Hello BP fam!!
Hope everyone is having an excellent day/week/month/year!
Today I want to talk about how to calculate how much monthly income you'll get if you rent to section 8 tenants with vouchers. So many rental markets in Chicago and surrounding suburbs (Cook County) are dominated by renters using government vouchers to pay for their rent payments. Though this is so common here, figuring out how much you'll actually receive can be super confusing and convoluted if you don't know where to start. As investors, we want the most accurate numbers when we're analyzing potential deals and it could be very detrimental to not know the exact monthly income that you'll receive from this class of tenants. Let me know if you have any questions or further input. I am always on a mission to learn as well!
Alright, so first thing, you'll want to go to the Housing Authority of Cook County website: https://thehacc.org/
Here, you'll find two spreadsheets under the Documents ---> Landlords tab (both attached below). One is the 2022 Payment Standards and one is the 2022 Utility Allowance Schedule. Open both of them.
Let's use 2932 Sussex Ave. in Markham, IL as our example property.
So first, you'll want to look up the zip code to see what range it is on the Payment Standards worksheet, in this case 60428 is "P". You'll then you look in the P column below with the corresponding number of bedrooms to find the payment amount. The payment amount will be based on how many bedrooms the tenant is allowed on their voucher. So if it's a 3 bedroom house but the tenant has a 2 bedroom voucher, the rent will be based only on two bedrooms. But, you can still see what the rent would be if you can find a tenant with a voucher that matches the # of bedrooms (best case scenario). The county usually gives vouchers based on the rule of two people per room.
Next, you look at the utility allowance worksheet. Add up the amounts for all of the utilities/services the tenant will be responsible for paying, then subtract that amount from the rent on the first page. The remaining amount will be the actual rent allowance that the landlord will receive.
For example 2932 Sussex:
Zip code 60428 is range P
Rent for Range P for a 3-bed voucher is $2040
Assume the tenant pays all utilities (here I used natural gas heat, natural gas cooking, electric, electric charge, natural gas charge, water heating, water, sewer, trash, range/microwave, refrigerator), all those for a 3BD equals $308
$2040 - Base Rent Amount for 3BD voucher
-$ 308 - Utility Allowance for 3BD voucher (subtracted from base rent)
____________________________________________________________
$1732 - remaining rent allowance payable to landlord
So just remember, you'll have to subtract a significant amount from your rental income if tenant is responsible for the utilities.
Hope this was helpful and happy investing! Cheers!
