Breaking the Section 8 Stigma

[Owen Schwaegerle]

If you’re a landlord you’ve been trained to be leery of Section 8 housing. There is a negative stigma associated with the program and people who receive vouchers in the program. We recently had a panel at the SLO Real Estate Investor Meetup with speakers from HASLO, Five Cities Homeless Coalition, and Transitions Mental Health. During this panel they brought to light the significance that government assistance housing programs provide for our community. To put this into perspective, the majority of people in this program in our area have a monthly income of $1,000-2,000 per month. Where can you find a rental unit in  California for $1,000-2,000 per month? How do you qualify for a rental if you only make that much? And how do you afford food, gas, utilities, shelter, and health care on top of that? The answer is you don’t, so many of these people end up homeless, living in their cars, or on the streets. 

Here are three of the greatest concerns most landlords, including myself, have of Section 8 and these programs.

1. Section 8 means poor quality tenants
2. Government inspections of my property
3. If I rent to Section 8 can I leave the program?

Section 8 means poor quality tenants

Have you ever had a bad tenant? How many of those tenants were Section 8? The truth is you will find bad tenants everywhere. The quality of Section 8 tenants is the same as the general public, sometimes even better. Once you get a Section 8 voucher it’s like winning the lottery. A lot of the people in this program only earn $1-2K/mo, so this totally covers housing! They are so grateful for the program that they do not want to lose it. Plus, in order to qualify they have to check in with their agency regularly. They are on their best behavior and know that they are on a tight leash. Plus, just because they are Section 8 does not mean that they are above the law or the letter of the lease. You as the landlord will still have the right to give them a 3 day notice if they are in breach of the lease agreement for being a disturbance to the right to peaceful enjoyment of the property or if they have trash piling up outside, etc. Granted, these people will not have high incomes or high credit, but the rent payments are guaranteed by the government. Some landlords who get into these agencies actually really enjoy having 1 tenant, the agency, and then the agency fills the units and helps manage the people for you. It’s like have an extra set of eyes and ears on the property, and people who help support the tenants, coaching them to succeed with life skills like budgeting, finance, and health.

Government inspections of my property

Government inspections seem daunting. Who wants the government coming into their property and poking their nose around? The inspection is not as invasive as you’d think. They are simply looking for all the standard stuff: carbon monoxide and smoke detectors, water heater braces, proper ventilation. They want to make sure that your unit is safe and habitable for the tenants living in them. As long as you aren’t a slumlord you shouldn’t have anything to worry about. People need a safe, quality place to live.

Can you leave the program?

Yes, you can leave the program. Once you rent to a Section 8 tenant it does not label you a Section 8 landlord for life. You are not required to turn all of your units or properties over to Section 8. Once the tenant moves out, you do not have to lease the space to a Section 8 tenant again if you do not want to. The tenant signs a lease so you can still give a 3 day notice for lease violations like disturbance of the peace, trash accumulation, animals, etc. Most of these programs have a three way contract they sign. The landlord and the tenant sign a lease, the agency and the tenant sign a contract for terms in order for the tenant to receive the voucher/benefits, and the landlord and agency sign a contract.

Overall, there is a desperate need in our communities for the housing programs to have more units to house their people. One of the panelists shared a story about a 93 year old woman who had been living in a rental for 17 years. Once the property was sold, the new landlords wanted to raise the rent by $1,000/mo. Given that this senior is on a fixed income, she could no longer afford the rent and this forced her to be displaced. That was when the housing providers were able to enter in, get her assistance, and find her housing. Could you imagine a 93 year old woman on the streets? This is why these programs exist. It’s to help those who are in dire need.

Have you tried renting to Section 8? How did it go? If you have written Section 8 off completely, instead of avoiding the program and people who are using this social service, perhaps give it a try and see for yourself how it works out.

[Richard F.]

Aloha,

Sorry, I think you miss the mark with regard to the "greatest concerns" of landlords. 

1) Lost rent during the period from accepting an applicant, through inspections, and actual move in. These are days of lost rent that will never be recovered, AND, they typically are for a significantly greater number of days than a typical non-subsidized Tenant for a given market and seasonal timing. AND, you wait a month or two to get the initial payments.

2) The legal costs, lost rent, and repair costs when a Tenant must be removed for failure to abide by the contract terms. These are nearly ALL additional costs that will never be recovered. This includes those occasions where the Tenant either fails to pay their portion of the rent, or violates other terms of either the HAP contract or your Rental Agreement. Of course, those costs CAN compare equally to non-subsidized Tenants that were poorly or hurriedly screened. Most importantly, once you initiate action to cure or pay, you are required to notify Section 8 and they will, more often than not, terminate the Tenant from the program, so you will no longer be receiving those "guaranteed" rent payments while you go through the eviction process.

3) Inspections alone are not really too serious of a concern to LL's that routinely provide a clean, functional, secure unit; but what does eventually sour LL's is the fact that typically they have to make repairs later, even when the Tenant caused the damage or failure. Windows, screens, cabinet doors getting pulled off, unreported leak damage, physically damaged outlets and switches, and many more common issues are routinely pushed off on the Owner to repair. The Tenants cannot afford quality repair costs any more than they can afford market rent. "Normal" wear and tear has a much higher bar for Section 8 inspectors than it does for most Judges.

4) I 100% agree there are some good, long term subsidized Tenants, but finding them with one hand tied behind your back can be nearly impossible. Taking away the choice by LL's whether or not they want to participate with the programs is forcing many to turn their profitable "investment" into a non-profit charity. Operating a charity is noble and much needed...but should be a conscious choice. Not all investors have deep pockets to handle the higher costs and turnovers. There is no question of the "need" for housing, but reality is that bad habits beget more bad habits, and a significant percentage of those in need have bad habits in all areas of their life, as do their friends and families that also spend time at your property.

Maybe if the programs would pay for a percentage of the costs referenced above, perhaps the same percentage as their original, major share of rent, that would be a big step in the right direction. It just is not sustainable for small mom and pop investors to take those big hits every year or two. They often end up in financial difficulty as result, and are forced to dispose of the property, or just perform minimal maintenance allowing the property to deteriorate until it is a neighborhood problem.

Have I tried renting to Section 8? There was a time when I was responsible for over 600 units for about a five year period in the midwest. Easily 15% of them were section 8. So yes, I am familiar. I also understand that markets vary, smaller towns and counties might see more "good" participants, while inner city areas are much more difficult. Even here in Paradise, there is a wide range of quality in subsidized Tenants, and I've had both extremes. Promises on the front end of home visits by caseworkers and close monitoring are common. 9 Months later I received a letter advising they had removed the Tenant from the program... still no guarantees.