Section 8 Housing: Yea, nay, or neutral?

Question

Good morning, BP community!

As always a huge thank you to everyone who has spoken up to help us in the past. This is such a great, overwhelming experience, and the support and knowledge of this community has been incredible.

@Raymond Northcutt is closing on his 4th house, 5th unit today, so I've been looking to fill. It is a newly renovated 4 bed, 1.5 bath in a neighborhood that is quiet, but not necessarily top of the line.

We have been inundated with interest. Many of these applicants are inquiring about Section 8 housing. Honestly, we are very unfamiliar with this. Here are some questions we have:

1. In a nutshell, what can we expect? Go for it, or stay away?

2. Barring any tenant issues (messy, destructive, those sorts) what should we put in the terms of lease, or be on the lookout for?

3. If we decide not to go with Section 8, how can we turn down these applicants without offending or creating a legal mess?

Thanks again!

Andrew Fidler · Answer

@Kendall VranaHi Kendrall, there is a good amount written on BP relating to this, check out "Section 8 Bible" topics for more than you ever wanted :)1. In a nutshell, what can we expect? Go for it, or stay away? - I operate 20 Section 8 houses in Toledo, I have to openly say it's a Love/Hate relationship...it kind of goes against my conservative values but the money comes in like clock work and the tenants are for the most part good people and simple need a short leash for their expectations and paying their portion of the rent. The agency that administers the program really is the largest variable, as long as they are landlord friendly (processing paperwork on time, reasonable inspection standards and hold the tenants accountable for their portion of the house ((cleanliness is a big one)) ) then the program can really be a valuable asset to you, the agency, and the tenant.2. Barring any tenant issues (messy, destructive, those sorts) what should we put in the terms of lease, or be on the lookout for? - Standard tenant screening really...I have found that you have to be reasonably strict on the payments from the tenant (we require tenanted houses to pay water here in Toledo) and definitely need a well documented and explained process for repairs, questions, payments, etc. Be aware that this segment of society is trained to hound the system for all it can provide through helplessness real or otherwise, they can swamp you with demands and expectations if you have the wrong relationship in place.3. If we decide not to go with Section 8, how can we turn down these applicants without offending or creating a legal mess? -- My understanding is that S-8 participation is completely voluntary so you don't HAVE to rent section 8. If you list a home for rent as "Section 8 Preferred" then you simply screen the tenants as you would ANY tenant and accept the first qualified applicant. I would see a "legal mess" stemming from inappropriately choosing a tenant over another (black/white, kids/no kids, gay/straight, the usual bad decisions of fair housing)...treat S-8 folks as a standard tenant really, it's not difficult to get started.What you do need to know is that the S-8 process is SLOW!!! I can rent a house on the first on the month, immediately after accepting the applicant if the stars align, and most importantly will have the deposit and the first month's rent in hand as I hand over keys.Section 8 is rife with bureaucracy...accepting the tenant is the beginning of about a minimum 30 day process. The voucher gets signed by you and the tenant is thrilled and you have the house "rented" provided the local S-8 authority agrees with everything.- 7-14 days, the voucher goes into the tenant's administrator and is reviewed for affordability, bedrooms vs the voucher size, rent rate, and is the tenant still in good standing with the program. If there are any issues then documents are requested and the delays begin...if the rent rate is too high then you will receive an email or call asking that the amount be adjusted. (I prefer this event because it means I found the absolute top of the market for that address at that time)- 7-14 days, if the voucher is accepted then the home moves to the inspection division. Assume 2 days to process and depending on their backlog the first inspection may take 7-10 days to occur.- Inspection day, if you pass you're good, if not you get to wait 24 hrs for the inspector's report to be filed and then call back to be scheduled at the next available day.- 1-7 days, HAP Contract is generated...you aren't allowed to let the tenant move in until you have a specific email from the S-8 authority stating that the whole process has been completed and you can sign a lease, move the tenant in, sign the HAP contract which is attached to the email, and send everything back to the agency. (Smile though, you are getting paid as of the day the lease is signed, it's just not in your bank account yet)- 7-30 days, once the HAP contact is received and you're setup on the monthly auto-pay. Here in Toledo they seem to process new contracts on the 20th of the month and then the 1st of every month thereafter. It's not un-common to have a first month partial, and a full second and third month being paid on the 1st day of the third month. Conclusion - don't dabble in Section 8 if you are cash poor, you're not going to like the delays in the process...especially is you struggled to get to the inspection phase and are told that the outside needs to be painted or the roof needs to be replaced. Every time we have a failed inspection I really just want the crew leader to tell me about any large issues, if daylight could be seen through an exterior door I know it's an easy fix.Hope this helps!

Bettina F. · Answer

I have never done Sec 8 -- never needed to. My units rent easily to people with jobs. My advice is based on my reading and discussion with other LLs.Your Sec 8 experience will, in a large part, depend upon your local housing authority. They administer the Sec 8 program in your local area. Some are great to work with, some are a nightmare of government inefficiency and waste -- you will never get them to return your phone calls, for example. If you decide to go Sec 8, you will want to maintain a good working relationship with the housing authority staff, so it is another layer in the LL/tenant relationship. Check out your local housing authority by networking with your local LL association.Some housing authorities are tenant friendly to the point of being LL hostile. If the tenant has a complaint -- even for tenant caused damage -- the housing office will withhold rent. It can take months to get your unit inspected and approved for Sec 8. You must sign a one year lease for Sec 8.I suspect with a 4 bedroom, you are going to have large families and/or unauthorized tenants. What is your strategy for dealing with that?Do you have local laws forbidding discrimination by payer class? If no laws against it, you can either tell applicants you do not participate in Sec 8, or only do month to month rental agreements. Otherwise, you just advertise, screen and fill your unit as normal. Since you are not already approved for Sec 8, the chances are you will have another non-section 8 applicant with move-in money ready long before your unit is approved.

Carlos Zapata · Answer

@Kendall Vrana We have been working with section 8 tenant for more than 4 years, you will find good ones, bad ones etc, normally they pay higher rent, try to find out what is the maximum allowable in your are for this property,, you will get the money from the housing authority but ask them to do the process as normal tenatn, check eviction and criminal records and do periodic inspections, one of my tenat have been more than 4 years with no issues but we used to have one that was not the best, We also do property management and on one occasion the investor did not want section 8 tenant, check your state 's Fair housing if you are allowed to do so in the mane of source of income Good luck