Section 8 rent is usually higher than people think — how to check before you buy

General Landlording & Rental Properties
3moFollow

Section 8 rent is usually higher than people think — how to check before you buy

James JonesPro Member
Investor · Collierville, TN 38017 · Member since 2017 · 987 posts · 671 votes

The biggest myth I hear about Section 8 is "it pays under market." In a lot of working-class zips it's actually the opposite — the voucher payment standard sits at or above market rent, and a big chunk of it lands by direct deposit like clockwork every month.

I've been investing in Section 8 for years and here's the practical stuff that actually moves the needle:

1) Payment standards vary by ZIP, not by city. Two neighborhoods ten minutes apart can have meaningfully different numbers, so never assume the "city" rate. Before you write off an S8 deal (or overpay for a "market" one), pull the payment standard for that exact ZIP and bedroom count. There's a free tool that shows it by ZIP — search "section8guys app" and run your numbers before you commit.

2) You can push back on a low number. If the housing authority lowballs the initial rent, you can request a rent-reasonableness review with comparable rentals. A lot of landlords just accept the first figure and leave money on the table.

3) Build the HQS inspection into your rehab scope. Handrails, GFCIs, window locks, no chipping paint, working smoke/CO — knock these out during the rehab and you pass the first inspection instead of eating a re-inspection delay and lost weeks of rent.

4) Screen the tenant like you would any other. The voucher covers the rent; it doesn't screen for you. Background, income (their portion), and landlord references still matter.

Curious what everyone else is seeing right now — is the S8 payment standard beating market rent in your area, or has your local housing authority gotten stingy? Drop your market and what you're seeing.

0Reply
178 views

Most Popular Reply

Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3mo

There can certainly be operational differences from one locale to another, but overall they all are using Title IX funds and are substantially similar. They all use a nearly identical inspection form AND standards as found here. They all utilize the same tables for determining Fair Market Rents. Yes, you might be able to negotiate somewhat in a micro market area, but if you are figuring that close, you better be equally accurate on all of your other numbers. Other common forms you will be needing, including request for rent increase, can be found here. 

You need to be realistic with regard to COLLECTING all rent. It is typical that you will NOT receive first month rent prior to occupancy...indeed it will be anywhere from 1 to 3 months before you see first payment from S8. If you are lucky, you will initially get the tenant portion of rent from them timely, but with Housing, you are dealing with govt bureaucracy, and that takes time. Also, NO rent will be paid, generally, for days prior to actual approved (by S8) move in date. The time lost scheduling initial inspection, and followup inspections if you fail that initial, or any delays in submitting paperwork etc. is all LOST RENT. This also applies at the annual re-inspection...fail it initially, rent stops coming in. Once you fix the issue, and get a re-inspection scheduled, then they may, or may not, pay for the lost days.

This all raises the question, WTF will you do when tenant does NOT pay their portion? Your options are primarily, complain to the caseworker. They usually don't much care. You can try to "reason" with the tenant, but I guarantee they know more about how the "system" works than you do. Often, if you are persistent, or if there are other issues that you have raised, such as additional people, possible criminal activity, domestic complaints, etc. the caseworker will just remove the tenant from the program. Now you still have a tenant in your unit, and there will be no payments coming from S8. This means you must initiate lawful eviction. Do you know what that costs, in terms of time and legal fees? Often, less experienced LL's believe the tenants will "protect" their vouchers. A very few will try, but more often they, or their family members, simply have behaviors that they cannot or will not control. So, yes, from that standpoint, you do need to seriously screen every adult you think you want to move in, and you need to enforce the terms of your rental agreement and any House Rules promptly and consistently. 

1Reply
See this reply in the discussion

3 Replies

Jump to latestLatest
  • Patrick O'SullivanBusiness Member
    Property Manager · Phoenix, AZ · Member since 2024 · 552 posts · 210 votes
    3mo

    One thing I'd add is that every housing authority operates a little differently, so it's worth getting familiar with your local office before buying. Inspection timelines, communication, and rent increase processes can vary quite a bit, and those factors can affect your returns just as much as the payment standard.

    I also agree that screening is just as important with voucher tenants as it is with any other applicant. The voucher helps with rent, but you still want a tenant who will take care of the property and communicate well.

    [email protected]480-795-7938
    get MULTIfamily Property Management4.7214 Reviews
    WebsiteView Page
    0Reply
  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    3mo

    There can certainly be operational differences from one locale to another, but overall they all are using Title IX funds and are substantially similar. They all use a nearly identical inspection form AND standards as found here. They all utilize the same tables for determining Fair Market Rents. Yes, you might be able to negotiate somewhat in a micro market area, but if you are figuring that close, you better be equally accurate on all of your other numbers. Other common forms you will be needing, including request for rent increase, can be found here. 

    You need to be realistic with regard to COLLECTING all rent. It is typical that you will NOT receive first month rent prior to occupancy...indeed it will be anywhere from 1 to 3 months before you see first payment from S8. If you are lucky, you will initially get the tenant portion of rent from them timely, but with Housing, you are dealing with govt bureaucracy, and that takes time. Also, NO rent will be paid, generally, for days prior to actual approved (by S8) move in date. The time lost scheduling initial inspection, and followup inspections if you fail that initial, or any delays in submitting paperwork etc. is all LOST RENT. This also applies at the annual re-inspection...fail it initially, rent stops coming in. Once you fix the issue, and get a re-inspection scheduled, then they may, or may not, pay for the lost days.

    This all raises the question, WTF will you do when tenant does NOT pay their portion? Your options are primarily, complain to the caseworker. They usually don't much care. You can try to "reason" with the tenant, but I guarantee they know more about how the "system" works than you do. Often, if you are persistent, or if there are other issues that you have raised, such as additional people, possible criminal activity, domestic complaints, etc. the caseworker will just remove the tenant from the program. Now you still have a tenant in your unit, and there will be no payments coming from S8. This means you must initiate lawful eviction. Do you know what that costs, in terms of time and legal fees? Often, less experienced LL's believe the tenants will "protect" their vouchers. A very few will try, but more often they, or their family members, simply have behaviors that they cannot or will not control. So, yes, from that standpoint, you do need to seriously screen every adult you think you want to move in, and you need to enforce the terms of your rental agreement and any House Rules promptly and consistently. 

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    3mo
    Quote from @James Jones:

    The biggest myth I hear about Section 8 is "it pays under market." In a lot of working-class zips it's actually the opposite — the voucher payment standard sits at or above market rent, and a big chunk of it lands by direct deposit like clockwork every month.

    I've been investing in Section 8 for years and here's the practical stuff that actually moves the needle:

    1) Payment standards vary by ZIP, not by city. Two neighborhoods ten minutes apart can have meaningfully different numbers, so never assume the "city" rate. Before you write off an S8 deal (or overpay for a "market" one), pull the payment standard for that exact ZIP and bedroom count. There's a free tool that shows it by ZIP — search "section8guys app" and run your numbers before you commit.

    2) You can push back on a low number. If the housing authority lowballs the initial rent, you can request a rent-reasonableness review with comparable rentals. A lot of landlords just accept the first figure and leave money on the table.

    3) Build the HQS inspection into your rehab scope. Handrails, GFCIs, window locks, no chipping paint, working smoke/CO — knock these out during the rehab and you pass the first inspection instead of eating a re-inspection delay and lost weeks of rent.

    4) Screen the tenant like you would any other. The voucher covers the rent; it doesn't screen for you. Background, income (their portion), and landlord references still matter.

    Curious what everyone else is seeing right now — is the S8 payment standard beating market rent in your area, or has your local housing authority gotten stingy? Drop your market and what you're seeing.


    Can't agree on everything you posted, but 100% agree with @Richard F..

    Been dealing with S8 for near 25 years.

    S8 RENT RATES
    While you are correct on how they are set, 99% of the time they are BELOW Class A rental rates about 75% of the time BELOW Class B rental rates.

    It's my opinion that S8 rental rates are targeted for Class C rentals/neighborhoods.

    The ONLY time we've seen S8 rental rates consistently ABOVE market rental rates is in Class D neighborhoods.

    Of course, with no industry standards about rental Classes, we can argue about what neighborhoods are what Class.

    SCREENING S8 APPLICANTS
    In our experience, too many S8 voucher holders are either:
    - Too lazy/ignorant to learn & understand the program - even after using it for 5+ years
    - Have an "entitlement mentality" that they should be held accountable for ANYTHING.

    So, VERY important to screen them just like any other tenant prospect - and theoretically, you could be charged with a Fair Housing violation for not treating them like any other applicant.

    In our experience, S8 is just another option for rental income, but it is NOT a "magic" solution. It's just trading one set of problems for another. 

    [email protected]248-209-6824
    Logical Property Management4.9462 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free