Big changes to Section 8?

Big changes to Section 8?

Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes

I have a tenant that is on Section 8 and her lease expires at the end of October. I just received word from Section 8 that the portion of the rent that she pays is almost going to triple for the next lease. The tenant called me saying she can't afford it and Section 8 wants her to move.

I called her case worker and was told that everyone on Section 8 is being downsized. My tenant has 2 kids and a grandchild in a three bedroom house. The worker told me that they want two people in each bedroom, regardless of age or gender. I said, "What if a 40 year old woman has a 16 year old son? What kind of voucher would she get?" She told me that she would get a one bedroom voucher. My tenant is being downsized to a two bedroom. She can stay in the three bedroom if she pays the extra amount, but she might not be able to afford it.

I asked the worker if this is nationwide. She said she wasn't sure. She told me that she is friends with someone who works at a different Section 8 office two miles away and they are doing the same thing. Has anyone else heard of this?

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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
14y

There goes Michael Rossi's business model...

See this reply in the discussion

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  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    14y

    I don't know because I don't have any Section 8 tenants. I looked into Section 8 quite a bit though previously, and what I found is that - even though it is a federal/nationwide program - the actual administration of the program is done at the county level and subject to change and minor differences from county-to-county.

    For instance, in counties around mine (i.e. Sacramento, Alameda, etc), it is acceptable and common practice for Section 8 to pay a portion of the tenant's rent and for the tenant to pay the difference. However, in the county I live in (i.e. San Joaquin), the tenant is strictly forbidden from paying ANY amount. In other words, if your rent is $1200 a month, and Section 8 pays $1125, the tenant cannot pay the $75 difference. Furthermore, if the tenant is caught paying any amount above their voucher amount, they will be kicked out of the Section 8 tenant and so will the landlord!

    So essentially, in my county at least, Section 8 is dictating what rent you can charge. And that's one of the main reasons I opted not to participate in the program.

    So, in regards to your question, it's entirely possible that your county could be changing their rules while another nearby county is not. There's just no consistency in the program.

  • Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
    14y

    not surprised. the govt can't live high off the hog forever. programs (& employees) are being axed left & right due to their fiscal irresponsibility.

    you're in detroit area which has gotten hammered even more so the less in housing values, the less in property taxes to fund these things.

    if the govt was in the private sector, they'd be bankrupt in days.

  • Real Estate Agent · Henderson, NV · Member since 2011 · 1k+ posts · 550 votes
    14y

    I've been hearing rumors of late/delayed payments in your area too Rob.

  • Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    14y

    The whole system needs a major overhaul. Some states say they only allow 2 years of help and then they need to get back on their feet, but I have seen 3 generations of the same family drawing section 8 funds.

  • Real Estate Investor · the villages, FL · Member since 2008 · 5k+ posts · 3k+ votes
    14y

    What- can't we afford this forever???? Some think we can. Rich

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y

    There goes Michael Rossi's business model...

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    [quote=Kyle J.

    For instance, in counties around mine (i.e. Sacramento, Alameda, etc), it is acceptable and common practice for Section 8 to pay a portion of the tenant's rent and for the tenant to pay the difference. However, in the county I live in (i.e. San Joaquin), the tenant is strictly forbidden from paying ANY amount. In other words, if your rent is $1200 a month, and Section 8 pays $1125, the tenant cannot pay the $75 difference. Furthermore, if the tenant is caught paying any amount above their voucher amount, they will be kicked out of the Section 8 tenant and so will the landlord!

    Kyle J. I've heard other investors say they think there is a difference in counties when it comes to the tenant paid portion, and that isn't quite accurate. The counties administer the program pretty much the same and require tenants to pay about 30% of income towards rent. The reason some tenants are not allowed to supplement an S8 voucher is because they have reported income that does not allow for any supplement....as in zero income or an income below a certain threshold. In certain counties, the bulk (or all) of the vouchers will have gone to extremely low income families or no income families (certain types income are not counted). Indeed, if a tenant supplements a rent for which they weren't supposed to have any funds to pay, they'll lose their voucher.

    As for S8 setting rents, in both my home county and and my farm counties Sec8 pays FMV. $1150 for a 3BDR in the Central Valley counties I work, and $2500+ for a 3 BDR here on the coast. Most landlords I know would love a S8 tenant at those prices. There just aren't enough vouchers to go around....for the landlords.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    14y

    K. Marie Poe I understand what you're saying. However, we're talking about different things.

    I'm not saying I THINK there is a difference between counties, I am saying that I KNOW there is and have been told this from numerous people at the Section 8 office in my county.

    I couldn't believe it either myself at first, but after speaking with multiple people there (including people up the chain) who all told me the same thing, I had no choice but to believe it.

    I was told very clearly, that no tenant in my county is allowed to pay any amount towards rent. It wasn't a scenario where, if they did, it would have been over their income threshold. It was a bright line rule in my county that they forbid it from all tenants.

    I argued that couldn't be true because within 45 minutes away there are two different counties who operate totally different (more like the scenario you're referring to). However, the response i got each time was that the Section 8 program (actually called the Housing Choice Voucher Program to be technically correct) is adminstered separately by each county therefore each county can make up different rules for how it operates.

    I know some landlords will still charge tenants a portion of rent, even in my county. But the Section 8 office was again very clear that if someone is caught doing this, both the tenant and the landlord will be kicked out of the program.

  • SFR Investor · IN · Member since 2008 · 137 posts · 24 votes
    14y

    Rob,

    Without having been explicity told, I have surmised the same. I have two S8 props remaining (mercifully low proportion of total). Both are more than adequate in condition and function, yet the inspector failed both houses by the tune of 3 full pages of items. egregiously unprecedented, and without question a "passive", indirect method of redlining to reduce overall obligation.

    far as I'm concerned, this is a favor to everyone. allow me to rationalize for just a sec:

    1. fewer deadbeat tenants with a free teat to suck on (or one less channel for free lunch, tho I'm sure they'll find it in the next-in-line fed handout)
    2. one less temptation for owner/landlord to seek "easy" tenancy
    3. less train-wreck midnight tenant evacuations
    4. (ostensibly) less gov money (ie, ahem, taxpayer dollar, aka gov pork) being woefully allocated to undeserving recipients
    5. less red tape headache
    6. less gov dependency (something we could all stand to appreciate more, on a trend of necessity unprecedented)

    That's a quick-6. I could think of more but it might turn into a rant.

    Peace.

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Kyle J. I'm really curious what you heard and how it was explained. Right on the SJ county HA website it says tenants pay about 30% for the Housing Choice Voucher Program (Sec8)....just like every other county in CA. There are other govt housing programs, both local and fed, where no supplementation is allowed. And some Sec8 recipients receive housing aid from more than one source. I'm still not sure that San Joaquin county could be all that different.

    From the SJ County website:

    What is the Housing Choice Voucher Program?

    The Housing Choice Voucher Program, formerly known as Section 8, assists low-income individuals and families with a rental subsidy. The Housing Choice Voucher Program subsidy does not change the normal relationship of property owners or managers to tenants. The only difference is that each month the property owner will receive two payments for the tenant’s rent - one from the tenant, which is about 30 percent of the tenant’s income, and the balance comes from the Housing Authority of the County of San Joaquin.

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y
    Originally posted by J Scott:
    There goes Michael Rossi's business model...

    J Scott This comment was so confusing. Michael Rossi. I knew I knew that name. He's Jerry Brown's CA "job czar". But I couldn't remember reading anything about his ideas for investors or landlords. But, aha, there's a google hit for a Michael Rossi on BP, one with a landlord blog. Whose website is no longer active.....did the changes in S8 already take him down. What did I miss?

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    14y

    I should probably add that I'm ok with these changes. I think the program should be ended altogether and people could pay their own rent. Maybe they could seek employment the way most others do.

    I'm just curious if anyone else has seen these changes in their area.

  • SFR Investor · IN · Member since 2008 · 137 posts · 24 votes
    14y

    Rob, pls reference my previous post (Indpls IN)

  • SFR Investor · IN · Member since 2008 · 137 posts · 24 votes
    14y

    ...like I said on the Patrick thread, I LOVE the logo...if only more people understood the gravity of its relevance, today more than ever.

  • Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
    14y

    Vincent D. Thanks about the logo. Too many people view it as an evil word these days. I'm proud to be a capitalist.

    I have been hearing about tougher inspections too. I just had one where the inspector wrote up a bunch of little stuff that shouldn't even matter.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    Yes I have seen section 8 be in a constant flux of change.

    If the tenants income increases then section 8 adjusts the voucher amount.Also here you can list in the lease that the tenant pays a certain amount of utilities and that is fine.

    Some section 8 areas they will pay 800 for a 2 bed but then all of a sudden readjust to start only paying 700 which is not market value.These section 8 tenants never make up the difference from what I have seen.

    So you accept the lower rent or evict them and get a regular tenant for 1,200 more a year in cash flow.

    I don't know with the election and many government programs in flux how stable section 8 is currently.

    Might be a bad decision to base many of your renters off of that income stream.

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    14y

    @K. Marie Poe - That's interesting. It's possible they may have changed their policy from last year when I spoke to them. However, I wouldn't know for sure unless I called them back. Though from their website info (which is all newly designed I see) it does sound like the tenant can now pay a portion of their rent like in other surrounding counties.

    I no longer have any interest in the Section 8 program myself. I briefly considered it last year and went to the landlord orientation meeting. But I ultimately decided against it based on the rules (at least at that time) in my county. Now I'm glad I decided not to participate. You just hear too many horror stories about Section 8 tenants.

  • SFR Investor · IN · Member since 2008 · 137 posts · 24 votes
    14y

    as gov influence gains footing, more loonies fill the asylum...staff rolls. Such explains perhaps the inconsistency of allocations as noted by Joel.

    When it comes to purposely leaning heavy on what was previously an indiscriminate, free-flow of clearinghouse dollars, something of a higher bureaucratic nature is abrew. The action is too ironic for any positive hat-tipping to be deserved by its perpetrators. I'm suspicious of the motives, while absolutely CERTAIN of the purposeful sea change in gratuitous credits - something is amiss, and the S8 dollars are tighter.

    Maybe they want to circle the wagons and reassign dollars to the next-least-worthy deadbeat handout line of teat-suckers.

  • West, MI · Member since 2012 · 674 posts · 182 votes
    14y

    So..... a lot if people talking about the mechanics of the program.

    But to address Rob's question, we have not had any changes here to date. Next one comes up in January, so we shall see.

  • Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes
    14y

    Sounds like a reasonable change... having to share a room that you don't pay for isn't the end of the world. Our safety net programs allow people to do zero work and have a standard of living that is well above half of the worlds population.

  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by K. Marie Poe:

    J Scott This comment was so confusing. Michael Rossi. I knew I knew that name. He's Jerry Brown's CA "job czar". But I couldn't remember reading anything about his ideas for investors or landlords. But, aha, there's a google hit for a Michael Rossi on BP, one with a landlord blog. Whose website is no longer active.....did the changes in S8 already take him down. What did I miss?

    Sorry...that was more of an inside joke/comment referring to a former BP contributor (and almost certainly not someone working for Jerry Brown :)...

    Michael Rossi was (is?) a landlord who posted a lot of great info here on BP for several years. He would adamantly rail against welfare and anyone who relied on the government for assistance, but he owned many dozens (hundreds?) of units of Section 8 housing.

    He never seemed to get the irony...

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y
    Originally posted by Rob K:
    I called her case worker and was told that everyone on Section 8 is being downsized. My tenant has 2 kids and a grandchild in a three bedroom house. The worker told me that they want two people in each bedroom, regardless of age or gender. I said, "What if a 40 year old woman has a 16 year old son? What kind of voucher would she get?" She told me that she would get a one bedroom voucher. My tenant is being downsized to a two bedroom. She can stay in the three bedroom if she pays the extra amount, but she might not be able to afford it.

    I asked the worker if this is nationwide. She said she wasn't sure. She told me that she is friends with someone who works at a different Section 8 office two miles away and they are doing the same thing. Has anyone else heard of this?

    I suggest you call the regional HUD office, usually best to get through to the HUD IG. Having a 16 yr old boy and girl in the same bedroom would be in violation of long standing HUD requirements.

    Here's the thing, management at the local level is up to the PHA or Section 8 Administrator and they may adopt policies in addition to HUD requirements, but not in violation of HUD guidelines. Sounds to me like they are trying to spread the voucher allocations as far as they can with good intentions while accepting the blow back for compliance. Taking the issue to HUD will probably be your only option or getting an attorney which in most cases is out of the question due to the economic position of the tenant.

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y
    Originally posted by Kyle J.:
    Furthermore, if the tenant is caught paying any amount above their voucher amount, they will be kicked out of the Section 8 tenant and so will the landlord!

    So essentially, in my county at least, Section 8 is dictating what rent you can charge. And that's one of the main reasons I opted not to participate in the program.

    Let's address this. Tenants may pay more for any property so long as they are not paying more than 33% of thier income for rents, if they exceed that they will need to move or a lower rent must be charged.

    Section 8 certainly impacts what is charged but they do not dictate rents.

  • Investor · Hampton Bays, NY · Member since 2009 · 907 posts · 258 votes
    14y

    In Dayton Oh section 8 vouchers have a 2 year waiting list. I would not be surprised if some of the guidelines are relaxed to accommodate more families. I understand the arguments and feelings about those programs designed as a safety net and then become a crutch for many but if we are to continue to press for an economic system that leads more strongly to a free market capitalism and less to a socialistic European system we need to provide a safety net for those who through no fault of there own fall on hard times. Sorry for the political tone of this post this is not the place for it but many of your responses spoke of those in need of Section 8 assistance in quite a disparaging tone.

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Yes Michael, talk about cutting off your nose to spite your face. Sec 8 makes a big impact on RE and trickles through to just about all involved in RE. A flipper sells a hosue to a LL who then rents under Sec 8. Contracts fix Sec 8 properties, the volume of thier work helps to keep prices competitive for construction labor. It's all connected. Most investors, one way or another benefit by government injecting money into the industry.

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