Rental Property Investor · Sonoma County · Member since 2019 · 5 posts · 1 vote
I recently purchased a property that already has a section 8 tenant in place. HUD pays 100% of their monthly rent. Id like to know your experience when requesting a rent increase through HUD. Please note: I understand how HUD calculates fair market rent and I'm within the limit in my area. Moreover, I'm prepared for their yearly inspection.
1. If HUD denies the rent increase request what recourse do you have? I've heard others say that HUD might counter (e.g. you ask for a $100 rent increase which they don't approve but HUD says they'll allow a $50 rent increase). However, if this isn't the case and its simply denied what can be done to prevent you from having to wait another year to request an increase through your local housing authority?
2. Any tips for getting the rent increase approved in the first place?
Hi @Harrison Biddulph. I own a portfolio of S8 properties in the St Louis area and teach other investors how to maximize the niche.
There isn’t a straightforward answer here unless someone from your county can respond because every PHA operates differently on how they set and increase rents. I work with 2 here. One is very easy to get increases from, one is not. For the one that isn’t, the first time I had an increase denied, I politely thanked the person for their time and help and asked what the process was to escalate/appeal the decision. Then I followed the process (it includes sending at 3 rent comps for similar units within a half mile) and followed up over and over until I got it.
Hi @Harrison Biddulph. I own a portfolio of S8 properties in the St Louis area and teach other investors how to maximize the niche.
There isn’t a straightforward answer here unless someone from your county can respond because every PHA operates differently on how they set and increase rents. I work with 2 here. One is very easy to get increases from, one is not. For the one that isn’t, the first time I had an increase denied, I politely thanked the person for their time and help and asked what the process was to escalate/appeal the decision. Then I followed the process (it includes sending at 3 rent comps for similar units within a half mile) and followed up over and over until I got it.
In my market, Section 8 properties are eligible for rent increases at end of lease. 60-days notice needs to be given to the tenant so contact HUD sooner versus later. HUD publishes its current market rent eligibility based on beds for each zip code in the US (it's available online). It does include the utility allocation so you can't expect that full amount. In the most recent rent increase we did, we emailed the Section 8 Housing Office (due to Covid) providing the address and tenant name. A case manager wrote back with what the property was "eligible to receive." We then asked for the proration to determine the impact on the tenant - and it actually reduced her payment (which had been almost the full rent before) - a win for all.
Email that city's Housing Office. No rent increase is granted if not requested and I'm finding that landlords/PMs miss this opportunity.
Well, go back to their H/A caseworker (you won't be dealing with HUD directly almost ever as a landlord) and make your case. H/As get funds from HUD, but have some side money so can decide whether to pay more per voucher or same rates and more vouchers.
In general, HUD FMRs are based on 3-year trailing averages. We've had 3 pretty good years, most LIH operators are expecting small/flat increases or, yes, god forbid, FMR decreases in the immediate future.
Unless you have a LURA on the property, you don't have to take low-income renters if they can't afford stated rates.
If you get money or tax credits to build income-restricted housing, govt will record a LURA against your property with terms (60% AMI) and length (usually 30 years).
1) Choose a tenant who has income. My criteria requires a tenant with a voucher equal to my bedroom size to have 1 times rent in income. If their voucher size is smaller than my house (3 bed voucher, 4 bed house), I require income of 2 times the rent. This does is income in addition to the voucher. I don’t accept tenants with no income who are “between jobs right now.”
2) Submit non-SEC 8 rent comps with your RFTA to support your rent amount.