a guaranteed market of tenants who are in regular need of housing. In fact, many Public Housing Authorities, or PHAs, have long waiting lists filled with tenants seeking homes for rent. When you sign on to be a landlord that accepts housing choice vouchers, it is basically guaranteed profitability.
Additionally, your local PHAs are likely easy to work with, and are looking to cross Section 8 housing tenants off their lists quickly, so your property will be an enticing way for representatives to do their jobs.
Even still, the benefits of being a landlord for Section 8 are aplenty. These include:
- Consistent rent payments. One of the most difficult parts of being a landlord is chasing your tenants for money each month. When you welcome Section 8 tenants into your properties, you can guarantee you will be paid on time, thanks to the government subsidies headed your way.
- Guaranteed tenants. You will have little-to-no vacancy concerns if you decide to house Section 8 residents. There is a 12-month requirement enforced on all housing choice voucher leases, which means you do not have to worry about a Section 8 renter breaking the lease before the time is up, or he or she will not be able to maintain these housing benefits.
- Pre-screened tenants. Your local PHAs will do the screening work for you. This can save you time and money in vetting qualified tenants. Part of Section 8 housing means PHAs screening tenants, from their background checks to their financial histories, so this cuts the legwork out for you.
- Free advertising. When you are a property owner without a tenant, advertising costs can eat away at your investment. When you enlist your home with Section 8, it is basically free advertising through your local PHA. And, because the demand is so high for properties that accept government discounts, your home will never be vacant for too long.
- Business support scholarships. Another perk to joining the Section 8 program as a landlord includes access to certain scholarships. You are eligible for advanced property management training to brush up on your business skills as a landlord, and for discounts on supplies related to property management. To learn more about these opportunities, contact your local PHA.
Section 8 Landlord Disadvantages
Although Section 8 voucher amount totals might be tempting, as they are guaranteed money on your property investment for 12 months at a time, there are also cons associated with joining the program. Before you jump into a Section 8 housing role, make sure to consider:
- The regulations on rental prices. When you are a part of the Section 8 program, your rent must fall in line with the PHA’s regulations. This means missing out on higher-paying tenants from the free market.
- The risks associated with renting in low-income areas. As the property owner, you already know about the risk you face if your home is located in a non-gentrified neighborhood. Unfortunately, this risk can amplify if you are attracting tenants from that neighborhood.
- Delays on initial voucher payments. Getting initially paid is not immediate, during the singing phase. You are at the PHA’s mercy to receive your Section 8 voucher amount upon move-in, until all government procedures are fulfilled.
- The possible loss on security deposits. Since the U.S. Department of Housing and Urban Development does not pay for security deposits, you are not only looking at a financial loss on those funds, but it puts your property at risk for depreciation, depending on how your tenants choose to live.
- Your property is subject to approval by the PHA. Section 8 inspection requirements are enforced, and must be adhered to, on an annual basis. This is a factor that you do not need to address if you are renting in the free market.
In addition, even though your local Section 8 housing PHA has done the vetting work for you, there are no guarantees on the quality of your tenants. Unfortunately, you have no control over:
- If you have cooperative tenants or not.
- Any property damage issues that may occur, which do not include security compensation.
- Situations that may arise regarding hard-to-evict tenants.
Section 8 Inspection Requirements
If you have decided to sign on as a Section 8 landlord, you must learn about the requirements related to home inspection. The Section 8 inspection requirements are enforced on a federal level by the HUD. The HUD supplies participating landlords with an official inspector. Annual inspections must occur, and your tenants will be analyzed, and information recorded, including, but not limited to:
- Details about the tenants, including sleeping arrangements.
- If the home meets safety standards in bedrooms, living rooms, bathrooms and kitchens.
- If the paints used on the home are up to code.
- The conditions of the windows, flooring, ceilings and walls.
- The air ventilation and air quality.
- If the exterior is up to Section 8 housing code, including the foundation, roofing, gutters, chimneys, stairs, rails and porches.
- If water, sewage, heating and plumbing is on par.
- General safety concerns, surrounding fire exists, infestations and garbage disposal.
- Accessibility for disabled tenants.
- Whether or not repairs are carried out upon request.
- Full analyses of all appliances.
As you can see, the Section 8 landlord obligations tend to go above and beyond those of a standard landlord. If you do not pass your annual inspection, it could cost you a lot to get your property back up to the PHA’s standards. Make sure to weigh the pros and cons of this business decision, prior to welcoming Section 8 tenants into your home(s).