Accurate FMRs Section 8 Colorado 5 beds rates

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Accurate FMRs Section 8 Colorado 5 beds rates

Michael Rodriguez
Real Estate Investor · Thornton, CO · Member since 2015 · 65 posts · 42 votes

I really appreciate the posts of  @Jennifer Donley and @Joseph Asamoah around Section 8.

Wondering if any of you can clarify for me the following 2 questions:

Two Big Questions I have before I would move forward

I) Who determines Fair Market Rents (FMR) in these housing authorities? It seems I can charge a rent between 100% of FMR to 140% of FMR it seems. If I buy and rehab a really nice property how do I get assurances I will get 100 to 140%?

II ) Can I get an assurance from one of the housing authority's that if I buy it they will come? More specifically, it seems a cohort of Section 8 voucher holders can move from place to place with that voucher. So how do I connect to those voucher holders?

Thanks, Mike

FYI - Colorado resources I found so far

List of Colorado Public Housing Authority’s https://www.hud.gov/sites/dfiles/PIH/documents/PHA_Contact_Report_CO.pdf

Two resources I found so far 

1) A search engine for Section 8 listings also has fair market rents. I am not sure if these are just generic

http://www.socialserve.com/lan...

2) Denver Housing's Utility reimbursements and Rent's they will pay up to

http://www.denverhousing.org/LWU/section8/Documents/Utility%20Allowance%20Sheet%20%201%201%202021%20with%2010%201%202020%20Payment%20Standards.pdf

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Matt M.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
5y

I'm getting $1948 for a 3 bed in Denver for my current S8, but I haven't raised her rent in 3 years. I posted up on go section 8 dot com per housings recommendation. Tenants I spoke to had a wide range of vouchers, so you have to post it up and see what comes in. Some were over and under what I'm currently getting. 

The best tip I found was to ask how long they had been with their previous landlord. If they move every year, then consider it a red flag. If they hadn't moved in a long time, then that was a good sign. 

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  • Matt M.
    Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    I'm getting $1948 for a 3 bed in Denver for my current S8, but I haven't raised her rent in 3 years. I posted up on go section 8 dot com per housings recommendation. Tenants I spoke to had a wide range of vouchers, so you have to post it up and see what comes in. Some were over and under what I'm currently getting. 

    The best tip I found was to ask how long they had been with their previous landlord. If they move every year, then consider it a red flag. If they hadn't moved in a long time, then that was a good sign. 

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    I) Who determines Fair Market Rents (FMR) in these housing authorities? It seems I can charge a rent between 100% of FMR to 140% of FMR it seems. If I buy and rehab a really nice property how do I get assurances I will get 100 to 140%?

    HUD does a county by county report on FMRs and AMIs.  The housing authority uses these as a start since the HUD payments to the H/As are based on this.  Sometimes HUD rolls back numbers.  The H/As need to be competitive so they may go above FMR (like same money less vouchers) but I wouldn't expect radical increases like 140% above fair market.

    II ) Can I get an assurance from one of the housing authority's that if I buy it they will come? More specifically, it seems a cohort of Section 8 voucher holders can move from place to place with that voucher. So how do I connect to those voucher holders?

    You just treat them like normal tenants.  In OR, you can't exclude Sec 8 vouchers from income calcs.  You may want to call the local H/A and place an ad or tell some caseworkers. But you won't get an assurance.  If you can't compete at market-rate, Sec 8 tenants won't save you.

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  • Michael Rodriguez
    OP
    Real Estate Investor · Thornton, CO · Member since 2015 · 65 posts · 42 votes
    5y

    Thanks for the information @Matt M. and @Steve Morris.

    Any other Denver section 8 landlords have a similar scenario to what @Joseph Asamoah does by offering newly remodeled 5+ Bedroom houses for premium rates.  He seems to be able to get north of $5k a month for these in gentrifying neighborhoods in DC. Albeit I haven't seen those rents in urban Denver metro but maybe they exist?

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  • Jennifer Donley
    Rental Property Investor · Saint Louis, MO · Member since 2018 · 228 posts · 279 votes
    5y

    @Michael Rodriguez I love that you're looking into this model.

    I would echo what others have said regarding rents and what you're looking for - landlords in the area who are SUCCESSFUL with Section 8.  They should be able to give you an idea of rents.

    The Housing Authorities use FMR but they also use rent reasonableness - essentially, looking at comps to determine market rents and then they are supposed to match those up to FMR guidelines. In reality, what sometimes happens is that there are pockets where rents run higher for some reason and those are great spots to buy of course. But it's hard to determine where those are without some on the ground experience and knowledge.

    In terms of finding tenants, I don't expect that will be difficult - I post only to gosection8.com and get a lot of interest.  10 showings per day type interest.  

    What I don't know is the market for larger rentals in your area/ following Joe's model.  I get alot of interest from 4 bedroom voucher holders for my larger 3 bedroom units but I don't get interest from anyone with more bedrooms than that.  And it may be hard to determine interest from someone on the ground because very very few peopel are following that model.

    Maybe reach out to the Housing Authorities in your area and find someone who will talk to you for a bit around the number of people with larger vouchers, supply of those houses, what the rules are for # of kids per bedroom, etc.  

    Good luck! 

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  • Zeona McIntyrePro Member
    Real Estate Agent · Boulder, CO · Member since 2015 · 284 posts · 226 votes
    3y

    Is anyone teaching about section 8 in Denver like @Joseph Asamoah? I am looking for resources for a client and friend

    Podcast Guest on Show Seeing Greene: Why Are My Rental Property Returns Looking So Bleak?
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  • Jeff WhiteBusiness Member
    Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
    3y

    @Zeona McIntyre I have a few rentals on Section 8 here in Denver, and I'm more than happy to provide any information that you need since I really like the program. 

    I don't do it as much as Joseph Asamoah does with all my units since I like to spread my risk with rent by room, long-term tenants and Section 8 tenants. 

    I have two 3 bedroom one one 4 bedroom units in Denver County with the Denver Housing Authority. Also, I'm about to add a 5 bedroom unit in Aurora, so I will be able to comment on that Housing Authority as well. 

     

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