Why is HUD FMR higher than real FMR?

[Account Closed]

Is there a reason that the HUD FMR for section 8 housing is so much higher than actual FMR? My boss owns properties in the Bay Area and is interested in buying an apartment complex and turning it into Sec 8. We found that rents are $1000 higher than rents we are already getting for 1 unit apartments and see this as a great opportunity. We are already aware of the problems that may arise with Sec 8 tenants but why does is it seem like it is so incentivized? Is there a catch?

Thank you.

[Louie Gabriel]

Section 8 will base their payment on fair market value. I think by "voucher", you are probably referring to a table on their web site showing what they might pay. If that is the case, that is an upper limit, not "the payment." In my area, the housing authority says they never pay that and hate that it is setting an incorrect expectation. I don't know if they pay it or not.

You can get a higher payment if you include utilities, but it might not benefit you. The housing authority will calculate what utilities should cost and include that consideration in the assistance payment which could mean higher rent to you. Unfortunately, your tenant has no reason to conserve, so why not turn the heat up to 80 and leave the window open for fresh air? I wouldn't include utilities.