Section 8 Questions

3 Replies

Hi,
My husband and I just purchased a property in Mobile, AL. that we are currently thinking about making section 8; however, I have a few questions and am looking for advice. Questions:
1.) How much do you ask for a deposit? On my other rentals I ask for 1st and last months rent but what is appropriate for section 8?
2.) We did install an electric stove and dishwasher but Do you supply refrigerator? Washer/dryer?
3.) Do you ever ask more than the voucher amount for rent?
4.) Do you require your tenants to take care of lawn maintenance? And what if they don't?

Thanks friends! I appreciate the feedback:)

Afternoon @Account Closed . I've been searching Section 8 myself as I have an opportunity coming up that may apply. My plan is to work directly with Section 8 housing in Pensacola as I have the same questions you posted. 

Here is a referenceable link for Mobile County: http://www.mobilecountyha.org/section8.html

Congrats & good luck!

JH

I currently have two units with Section 8 tenants in the NOLA area.  Here is my, albeit limited, experience:

1) I ask for a security deposit equal to one month's rent, same as my other tenants.  One Section 8 tenant I inherited and the security deposit she paid the previous LL was only $300.  I knew that buying the house.  The other Section 8 tenant paid the full deposit before moving in.  The security deposit is something I would be negotiable on for a Section 8 tenant, because they are substantially less likely to move out owing rent.  But it still needs to be substantial enough to cover at least typical damages and to also be a big enough carrot that the tenant wants back on move out.

2) In general, this depends a bit on your area.  Where I live, it is common for a LL (Section 8 or not) to provide at least a stove and fridge.  I usually don't provide a dishwasher, unless there already is one or there is room in the cabinetry to put one in.  I usually provide a washer/dryer also, but that is not necessary.  I provide washers/dryers, because I can typically pick up decent used sets for about $300.  This makes a unit much more attractive to potential tenants and will raise the rent potential...also true for both Section 8 and non-Section 8 tenants.

3) Here's the deal on rent and Section 8.  I very much learned the hard way.  Yes, a tenant can and often does pay for more than what their voucher is for.  You and the tenant agree ahead of time on the rent.  BUT, BUT, BUT, Section 8 will then get their grubby mitts in and they will decide how much rent you can charge.  I had a VERY UGLY incident happen to me.

I have a 4 bed/2 bath unit.  The tenant's voucher was for $1,095/month for a 3-bedroom.  The tenant and I agreed on rent of $1,140.  Which was less than fair market rent and they would pay the minor difference.  Signed a lease for that amount.  The tenant moved in before the unit passed inspections.  The unit failed the first time and then passed the inspection 7 days later the second time.  Good bye to ANY rent for those 7 days.  Totally lame and b.s., it failed for totally minor stuff, but I understood that was how it works with S8.  Section 8 called me 7 days after that to tell me I needed to agree to $1,045/month.  I protested.  Explained I was charging a fair rent.

They explained it didn't matter the unit was 4-bedrooms, the tenant's voucher was for 3-bedrooms, so that was what they based the fair rent on.  I tried to get them to at least agree to the voucher amount of $1,095...which was still fair for a 3-bedroom, considering the amenities, size, and that I was supplying stove/fridge/AND a washer/dryer.  Nope.  Screw me.  They'd already arbitrarily determined the fair rent was $1,045.  It didn't matter the tenant and I had agreed to more than that.  I could take it or leave it.  If I wanted to leave it, I'd have to give the tenant 30 days and would get paid the $1,045/month for those 30 days.  I took it and can dispute it again after the one year lease is up.

4)  You can require the tenant to take care of lawn maintenance.  From what I understand, that's totally separate from S8.  I don't think S8 pays less/more on whether that is provided by the LL or not.  With the inherited S8 tenant I have, she is required to take care of lawn maintenance...though I have to take care of trees.  That was the deal between her and the last LL.  With my other S8 tenant, from my tale of woe above, that is a duplex.  The tenants for the other unit moved in first and are non S8, they maintain the lawn for a slightly lowered rent.  Obviously, the fact that the lawn was being taken care of by someone other than the S8 tenant, did not matter one whit to S8 and how much rent they would agree to let me charge.

As an aside, S8 does look at the maintenance of the lawn for their annual inspections.  The don't care if it is the S8 tenant's responsibility to maintain the lawn.  If it is overgrown during their inspection, they'll fail you anyway and you'll at least need to get it up to snuff for the re-inspection...at your own cost and/or labor.   

BP had a short Section 8 post a few weeks ago, and I responded with this (based on our experience):

Contrary to public opinion, violations of the lease by a Section 8 tenant DOES NOT result in automatic loss of Section 8 status for the tenant UNLESS the landlord evicts the tenant through the judicial process (local magistrate). The Section 8 office will tell you that the lease is between you and the tenant; they only pay the rent. If there is a lease violation it is the responsibility of the landlord to act to correct the issue or evict the tenant, but eviction must go through the judicial process in order for the tenant to be disqualified from the Section 8 program (for up to five years).

Inspections can also be a challenge. Doors and windows must operate as designed, with security latches and everything functioning properly. Inside doors must latch also, even if they are only for a closet. For electrical issues, recent national electrical code must be followed. Any electrical outlet within 6 feet of a water source must be a GFCI. (And you must have an outlet in the bathroom). If you have non-grounded three-prong outlets, they won’t pass either. (Our local inspector encourages us to change the three-prong non-grounded receptacles to the old two-prong style, which I find ridiculous, because then the tenant then has to use the three-to-two adapters.) Smoke detectors and carbon monoxide detectors must be in every bedroom and common areas, altogether adding great costs to your rental. And each floor requires one fire extinguisher now. Plumbing code must be followed also; no lead lines, no drips, handles must shut off water and toilets must not run or leak. Tubs can not have mold or mildew growth. And let’s not forget outside: shingles can not be loose, curling or even in poor condition (subjective). No peeling paint outside either: if you are renting one side of a duplex via Section 8, the roof and paint on BOTH sides must meet this standard. Inspections can test every bit of your patience.

Section 8 tenants need to be managed by a qualified landlord just like non-Section 8 tenants: being in a government-sponsored program won’t get people to behave if they choose to act like heathens. Finding and keeping good tenants is the primary role of the qualified landlord; failing to perform this function correctly will lead to disaster regardless who is paying the rent.

One more thing: your unit must pass inspection prior to the tenant moving in. Sometimes this can cost you quite a bit and significant work to do these things, but you do it. Section 8 will also require you to prove that all real estate taxes are paid up, and that all municipal utilities are working and paid up BEFORE the tenant moves in. You figure, wow that’s strict, but I’ll have some protection, right? WRONG! At the end of the year, when you decide not to rent to the tenant again, and you inform Section 8, you might think the Section 8 office would verify that the tenant has paid up all the utilities prior to giving them a new voucher for the next place, right? No! You might think the Section 8 office is going to inspect the property-the one you worked long and hard and spent money to meet their standards-prior to the tenant moving out and getting a voucher for the next place, right? WRONG! The Section 8 program places great requirements on the landlord at the outset (and periodically if the contract is re-newed) but never places this same burden on the tenant. They simply let the tenant move on and you get stuck with the unpaid water and sewer bills and their junk left in your unit.

Be sure to take a lot of pictures before you rent and after the tenant moves out, just as you should for any tenant. Also, if the utilities aren’t paid in full each month, you may have to threaten to evict them to get them to pay their bills. Be sure the Section 8 tenant pays their utilities each month in full. The Section 8 office leaves you with ALL the responsibility, so don’t expect anything but a rent check from them.

I will never understand how a government-run program can give a taxpayer-supported voucher to a tenant who left behind a mess of junk and unpaid utility bills for a landlord: to me, that is the number one reason landlords don’t want to participate in the program. In the end, the landlord gets screwed by the tenant AND Uncle Sam.

Good luck. Tim

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