Oakland, CA · Member since 2015 · 109 posts · 41 votes
Hi all,
first time poster here. I've looked through some of the other posts and it doesn't seem like this has been properly answered, so I was hoping for some info.
I am on the cusp of buying a duplex. One unit is vacant (I plan to live in this one) and one is occupied by section 8 tenants. The rental unit is a 3 bedroom and the current rent is $1,484. According to this site (http://www.huduser.gov/datasets/fmr/fmr_il_history...) the fair market rate for a 3-bedroom unit is $2,204.
My question, as a new owner, can I increase the rent to the fair market rate? Section-8 isn't applicable to rent control, but I'm not sure if this is too much of an increase.
To make things a bit more complicated, their voucher is for 2 people, for there are more than 2 people living there. This is a separate issue though and I'll probably post that separately.
I also suggest going one of the upcoming Landlord 101 meetings at the EBRHA - the East Bay Rental Housing Assn. If you decide to joint the assn, there are other benefits that are worthwhile. ebrha.com
If you send the proper notice to Sec. 8 housing office that the rent is being increased, they will take probably a few months to get back to you with approval or tell you how much rent they will allow. I suspect it will not be market rate rent.
Make sure before you buy that you get all documents from the current owner that relate to the tenant's lease and security deposit. Regarding that, BP has a post here :
I also suggest going one of the upcoming Landlord 101 meetings at the EBRHA - the East Bay Rental Housing Assn. If you decide to joint the assn, there are other benefits that are worthwhile. ebrha.com
If you send the proper notice to Sec. 8 housing office that the rent is being increased, they will take probably a few months to get back to you with approval or tell you how much rent they will allow. I suspect it will not be market rate rent.
Make sure before you buy that you get all documents from the current owner that relate to the tenant's lease and security deposit. Regarding that, BP has a post here :
Start by contacting the Section 8 program administrator for your area, most likely a Housing Authority. When you work with the Section 8 program, you will be required to enter into a contract with them and to follow their guidelines. It is fairly straightforward. You will be able use your own rental agreement with the tenant and set your own rent rate. But S8 may or may not agree to your new rent rate.
If it is a big jump in rent, it could cause a world of hurt for the tenant. You would need to give plenty of notice (we're required to give 60 days) because the Section 8 case manager will need to recalculate the tenant's income and ability to pay their portion. It is not likely the S8 program will pick up the tab on the difference. It is more likely the tenant will, or at least a significant portion of it. Or you maybe pricing yourself out of working with S8 altogether.
Thanks for the response. On the Ordinance site, it says the rent can only be increased by 1.7% for 2015. Does that figure apply to new landlords, as well as existing ones?
Is there any way to know ahead of time what section-8 will cover? I'd like to keep the tenants in, but if they can't afford the increase and section-8 won't cover it then it sounds like they wouldn't be able to stay. If they can't afford it, do I have grounds for eviction as a new owner-occupier?
Are the tenants' leases up? If they are in the middle of a lease, you can not raise the rent until it's up and offer them a renewal. This is for any tenant, section 8 or not.
It sounds as if you're new to land lording in Oakland. You're correct to get as much info as possible before jumping in, as Oakland is becoming more and more difficult an environment for landlords. I strongly suggest you consult a local landlord friendly attorney for a consultation - it could save you a lot of headaches and $$, You have to consider not only state laws, but local ordinances.
As noted before, the EBRHA is also a good source of information.
They have an event coming up Nov 12 where you could drop in and see if this would help you.
All residential rental units in Oakland are covered by the Oakland Just Cause for Eviction Ordinance where the landlord attempts to evict after 2003, with the following exceptions:
...
"A rental unit in a residential property that is divided into a maximum of three units, one of which is occupied by the owner of record as his or her principal residence. For purposes of this section, the term “owner of record” shall not include any person who claims a homeowner’s property tax exemption on any other real property in the State of California;"
Not sure if Sec 8 works the same way in California, but here the landlord signs a contract with the housing authority which specifies the maximum rent that can be charged. In order to get a raise, you have submit a request to the housing authority and they have to approve it.
Hey all. I spoke to an attorney about this and here is whats I found out.
I CAN try to raise the rent to market rate, but if the housing authority doesn't approve it then I'm basically out of luck and can only increase it to what they say I can.
One other rule I found out is that if I want to evict tenants (section 8, or not), so that I can move in to the property then I would HAVE to live in that property for 3 years. Also, that unit would then become the owner occupied unit for any new owner. Sounds like a weird, abitrary rule to me
If I were as lucky as you, I'd stick with the current rent paid as I could live good on over $1,000 a month..and could earn money in other ways besides..but then that is just me.
To me, that is not bad for a first time property owner and then you can build it from there.
I like being involved in REI but as of yet, to even own one myself and it would be nice to get one like your about to purchase! Then I to can live in one, rent out the other like your going to do.