Real estate investors have a love/hate relationship with Section 8 Housing, the largest rental assistance program for low-income renters. Section 8 housing consists mainly of housing choice vouchers that are administered to tenants and their immediate families. The Sec 8 program is managed by the U.S. Department of Housing and Urban Development (HUD), as well as hundreds of regional Public Housing Authorities (PHAs) across the country. These public housing agencies administer the program at the local level. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free I’ve heard horror stories about Section 8 tenants completely wrecking properties, moving large numbers of adults and children into the home, and other flavors of major drama. There are certainly some downfalls to renting under Section 8, but for my husband and I, the positives far outweigh the negatives. Particularly in tougher economic times, investors will enjoy the benefits and stability of Section 8 tenants. Voucher holders have their rental payments backed by an enormous government checkbook, and it’s easy to attain and maintain the eligibility of a housing unit for HUD’s affordable housing programs Here are the top reasons why we will continue to leverage the Section 8 voucher program at our investment properties. 1. On-time and Convenient Payments From Public Housing Authorities I receive my rents (either in full or a large percentage) from HUD or local Public Housing Authorities (PHA), on time every single month via direct deposit into my business checking account. I don’t get excuses from HUD about why the rent is late. The money is there. HUD’s programs for housing assistance payments have been consistently funded in full for decades and hold billions of dollars in reserves. There are important differences between housing choice vouchers and project-based vouchers, which are HUD’s two main fair housing programs. Housing Choice Vouchers Housing choice vouchers allow the tenant to choose their dwelling anywhere that accepts vouchers. This makes up the bulk of the Section 8 program. Only households that have a monthly income less than 50 percent of the median income for the area in which they reside can apply for the program. HUD sets and maintains median income values for each region of the country, and the data can be accessed on HUD’s Office of Policy Development and Research website. Vouchers can be used for multiple-unit housing, single-family homes, or townhouses. The median family incomes for each region are used to calculate HUD’s 50 percent income limits for the Section 8 housing choice voucher program. Project-Based Vouchers While an applicant for Section 8 affordable housing is on the waiting list for a housing choice voucher (which can take up to three to six years in some areas), they can utilize a project-based voucher (PBV). The PBV is only good for a specific rental unit. Landlords can apply with state or municipal governments to be eligible for the PBV program. With a project-based voucher, the tenant will pay 30 percent of their household’s gross monthly income, and the public housing authority will cover the rest. (Do not confuse project-based vouchers with “housing projects,” and the stigma associated with the phrase. PBVs can be as simple as a duplex!) 2. Housing Choice Voucher (HCV) Program Protection from Tenants’ Financial Hardships I’ve had a tenant go on an unpaid leave of absence from work for four months due to health issues. If this tenant hadn’t been on Section 8, she likely would’ve unfortunately been evicted due to non-payment of rent (and we’d be faced with a short-term vacancy). Instead, HUD picked up 100 percent of the rental payment until the tenant could get back to her job. This not only protected our near-term cash flow on the unit itself, but the housing assistance payments helped the tenant through a tough time without disrupting their living arrangements. Related: Should I Accept Section 8 Tenants—or Run the Other Way? 3. The Possibility of Higher Rents From Housing Choice Voucher Program Not only are rent payments guaranteed and stable despite a tenant’s hardship, but HUD is sometimes the best in town when it comes to the rental rates. We’re able to get $1,200-$,1600/month in lower income neighborhoods (although we don’t do war zones) where the purchase prices are less than $75K. In higher-end areas, we’d pay at least twice as much for the property but still only be able to get $1,400-$1,600/month in rent. There would likely be higher and faster appreciation in those nicer areas, but we always look at appreciation as icing on the cake anyway. You see, while Section 8 is all about providing housing to low-income renters, the government stipends allow for these renters to choose housing that is affordable based on their household income—but also at the median rent level for the area. HUD and local public housing authorities calculate a Fair Market Rent (FMR) for each geographic area of the United States to determine the maximum rent a landlord can charge to the Section 8 voucher recipient. FMRs include the cost of basic utilities like heating/air and electric, regardless of whether other tenants or the landlord pays those expenses within the same residential unit. FMRs also take into account family size and rental unit size. You can look up the FMRs in your area through HUD’s documentation system. 4. Free Access to a Pool of Potential Tenants and Low-Cost Marketing With GoSection8.com, I’m able to list our properties and review tenant profiles. For a small fee, property owners are able to do a premium listing to get more attention on their property when housing assistance tenants are searching. I used to think that perhaps the low-income applicant pool was unlikely to have internet access to review profiles, but that doesn’t seem to be a problem, and I believe that HUD also provides paper listings in the local PHA offices for those without internet access. Related: 8 Myths About Section 8, Corrected: Here’s the Profitable Truth 5. Long Waiting Lists = Short Vacancies Perhaps not every city has a list a mile long of Section 8 participants with vouchers who are seeking housing, but ours certainly does. There are also famously long waiting lists of low-income families seeking to become eligible for a housing voucher. Filling a vacancy is a pretty quick process once your property has already been inspected and approved for the program by HUD Real Estate Assessment Center (REAC) employees. These are just a few reasons why I believe investors and private landlords should take a very good look at housing choice voucher programs offered by public housing authorities in their respective areas. The horror stories that you may have heard can and will happen even with non-Section 8 tenants! I’ve found that with careful screening, landlord references, and a general attitude of respect for your housing program tenants, as well as pride in the condition of your property, you will vastly reduce the probability of experiencing your own horror story. Keep in mind that public housing authority social workers also conduct thorough screening of all candidates while they are on the waiting list. And it doesn’t stop there—if you have an issue with a tenant or family member, you also have an extra step of recourse outside of just evictions. In addition, you can contact the social workers directly to mediate any issues with a tenant who’s stepping outside of the lease agreement. Would you consider renting to Section 8 tenants? Why or why not? Weigh in with a comment!