Renting to Section 8 Tenants

[Charles Johnson]

Just curious how many of you offer up your property to section 8 tenants?   If so, what has your experience been with tenants?  Has getting paid been an issue?  Does the process of allowing Section 8 tenants require a lot of red tape?   Just curiosity on my end.  Thanks in advance!

[John Underwood]

I have 3. It has worked out great. No problem with getting paid the rent.

The process is pretty painless to get started.

I don't think you can really refuse to rent to someone solely because they are on section 8. Pretty sure that could be seen as a violation of Fair Housing.

[Kim Meredith Hampton]

@Charles Johnson Section 8 can be great, just be cautious and get to know the process; your property has to be inspected and approved, more paperwork than normal, and it takes longer to receive your money on the front end just because of their government processing. After that, you should be good to go, just takes a minute to get through their red tape. Make sure you know how renewals work too. They usually give market rate rent and market increases each year. You can usually look on their website to see different rent amounts for zip codes, bed, baths and square footage.

The last and most important part, check your state and local municipality on whether source of income is a protected class or possibly a tenants bill of rights

[Nathan Gesner]

Quote from @Charles Johnson:

Different strokes for different folks.

I stopped accepting Section 8 because of the bad experiences. Tenants were below-average and at least half of them left owing more than their deposit would cover. One tenant had a $1,200 rental, her share of the cost was $25 a month, she was late every month for six months, we reported her for working two jobs and not reporting the income but HUD did nothing about it, and she left the place with almost $5,000 in damages after two years.

My new policy is that I won't accept a new tenant with a voucher, but I will accept an existing tenant applying for a voucher after they've occupied and proven themselves.

Some states/cities require you to accept Section 8. Some locations pay below-market rates, while others pay above-market. You just have to figure out whether you are required to accept them and whether you want to.

[Charles Johnson]

Thanks everyone for the responses!

[John Morgan]

@Charles Johnson

I’ve got a great sec 8 family in one of mine. They are clean and excellent tenants that have been there for 4 years. Don’t rule it out! And each year I raise rent about $100/month and housing always accepts my rent increases.

[Henry T.]

I would not, I care too much about my properties to take the risk. I had a friend who had a "fantastic" sec 8 tenant. His next one was awful, trash everywhere, he ended up evicting. I feel for those that need a place to live. But when you don't have skin in the game, I think you  learn not to care. And expecting more from the landlord on top of it....Having said all that, I think it's coming that you will be forced to take sec 8. It's happening in Seattle.

[Cory J Thornton]

@Charles Johnson - 

I currently have three properties on vouchers in Franklin County. All of them are receiving market rents. The voucher makes up a portion and the tenant pays the remainder. 

- You are allowed to screen a tenant with a voucher and turn down a voucher if your screening process rules out the applicant. To avoid legal entanglements, I strongly recommend that anyone disqualified for any property (voucher or otherwise) has their application denied due to pre defined criteria and for no other reason. 

- In NC you are allowed to charge up to two months rent as a security deposit. If this is a practice that you apply as a part of your standard process, then this is another tool to manage risk. One way to do this would be to charge a double deposit, and if the one year/renewal inspection indicates that they have taken good care of the property, then release half the deposit back to the tenant at renewal. 

- I think the quality of the experience comes down to the section 8 office you are going to be working with. I have not worked with Durham's office, so I do not know how supportive they would be of a landlord. In Franklin county our office has been very good to work with. I do know that the court system in Durham is not landlord friendly. We just took over management on a few properties and inherited some mid stream evictions. Tenant placement is always important, but in a place that is not landlord friendly, it will make or break a property. 

- A voucher pays based on a County's median rent. That median rent may be undervalued in one part of the county and market value in another part of the county. Taking a more rural property with a significantly lower entry price, and using it for a voucher, is one way to get at market rents through the section 8 program. 

- The voucher payment program has sometimes taken a month or two to get the direct deposit system working properly, but they always pay and once established the money hits the account every month between the 5th and the 10th. Legally you will not be able to assess a late fee. 

- One more thing to keep in mind ... these programs mean fixed income not just limited income. If someone is on VA disability or is a senior citizen on social security, and the cost of living keeps them from affording to rent without assistance, then they can get a voucher. It takes a lot of screening, but there are good renters to be found who are trying to use a voucher.

If you ever want to chat more, feel free to give me a call. I think we are both somewhat local to one another ... I am constantly looking for an excuse to meet for coffee!