Section 8 Landlords in Philly — Do You Actually Get Close to the Cap?

Question

Hey everyone,

I’m a first-time house hacker in Philly (zip 19121 — Brewerytown area), currently under contract for a triplex. Each unit is a 2-bed, 1-bath and I plan to live in one unit and rent out the other two. I’m considering renting to Section 8 tenants but wanted to hear from experienced landlords in Philly who’ve done this.

On the PHA site, the SAFMR rent cap for a 2-bedroom in 19121 is $1,830 (including utilities). My setup is:

• All units separately metered
• Electric-only (no gas)
• Tenants would pay their own electric
• I’d likely cover water/sewer since Philly usually keeps it in the landlord’s name

I know PHA subtracts utility allowances before approving the rent, but I’m trying to get a real-world sense of:

• Are you able to get close to that $1,830 cap in practice?
• What kind of rent do they actually approve for renovated units where tenants pay electric?
• Why did you choose Section 8 over traditional tenants in your Philly rentals?
• Any downsides or surprises I should be aware of?

Appreciate any insight. I just want to make sure I’m preparing for worst-case cash flow but not leaving money on the table if Section 8 can bring stable income close to market.

Thanks in advance!

Sheryl Sitman · Answer

You will be well served to enter into this strategy with as much knowledge possible on how to maximize rent with section 8, how to vet tenants, especially if you're going to be sharing a building with them, and to do a reality check of whether your strategy will really work. Happy to connect you with a great Philly consultant who has built a large section 8 portfolio of long-term tenants at maximum rents. Nothing can be experience in this business. Learn from others.

Stuart Udis · Answer

I wouldn't make investment decisions based on the group zone. If you are going to resort to PHA voucher recipients, do so because your property is in a neighborhood where you cannot secure financially responsible tenants, not because you beleive you can achieve a higher rental rate. When you account for the added time and effort to move that tenant in + the higher turn over cost you rarely generate a greatre NOI when looking at the total picture.