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I am a new landlord on some out of state houses, thus I hired a management company.  Today, the mgmt company asked me to approve a potential tenant for one of my homes.  Single lady with two teenage kids.  She has a credit score of 546, income of $1.1k a month from her job (which she has been at for two months) and $300/month from Army Reserve pension.  She will have a section 8 voucher that will pay for 60% of rent so her portion of the rent will be 25% of her gross combined income.  The rent/income aspect is okay but the low credit score along with 8 collections and an eviction in 2005 leads me to wonder if I should be upset with my management company for showing me such a tenant.  I asked the mgmt company to get me more information on this potential tenant but should I be upset that they sent over a pretty sketchy applicant?

Ed O. · Answer

Every section 8 office is run differently. Where I'm at, there's no such thing as being an approved landlord for section 8. The house is inspected and approved and the landlord does their part.

What are the collections for? I'd be almost all of my section 8 residents have some sort of collections on their credit report. Many of them have had multiple cell phones disconnected. It's part of the grind.

What people won't tell you about section 8 tenants, is that if you're fair and good to them, they don't move as frequently as the rest of the rental population. Also, they have big incentives to pay their rent - if they don't pay, the lose their subsidy. They realize this. Often, many of them have money and money management issues. Many renters do.

In some markets, section 8 is way off market on rent. In some, they're right on. There's a lot of generalizations in this thread which may reflect what someone has heard, but not experienced themselves, in the section 8 program.

With the government paying 75% of the rent and the eviction being 7 years ago, I would give this person a good consideration. How long have you been trying to rent?

Nearly all renters are renting because they can't buy - they all have some credit or financial baggage.

Mark Updegraff · Answer

Past record speaks worlds. Evicted once... probably won't care if it happens again. After all, she knows the system, and even if she doesn't pay, she'll get to live for free for awhile. I think it may affect her ability to claim bennys though, so maybe she has wised up.

Personally, I deny ANYONE who has been evicted in the past.
No exceptions!

Mark H. · Answer

You can't garnish a section 8 check, and there's effectively no recourse except to be creditor #9 if the tenant trashes the place.  I don't see an upside, it sounds like gambling to me, and I hate flushing $$$  into slot machines.

I don't see why your property manager doesn't have written qualification standards for your unit?  Seems like they're begging for a fair housing complaint.

I'd get another manager and a different tenant.

Mike H. · Answer

Tenants don't usually stiff you on their payments when they're in Sec 8 program. To me, the biggest problem is that Sec 8 wants to set the rent amount and they're usually well below market. And, here in Illinois, the tenant doesn't have the option to "pay the difference".  If sec 8 says, the most the lease can be for is 1k and the rents are 1,200, the tenant can't pay the extra $200.

I like the automatic payments but I don't like the rent amounts so I tend to say no unless they know their voucher amount and it will cover the rent.

That being said, I agree with above comments - NO EVICTIONS!  I would take someone with a record before I'd take someone with an eviction. And I don't take either.

I tend to skip over credit unless there are two applications with even numbers and then I go to that as the tie breaker.

To me its:
1) No Evictions
2) No criminal
3) Job history (the "just got a new job" applicant is a risk)
4) Salary
5) Rental history (constant jumper is a risk because they may be jumping and not getting hit with an eviction but they still may stiffing landlords on rent)
6) Size of family to house size (6 people in 3 bedroom is a no)
6) Then Credit

Mark H. · Answer

You really ought to set written criteria for applicants to protect yourself from fair housing complaints & weed out the riff-raff (fairly).  Income at a certain percentage of rent, no criminal history or eviction history for any resident, etc.  there are some excellent blog postings here about setting reasonable standards.

Luc M. · Answer

Guys, thanks for all your responses.  This manager DK'd a previous applicant at another one of our rentals due to a past eviction.  I guess they don't mind evictions if they are a Section 8 applicant, or maybe because it was seven years ago.  Either way, I think we are going to pass on this applicant and tell the management company we will not accept any applicants with prior evictions.

Thanks again all,
Luc

Mark H. · Answer

Fair housing says 2 people per bedroom, plus one, so you can't deny 7 people a three bedroom.  If that's in your written standards, you need to drop it.

Steve Babiak · Answer

Much HUD info on the voucher program can be viewed here:
http://portal.hud.gov:80/hudportal/HUD?src=/program_offices/public_indian_housing/programs/hcv/forms/forms

Kyle J. · Answer

Section 8 (now actually called the Housing Choice Voucher Program)  rules and payment amounts can vary by area because it's up to each individual county to administer the program.  For example, in some counties near mine, the tenant is allowed to pay the difference between the rent and how much their voucher is for.  So if the rent is $1200, but their voucher is only for $1000, then they can pay the remaining $200 to the landlord.  However, in my county, that is strictly forbidden.  If the tenant's voucher is for $1000, then that is the most you can charge for rent.  Furthermore, if the housing authority finds out that additional cash money is being paid to the landlord to make up the difference, then both the tenant and the landlord can be permanently banned from the program.

And if you do get involved with Section 8 tenants, I second Rob K 's suggestion to read The Section 8 Bible.  I've read volume one and two of this book, and found it to be informative and VERY funny.

Larry K. · Answer

The eviction would be a deal breaker for me.  I like criteria list Mike Hasemann put up.

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