Potential S8 Tenant Income Verification

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Potential S8 Tenant Income Verification

Rick BassettBusiness Member
Property Manager · Greater New Haven, CT · Member since 2010 · 377 posts · 434 votes

We haven't had a section 8 tenant before but we are getting many potential s8 tenants looking at an open property that we have and chasing down information is becoming a time consuming process. 

It's my understanding that we're allowed to screen everyone the same but I run into 2 problems with many of the s8 applicants:

1) They generally can't seem to tell me how much their portion of the rent/utilities will be (which leads to #2) 

2) They never seem to show any verifiable income or bank accounts, which is problematic as we have no gauge on their ability to cover their portion of the rent/utilities (unknown above)

Most simply tell us not to worry as they have a voucher but when we start talking to their case worker(s) it is usually a different story.

Does anyone have a different information form for S8 prospects (after they identify themselves as such) that requests things like: Name & phone # of case worker, # of bedrooms approved for, housing authority portion of rent, tenant portion of rent ? Is this allowed?

Rick

475-900-3100
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Christopher Brainard
Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
10y

@Rick Bassett

Sounds like you need to see the voucher itself - It will tell you the voucher size, case worker, the maximum rent allowance, utility allowance, tenant portion and S8 portion of the rent. As far as #2 goes, that information needs to come from the applicant. If you can't verify their income and rental history, I would not approve them (just as I would not approve any subsidized tenant who can't provide income or rental history.

-Christopher

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  • Christopher Brainard
    Rental Property Investor · Rockwall, TX · Member since 2015 · 891 posts · 701 votes
    10y

    @Rick Bassett

    Sounds like you need to see the voucher itself - It will tell you the voucher size, case worker, the maximum rent allowance, utility allowance, tenant portion and S8 portion of the rent. As far as #2 goes, that information needs to come from the applicant. If you can't verify their income and rental history, I would not approve them (just as I would not approve any subsidized tenant who can't provide income or rental history.

    -Christopher

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  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    10y

    Set a requirement for verifiable income, or income equivalents, that are acceptable to you. If your jurisdiction only allows you to use your rent multiplier on only the tenant portion of rent, then change your criteria to a flat amount instead of using a multiplier. 

    For example, we used to set our minimum income requirement at 2.5x the rent and count the value of vouchers and subsidies as income, with the tenant needing documented income for the rest. Then our city established a new law by which we can only use the 2.5x multiplier on the amount of the tenant portion of the rent. So we dropped using the 2.5x multiplier and set minimum income as rent  + a flat amount. If rent is $800, then minimum income required to rent is rent ($800) + flat amount ($1200) = $2000. We did this because one of our tenants only had to pay $34 as her portion. If we used a rent multiplier on that, then she would only need $85 ($34 x 2.5) of verifiable income to qualify. Certainly not enough to be successful in paying her utilities, food, transportation costs, medical costs, entertainment costs, and other incidentals.

    Also, treat every applicant the same. Whether the applicant receives S8 housing assistance, S8 utility assistance, or not, your tenant screening process needs to be the same. The tenant with S8 will need to present you with their verifiable income. Then you will check the accuracy and validity of such. If they think you will accept their word for it, they are dreaming. Ask them to get an award letter or documentation from their case manager or the S8 voucher team. More than once someone has assured me their rent would be paid by an assistance program, when in fact it would not.

    About bank accounts... not useful information to us. Any money in a bank account could be put in today and taken out tomorrow. We want to see proof of a history of steady, verifiable income. Even if that income is from a public assistance program.

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  • Dana Dunford
    San Francisco, CA · Member since 2016 · 238 posts · 204 votes
    10y

    @Rick Bassett - This is a tricky one, and I've done quite a bit of research into Section 8. Some PMs / owners love the steady check coming in each month. Other PMs / owners won't take Section 8 (in CA, many Craigslist posts say "no Section 8" and it's not against Fair Housing to list this).

    Here is what I've heard as the pros and cons (as it relates to Section 8 and trying to verify them), as I interviewed 100s of landlords and property managers:

    Pros of Section 8:

    • It's very difficult to get Section 8 vouchers. Those who have them want to stay on Section 8, and therefore make sure to pay their rent on-time
    • You have more demand for your property, as you've opened up to Section 8 tenants.

    Cons of Section 8:

    • Property managers (that I interviewed) complained about the number of people living in the household and the state of the property upon turnover. There aren't any statistics, but that was the #1 complaint from all of the property managers I interviewed.
    • It's very difficult to screen Section 8 tenants.

    Here is my conclusion:

    You may want to take Section 8 tenants, especially because of the pros, but keep in mind that it will be difficult to vet the tenants. Based on my conversations with all of these property managers / owners, I would actually see if you can get more details into the state of the household / eviction history of these folks. They want to stay on Section 8, so they will pay you on-time. But, you may have other issues that are financial in another sense (for example, renovations).

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  • Bryan N.
    Investor · Hampton Roads, VA · Member since 2014 · 1k+ posts · 418 votes
    10y

    I'll let a property sit for a month or two until I find the right tenant.  I've never taken section 8 and I won't.  Section 8 isn't necessarily bad, but it's not for me. Verifiable income and debt management are what I look for.  All three of my rentals are drama free, paid on time, and the property is clean.  

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  • Logan Hicks
    Business Owner/Investor · Millersville, MD · Member since 2015 · 191 posts · 71 votes
    10y

    25-35%: rent

    15%: Automotive

    25%: Bills

    10%: Savings

    10%: Entertainment

    5%: Misc.

    This is after tax, so assume their gross is +20.5% more on average.

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  • James DeRoest
    Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
    10y

    Some strange info in this thread.

    There's really no need to verify income as the housing department has already done that (or is in the process of doing it), and the tenant nor the housing department will be able to tell you the portion of the rent until the tenant finds a house in the first place.

    Once the tenant has found a house, the house will need to be inspected, and if it passes, the housing office will make a rent offer to you directly; they won't overpay, but you can haggle a little. 

    Whatever you do though, it sounds strange, but the Section 8 tenant has 60 days (in our housing authority) from getting the voucher to being in the (inspected) house. So if you're on the fence, don't run someone out of time.

    House inspection is easy, if you can't pass it, then you're an honorary slumlord.

    Section 8 experiences tend to vary on the specific housing department. We have a good time with ours. What can I say.

    The reason that you see "No Section 8" in a lot of ads is because the house is owned by a slumlord who is unwilling to bring it up to standard, or someone who is unwilling to budge on price. Most landlords we know that dislike section 8 are fully fledged slumlords.

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  • Rick BassettBusiness Member
    OP
    Property Manager · Greater New Haven, CT · Member since 2010 · 377 posts · 434 votes
    10y
    Originally posted by @James DeRoest:

    Some strange info in this thread.

    The reason that you see "No Section 8" in a lot of ads is because the house is owned by a slumlord who is unwilling to bring it up to standard, or someone who is unwilling to budge on price. Most landlords we know that dislike section 8 are fully fledged slumlords.

     James, 

    We are unwilling to budge on price as our rent is at market and the property will rent at our asking price. Our past experiences with the local housing authority have been that they expect us to bend on price but we always decline.

    Rick

    475-900-3100
    Bassett Property Management5108 Reviews
    WebsiteView Page
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