Section 8 and Income Requirements

[Brandon Sturgill]

How do you address perspective tenants with a voucher that covers rent, but don't meet the income requirement for the property...in this scenario the rent is $1,200/mo. and the voucher is for $1,050. The individual make another $1,000/mo. in income. My requirement is 3x's for this property,

[Kyle J.]

One way to do it is to use 3x the tenant's portion of the rent.  Here's some more reading on it here: http://www.lawfoundation.org/repository/Income.pdf (see page 2).

[Watson Hilaire]

@Brandon Sturgill the purpose of section 8 is to help low income individuals afford fair housing at fair rates. So the only way they will meet your 3x requirement is if you subtract the $1,050 voucher from the $1200 rent leaving $150. The individual makes $1,000 which is more than $450 (3x $150).

Good luck!

[Marcia Maynard]

Originally posted by @Watson Hilaire:

@Brandon Sturgill the purpose of section 8 is to help low income individuals afford fair housing at fair rates. So the only way they will meet your 3x requirement is if you subtract the $1,050 voucher from the $1200 rent leaving $150. The individual makes $1,000 which is more than $450 (3x $150).

Good luck!

We have worked successfully with our local Housing Authority and the Section 8 program for 20 years. Our market niche is low income and fixed income folks. As I see it, there are inherent problems with subtracting the value of the voucher and then using the multiplier. 

During the course of tenancy the value of the voucher is likely to change. It can change a little or a lot. If the voucher covers a substantial portion of the rent, then the tenant's portion could be so little that using a multiplier would result in such a low income requirement that the likelihood of a tenant being able to successfully meet all of their financial obligations diminishes. 

For example, one of our tenants had a voucher that covered 100% of her rent and her portion was thus $0. 3 x $0 = $0. If I only required $0 income and that is what she indeed had, she would not be able to pay her utilities and have money to cover housing supplies. She also would not be able to pay for food, clothing, transportation, medical, recreation, childcare needs, etc.

Instead of considering only the tenant's portion, I would prefer to keep my income requirements the same for all tenants, regardless of their source of income. That seems more equitable and "fair". I consider the value of the S8 voucher as income, as well as the value of other public assistance subsidies, such as TANF, food stamps, utility assistance, VA benefits, SSI, SSDI, etc. for meeting my criteria regarding minimum income to rent. I set a minimum income requirement and consider both income and income equivalents.

Since the Fair Housing Law Project has interpreted the need as the tenant portion times the landlord's multiplier (and thank you to @Kyle J. for sharing a link about this) and since our city council recently passed an ordinance along these same lines (check your local housing laws), we are in the process of ditching using a rent multiplier to determine a person's ability to afford to rent one of our units. Instead, we will be using $RENT + $1000. (Our rents are in the $690 - $1000 range.) We also may need to raise our security deposits across the board to reduce our risk.

[Brandon Sturgill]

Right on. Thanks for the direction @Watson Hilaire @Kyle J. @Marcia Maynard

[Rod Joseph]

@Brandon Sturgill  I was just wondering what you ended up doing with the section8 income requirements.  I am going through the same issue.  

@Marcia Maynard  Its true that the tenant portion could fluctuate during the course of the lease.  If we look at tenant incomes in general, with or without section8, there is no guarantee that there income will not fluctuate during the course of the lease.  We are looking at a snapshot in time.  Same applies for when the bank gives someone a 30 year mortgage.  Life happens, we are all taking calculated risks.