NEW: BP Podcast 66: Flips, Apartments, & Protecting Yourself From Professional Tenants with Michael Blank

Hide this

From the BiggerPockets Blog

 BiggerPockets Blog »

Jump to Forum View All

Click a category below to view different forum categories.

BiggerPockets

General Info

BiggerPockets Q&A, Site Questions, & Announcements

1516 topics, 14408 posts — Last Post 04/19/14, 07:47PM

BiggerPockets Exclusive PRO Area

117 topics, 839 posts — Last Post 04/18/14, 05:47AM

New Member Introductions

10895 topics, 85710 posts — Last Post 04/19/14, 08:33PM

Real Estate Success Stories

396 topics, 6161 posts — Last Post 04/19/14, 05:20PM

General Real Estate

General Real Estate

Buying & Selling Real Estate

5942 topics, 46818 posts — Last Post 04/19/14, 07:14PM

Renters

643 topics, 5817 posts — Last Post 04/19/14, 09:29AM

Get Foreclosure Help - Help Stop Foreclosure Forum

316 topics, 2557 posts — Last Post 04/16/14, 03:58AM

Home Owner Association (HOA) Issues & Problems Forum

237 topics, 1609 posts — Last Post 04/17/14, 08:53AM

Do it Yourself

655 topics, 6268 posts — Last Post 04/19/14, 07:50PM

Reviews & Feedback

Real Estate Deal Analysis and Advice

3683 topics, 29524 posts — Last Post 04/19/14, 08:40PM

Real Estate Guru, Book & Course Reviews and Discussions

1133 topics, 11562 posts — Last Post 04/19/14, 12:17PM

Ask About A Real Estate Company

741 topics, 7322 posts — Last Post 04/19/14, 04:25PM

Real Estate Investing

Real Estate Strategies

Wholesaling

5605 topics, 43748 posts — Last Post 04/19/14, 05:16PM

Rehabbing and House Flipping

3334 topics, 31004 posts — Last Post 04/19/14, 06:45PM

Real Estate Development & New Home Construction

553 topics, 4685 posts — Last Post 04/19/14, 06:13PM

Innovative Strategies

703 topics, 6027 posts — Last Post 04/18/14, 08:48AM

Tax Liens, Notes, Paper, & Cash Flows Discussion

866 topics, 6678 posts — Last Post 04/19/14, 06:06AM

Rent to Own a.k.a. Lease Purchase, Lease Options

693 topics, 4902 posts — Last Post 04/19/14, 04:53PM

1031 Exchanges

143 topics, 1054 posts — Last Post 04/18/14, 08:41AM

Foreclosure Investing

General Foreclosure & Pre-Foreclosure Forums

1687 topics, 11288 posts — Last Post 04/19/14, 06:47PM

HUD, VA, and Tax Sales

415 topics, 3096 posts — Last Post 04/19/14, 08:39PM

REOs

1214 topics, 10577 posts — Last Post 04/19/14, 07:22PM

Short Sales

1534 topics, 13120 posts — Last Post 04/17/14, 04:44PM

Landlord & Tenant Forums

Landlord & Rental Property Questions

7207 topics, 70775 posts — Last Post 04/19/14, 07:50PM

Mobile Homes & Mobile Home Park Investing

638 topics, 5141 posts — Last Post 04/19/14, 09:49AM

Investor Basics

Starting Out

7705 topics, 60492 posts — Last Post 04/19/14, 07:49PM

Investor Psychology

431 topics, 6104 posts — Last Post 04/18/14, 06:08PM

General Real Estate Investing

4718 topics, 37214 posts — Last Post 04/19/14, 08:08PM

Real Estate Investor Marketing

1731 topics, 14094 posts — Last Post 04/19/14, 06:39AM

Commercial Real Estate

Commercial Real Estate Investing Forum

1410 topics, 8994 posts — Last Post 04/19/14, 04:34PM

Multi-Family and Apartment Investing

1109 topics, 9239 posts — Last Post 04/19/14, 07:12PM

The Business of Real Estate

Real Estate Technology and the Internet

Real Estate Technology, Social Media & Blogging

642 topics, 4898 posts — Last Post 04/19/14, 07:40PM

Business Basics

Goals, Business Plans & Entities

831 topics, 7562 posts — Last Post 04/18/14, 04:25PM

Real Estate Finance & Legal

Financial, Tax, and Legal

Tax, Legal Issues, Contracts, Self-Directed IRA

2786 topics, 20018 posts — Last Post 04/19/14, 08:17PM

Property Insurance

309 topics, 2045 posts — Last Post 04/17/14, 07:41PM

Personal Finance Discussion

328 topics, 2732 posts — Last Post 04/19/14, 06:57PM

Loans, Mortgages, Credit Lines

Private & Conventional Lending Discussion

2834 topics, 19702 posts — Last Post 04/19/14, 06:39PM

Creative Real Estate Financing

1210 topics, 8771 posts — Last Post 04/19/14, 08:28PM

Crowdfunding Real Estate

35 topics, 463 posts — Last Post 04/19/14, 06:24PM

Real Estate Professionals

Real Estate Professionals

Real Estate Agents

1211 topics, 7995 posts — Last Post 04/19/14, 08:09PM

Bankers, Lenders, and Mortgage Brokers

442 topics, 1924 posts — Last Post 04/19/14, 07:27PM

Contractors

268 topics, 1678 posts — Last Post 04/19/14, 03:38AM

Local Real Estate

Local Real Estate

Local Real Estate Networking & Recommendations

1990 topics, 11614 posts — Last Post 04/19/14, 07:40PM

Americans & International Real Estate

161 topics, 566 posts — Last Post 04/14/14, 11:19AM

Foreigners Buying in the USA

62 topics, 409 posts — Last Post 04/10/14, 06:27AM

Canadian Real Estate

64 topics, 428 posts — Last Post 04/18/14, 04:22AM

Marketplace

Real Estate Marketplace

Real Estate Marketplace

15020 topics, 53960 posts — Last Post 04/19/14, 07:37PM

Real Estate Events and Happenings

164 topics, 2515 posts — Last Post 04/19/14, 07:29PM

Off-Topic

Off Topic

Off-Topic

2905 topics, 32411 posts — Last Post 04/19/14, 08:03AM

Housing News & Real Estate Market

914 topics, 8351 posts — Last Post 04/17/14, 08:41AM

BiggerPockets Real Estate Investing Summit

97 topics, 1751 posts — Last Post 04/10/14, 02:27PM

BiggerPockets Resources

Forums » Landlord & Rental Property Questions » Setting rent price for Section 8

Setting rent price for Section 8

21 posts by 11 users

Signup

SFR Investor · Texas


It is my understanding that you can get a little more for Section 8 rents in many cases than you can from private market. How do you determine what the max amount you could set for rent and still get section 8 tenants?

Anybody with experience in Arlington, Texas or north Texas would be great, but I am open to what everyone has to say.

Thanks



· West, Michigan


Here in MI it is the opposite. Sec 8 is lagging slightly, but are close to 'market'.

Call a local sec 8 office and ask. They will ask what you are supplying (gas, electric, trash) and then they will have a max payment depending on number of bedrooms.

Depending on the actual person their payment will be almost the whole amount or nothing depending on their income.



Residential Landlord · Hampton Bays, New York


Brian; we have a section 8 resource page if you click above on resources and then check out sec 8 resources . or if it is too cumbersome to navigate you can also call your local section 8. The office in Dayton has been very supportive but I don't imagine it is that way in all counties.

I find the section 8 rent is about the same as my non section 8 , only difference is that I get the money like clockwork directly deposited to my IRA account.



SFR Investor · Texas


Originally posted by @Michael Lauther:
Brian; we have a section 8 resource page if you click above on resources and then check out sec 8 resources . or if it is too cumbersome to navigate you can also call your local section 8. The office in Dayton has been very supportive but I don't imagine it is that way in all counties.

I find the section 8 rent is about the same as my non section 8 , only difference is that I get the money like clockwork directly deposited to my IRA account.

Thanks Michael Lauther,

I understand that FMR are used, but I checked FMR for my area and for a 2 br the FMR is 863/month. But that is for Dallas, Arlington and Fort Worth. In my immnediate neighborhood, a 2 br goes for about 700-750/month. I am trying to find out if it varies per neighborhood, or can I just list at 863 and it will be paid? I suppose I'll need to call my City and ask.

If I could get 800+ for my 2BR, that would be pretty awesome. Something tells me it is not that easy...



Multi-family Investor · South Jordan, Utah


Brian, I believe they calculate FMR by county. You should be good to go on up to $863.



Residential Landlord · Dallas, Texas


I've really never gotten Section 8 to pay more than market rent, but I've also never tried for a couple of reasons. First, I'm not sure how I could market the property in a way that wouldn't deter non-subsidized renters from looking at the property. (e.g. one price for Section 8, one price for non-section 8) I would not feel comfortable setting a high rent (which would deter retail renters) in the hopes that I'll land a Section 8 renter. I do know of some people who will collude with a tenant to increase rent (e.g. once you find out they are on section 8, you agree with the tenant you will charge her $900/month, instead of the advertised $800/month.) If the tenant isn't paying any portion of it, they don't care. This just seems icky to me so I don't do it.

Second, DHA will do a rent survey before fully committing and if it thinks the rent is too much they'll demand you lower it. I generally just set market rent and don't worry about it. That's just my experience, though. I'd be curious if anyone does it differently.

I've had pretty good experiences with Section 8, but it is not without it's pitfalls. For example, if the tenant gets kicked out of Section 8 (not uncommon), they are released from the lease (meaning you can't charge them for breaking the lease).



Residential Landlord · Hampton Bays, New York


Brian : you got me to check the fair market rent for Dayton and found it went down from 2011. It is listed by state and then county.
The challenge in my area is not the actual rent but finding someone with a valid voucher.
Studio one two three four bed

Final FY2012 FMR $487 $556 $685 $922 $1,100

Fina l 2011 FMR $508 $580 $714 $961 $1,147



Real Estate Investor · -, Illinois


FMR according to HUD is $895 for a 3 bed in my area. The 3 bed house that I accept Section 8 for, the local HUD office will only pay $625 for due to amenities, age, size, condition, location, etc. Easiest way is to just call the local HUD office and see what they will give for it.



Real Estate Investor · Central Valley, California


Brian: have you checked to see if your county Housing Authority has a website. Sec8 rents, allowances for utilities, inspection guides and even listing the prop is available online for both my home county and my REI farm.

Sec8 pays $1150 for 3BDR in my farm, which is better than market in several neighborhoods. Trouble where I am isn't the rents, but finding a good tenant with a voucher.



Real Estate Investor · Central Valley, California


Originally posted by Michael Lauther:
Brian : you got me to check the fair market rent for Dayton and found it went down from 2011. It is listed by state and then county.
The challenge in my area is not the actual rent but finding someone with a valid voucher.
Studio one two three four bed

Final FY2012 FMR $487 $556 $685 $922 $1,100

Fina l 2011 FMR $508 $580 $714 $961 $1,147

Michael: even in Dayton? I assumed the lack of tenants with S8 vouchers was a CA thing. They haven't accepted new S8 applications for years here. The waiting list moves very slowly, and the good tenants with good vouchers for 3 and 4 BDRS have choices here. Seems the recession and housing crisis has made S8 a coveted tenant pool.



SFR Investor · Houston, Texas


The HUD website is not a good indicator of what your rent amount will be. Section 8 mainly bases the amount on the area. Then they add in extra for certain things. In my area, section 8 either pays at or under fair market rent. Call them and find out.



Residential Landlord · Hampton Bays, New York


Yes K. Marie Sec 8 told me that they are not issuing new vouchers and have not done so for almost a year. Dayton sec 8 also has a website to list property and where there pool of voucher holders can look for property.

If I could rent solely to section 8 I would do so and each and every property I own is one I would live in myself. Sometimes the simplicity of living in a 800sf home seems inviting but my wife and 3 daughters would miss me because they would never move.



Real Estate Investor · Central Valley, California


@Michael Lauther Ah, yes, I can attest to the simplicity of raising a family in a 1000 square foot home with 1 bath. When you live in a supposed Paradise (Santa Barbara), you pay big bucks for housing, make a lot of sacrifices and call it simplicity. My husband's family is from Yellow Springs outside of Dayton, his mother is still there, and he works for a foundation that requires he visit every other month.. He would live in his car (and has!) before he would he would live in Ohio again.

In my market, a good S8 tenant is landlord gold.



Residential Landlord · Hampton Bays, New York


K.Marie, Dayton just opened up section 8 to its waiting list of applicants , has been closed for 8 months but it has not accepted applications since 2008. There are lots of people in need of assistance In Dayton and that pre dates the current national economic fiasco.

by the way How do you do that @Michael thing?



Real Estate Investor · Springfield, Missouri


I was a Commissioner of a large public housing authority here and administered "owned housing" and Section 8. Rent vouchers are set by HUD according the the MSA (metropolitan statistical area) for each bedroom size based on FMR in that area.

There are also two systems for adminstration, one throgh a PHA and the other can be through non-profit affiliate adminstrators. This is to issue vouchers. How they specifically adminster a program will vary somewhat as the interpret HUD guidelines, for example, how strict they might be on inspections.

You can rent a unit for what ever you like, but charging more because someone receives assistance will land you in trouble. If you advertise a unit at 900 and the tenant receives 800, they are allowed to make up the difference, if they qualify. If you are willing to advertise that unit at 700 and rent it at 700, the assistance will be limited to that 700 basis.

Additional assessments are made for utilities paid by the tenant or the landlord. No one is to "cash out" from any assistance.

Thriowing in a bit more, as options are popular. It is against HUD regulations for any part of any assistance paid to count toward any option to buy or lease purchase arrangement, HUD does not buy homes for people. The parties can be prosectued and the client will lose all entitlements, it's fraud.

However there was a HUD program that allowed a tenant to have an option paid from their own funds if they qualified. Not sure if that is still current.

I'm no expert section 8 adminstrator but I had to deal with it.


Financexaminer@real estate investor dot com


Real Estate Investor · Audubon, Pennsylvania


I have not yet rented to Section 8 tenants, but have had so many inquiries from people with vouchers that I did investigate some of the details. This may or may not apply to any area other than my county.

The Section 8 tenant gets a voucher for a specific number of bedrooms. Depending on the area / neighborhood, that voucher gets a certain dollar value. The landlord can receive that full voucher amount if the landlord is paying for all utilities! No way for me to pay all utilities, so next comes handling of utilities. From that voucher amount, the Housing Authority subtracts the various utility allowances that end up being the tenant's responsibility, along with charges for the tenant needing to supply their own refrigerator; those utility allowances are re-calculated every year, as are the fair market rents. That's how the landlord can determine the "net" rent they will receive.

Now, the caseworkers are assigned to tenants, not to landlords, so getting cooperation from the Housing Authority can prove to be a challenge. They really don't want landlords to know the numbers for the fair market rent and utility allowances, because the landlords will manipulate the asking rent to take as big a "net" rent as they can - counter to the Housing Authority wanting to restrain amounts paid out.

So, you can have the tenant applicant bring all of the information from the Housing Authority if you really want to learn what the amounts are. Tell the applicants to get a copy of the utility allowances (they will already have their voucher amount) so that you can determine whether renting to them will pay you enough.

Then there is the matter that Bill mentioned, where the tenant can make up some of the rent from their income. The Housing Authority says that a tenant should pay 30% of their income toward rent, and that in some circumstance a tenant may be allowed to pay up to 40% of their income toward rent. In Bill's example of $900 rent and $800 allowance, if the tenant has at least $1000 income per month (approximately), then that might work. Where did the $1000 come from? $900 - $800 = $100 is pretty easy to see. Then that difference has to come from the 40% - 30% of income, so $100 in this case has to be no more than 10% of income.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Real Estate Investor · Springfield, Missouri


LOL, very astute Steve.....some might give the tenant those utility allowances, some may simply ask, are utilities included with this unit or not and never tell the applicant as they get what they qualify for and that makes the manipulation a little harder. And yes amenities are considered as well, not pools or spas or weight rooms, LOL, fridge, stove, A/C and type of heat....

And your qualification % are HUD guidleines @ 30% and 10@ with usual circumstances, like additional handicap accessible amenities required.


Financexaminer@real estate investor dot com


· West, Michigan


They also 1099 you at the end of the year.



SFR Investor · Los Angeles, California


In my Market (not Texas sorry) the Housing Authority (Section 8) posts on there website the rent prices for 0-5 bedrooms. Section 8 seems to pay more a little more than market rent in the C/D Areas of town because they base there rent prices on the whole city.



SFR Investor · Texas


Wow, thanks for all the feedback. Lots of great info here.
I have searched the forums and have not found this much specific to the nuts and bolts of Section 8. Thanks again everybody.





Sign up