Section 8 in Philadelphia

[Faith Importico]

A lot of investors are turning to section 8 now that they've moved the rent higher than market rent. I'm thinking of adding more section 8s to my portfolio in 2024.   Do you often receive the rent listed on the chart? or less than?

[Stuart Udis]

I don't personally own any properties leased to housing choice voucher recipients but heard from others who are having trouble leasing their properties. They are citing a lot of inventory competing for the same tenants. These landlords from what I understand have properties in marketable locations and doesn't seem as if it's the particular properties that's the issue. I have also personally seen a big push towards investing in affordable housing. It's a low barrier of entry asset class, especially the single-family homes and small multi-family properties in cities such as Philadelphia which I assume has also led to an influx of inventory. I suspect the increased rents will cause more investors to turn to the program which may cause more lease-up issues. This is merely what I am hearing along with some suspicions. Others who are active within the program may have other intel to share.

[Tim DiCicco]

Most often you receive less money than is listed on the chart. After you submit your prospective tenants voucher to PHA, one of the steps prior to lease signing is called "rent determination" . It is at this stage when PHA will do a rent comp analysis for the property and look closely at the "client's" (potential renter) finances. Using that data, they will then let the owner know how much they(PHA) determined rent will be. The amount of the determined rent  is a combination of what PHA  and the tenant will pay monthly.

Hoped that helped! Free free to DM me for more info.

Regards,

Tim

[Alan Asriants]

Bump on what Tim said. 

Those numbers are never guaranteed they are just ceilings. 

The tenant's income can also affect this rent determination. And to everyone out there thinking that Section 8 is guaranteed - it is not. Only the portion that PHA pays is the guaranteed part. What the tenant pays is never guaranteed. 

These markets in Phila like grays ferry, brewerytown,mantua "up and coming" got a lot of built up hype which caused many investors to flock and build and build and build. By the time they were finished building, the rates skyrocketed, there was way too much inventory, and the neighborhoods didnt improve but actually took a turn for the worse. 

Short term, this market is very tough on landlords and sellers. Long term, I'm not sure... Lots of things have to change and improve within local policy