The Department of Housing and Urban Development in the United States has developed a program called the Housing Choice voucher solution, or the Section 8 program. This program allows low-income families to pay their rent through “subsidy” vouchers instead of using cash. With the program, which is often referred to as the “Section 8” program, you can save a lot of money on your housing costs. However, if you’re a landlord thinking of investing in Section 8 houses for rent, then you might want to rethink your options.
There are various unique challenges that landlords have to face when they’re renting to someone with a section 8 voucher. For some landlords, these problems are absolute deal-breakers, and issues they simply don’t want to face. However, the advantages of renting to a section 8 tenant can also outweigh the disadvantages in some cases.
1. Inspections Are Very Common
One of the major issues that many landlords face, is that when they take on section 8 houses for rent, rental properties need to be inspected on a regular basis. Most inspections are performed by a local public housing authority, and a section 8 inspector will generally visit the property once a year to complete the inspection. Even if there hasn’t been any turnover with an existing tenant, the inspection must be done on time.
For people investing in section 8 houses for rent, it’s all about making sure that the unit meets with the housing quality standards of the housing authority. Inspectors will be looking for signs of specific problems, including issues with the sanitary system, the use of lead-based paint, water-supply issues, and smoke detectors.
Each of the 14 areas covered by inspectors will need to meet at least minimum requirements. Unfortunately, it’s not that uncommon for homeowners to fail their section 8 inspections. For instance, a water leak in your bathroom could be enough to cause you to fail your inspection. If you fail the inspection on section 8 houses for rent, you’ll have to address a list of items that need to be fixed, and then schedule another inspection with the office.
2. There’s No Security Deposit with Section 8 Houses for Rent
Another important thing for landlords to note, is that the way section 8 works means that there’s no security deposit for them to tap into. Section 8 gives potential renters housing vouchers that they can use to pay their monthly rent. These vouchers will not include an amount for a security deposit. If you want to collect a deposit, then you’ll need to do so by speaking directly to your tenant. This could be a huge problem as you know that your tenant is financially challenged because of the fact that he is using a section 8 voucher.
If your tenant can’t pay, then he or she could always appeal to other companies and agencies that can provide the money needed to make a security deposit. Although it can be a lot of hard work, when you’re dealing with section 8 houses for rent, you should make sure that you never allow a tenant to move in until you’ve collected a security deposit. This will help to protect your investment in case of unexpected problems.
3. Receiving Rental Payments
Another issue that landlords face when they’re dealing with section 8 houses for rent, is they need to figure out exactly when they’re going to get their first rental payment. In most cases, you won’t receive a payment from the section 8 office until the tenant has moved in into the property. Thanks to a lot of administrative concerns, there have been issues in the past where landlords have had to wait for several months to receive a payment for their section 8 houses for rent.
The good news if you are working with section 8 houses for rent, is that once you have got your first payment, you shouldn’t have a problem getting consistent payments each month. Despite this, the delay in your possible payment may be something that you want to keep in mind when you’re deciding whether to invest in section 8 houses for rent or not.
4. Problems in Attracting Tenants
In some cases, if you do invest in section 8 houses for rent, you might find that people who don’t collect rental assistance are less likely to be interested in your property. Some people have strange feelings about those who require extra support when it comes to renting their homes.
In this case, the only thing you can do to support your investment is focusing on making sure that you only allow high-quality tenants into your properties, and that you keep your property maintenance up too.
5. Property Damage Issues
One of the major concerns that many landlords have when investing in section 8 houses for rent, is that they believe that people who get this sort of support from the government are more destructive. There have been some terrible stories in the past about people destroying their property, and pulling cabinets off walls. However, this can happen regardless of to whom you rent too.
When you become a landlord, you will discover that there is a combination of good and bad tenants wherever you go. The key to success is making sure that you screen all of your tenants, including the section 8 tenants that you consider renting to.
6. Payments for Section 8 Houses for Rent
Finally, one of the last things you’ll need to consider, is that there is a maximum cap on the amount that section 8 will pay out. Every year, a list is created around the fair market rent amounts for areas all around the country. The amount you can earn from Section 8 houses for rent will be calculated according to what the government believes to be the fair market rent for that area, according to the number of bedrooms you rent out.
The amount provided on a housing voucher can be anywhere between 90% and 110% of the amount provided by the fair market research. Depending on how high quality your property is, you might be able to get a similar amount for your property as you would outside of section 8.