HUD Campaign to Boost Landlord acceptance of House Vouchers

12 Replies

Hi BP,

I came across this interesting announcement on the HUD.gov site today. Looks like HUD might be looking to make Section 8 and Housing Vouchers less difficult to accept by initiating listening sessions across the country.

What are your thoughts on taking Section 8 vouchers if there was less inspections and regulations for accepting tenants?

https://www.hud.gov/press/press_releases_media_adv...

@PJ Kolnik I don't mind the inspections and the regulations are not that bad.

My main complaint is that I can put a regular tenant in one of my properties in 2 days. It takes a month or longer to get through the Section 8 approval process. If they reimbursed rent from when you started the application that would be a huge improvement or if they could approve existing landlords that have proven themselves and catch up the paperwork and inspections after the tenant has signed the lease.

I have 2 existing section 8 properties and I like the program.

@John Underwood that's some helpful insight. As a newer investor, I sometimes feel like I have no idea how to manage the risks of Section 8, its only for the pro's.

What are the keys to managing the risks that come with Section 8 vs. other more conventional tenants in your opinion? I realize we are treading some potentially legal issues here, but curious to learn from you experience.

@PJ Kolnik You must screen section 8 tenants the same as anyone else and get a deposit. Then the government pays most or all of their rent via direct deposit. Section 8 pays up to 110% of market rents. Section 8 inspects your properties for free and lets you know if repairs are needed. The inspections also help keep the tenants in line and lets them know if they need to make improvements as far as cleaning etc. The tenants are getting some amount of free rent so they don't want to loose this free money and in my experience take pretty good care of your property.

@PJ Kolnik I don't know how they officially determine "market rent". I can look at rentometer.com and Zillow and see what similar properties are renting for. I then search Zillow and craigslist to see what is available use all this to determine a fair price. I usually shoot for the high side and don't have much trouble finding a qualified tenant willing to pay my asking price.  I live in a very hot rental market and demand is much higher than supply.

My housing authority publishes a chart of what they will pay for the amount of bedroom house that you have. It is on their website. Not every section 8 voucher holder will have a large enough voucher for this max price in every case.

My two main beefs with Section 8 is that, in my market, they do not pay market rents.  I believe they use a formula generated by county, and the city where I invest is has more rental demand than the county as a whole, so I can easily get $100 above what they will pay.  The other beef I have is with the annual inspections, where they often find nuisance items for me to address.  I take pride in the maintenance of my rentals, and I frankly find it insulting that they "need" to find items just to justify their role in the process (my opinion).

Originally posted by @Wesley W. :

My two main beefs with Section 8 is that, in my market, they do not pay market rents.  I believe they use a formula generated by county, and the city where I invest is has more rental demand than the county as a whole, so I can easily get $100 above what they will pay.  The other beef I have is with the annual inspections, where they often find nuisance items for me to address.  I take pride in the maintenance of my rentals, and I frankly find it insulting that they "need" to find items just to justify their role in the process (my opinion).

it is amazing how regional it is.. most folks that I know that do section 8 do it for higher rents.. because most section 8 tend to be C to D class areas.. so section 8 pays higher not lower..   we have almost no section 8 in the Portland metro area you get into rural areas and that changes fast. 

Originally posted by @John Underwood :

@PJ Kolnik You must screen section 8 tenants the same as anyone else and get a deposit. Then the government pays most or all of their rent via direct deposit. Section 8 pays up to 110% of market rents. Section 8 inspects your properties for free and lets you know if repairs are needed. The inspections also help keep the tenants in line and lets them know if they need to make improvements as far as cleaning etc. The tenants are getting some amount of free rent so they don't want to loose this free money and in my experience take pretty good care of your property.

Boy some of the markets I was in in the deep south no one got that cleanliness memo..  section 8 did nothing to keep the tenants in line. 

By the sound of it even section 8 varies based on location. @PJ Kolnik I have a few section 8 tenants and have had no problem with the program. We were able to get rented up in 2-3 weeks, so there is some potential rent loss there. The rent was questioned for one of my tenants, so there was actually a back and forth with a section 8 rep that we actually showed and discussed comps we knew of and found in the market. They look at the zipcode for locational parameters, which back fired on this property because we were on the west end of a zipcode and values typically go down heading east (and there was a freeway dividing east and west in that zipcode), so we were "pulled down" by "comps" east of that freeway. In the end, still a fair amount of rent for the property and they pay like clockwork. We've had one inspection (only the initial inspection) in the two years this tenant has been there. 

Section 8 definitely varies by location.................I have Section 8 rentals in 2 separate counties in California and I have them in Cleveland. I get more than market rate from Section 8 in 2 out of 3 and in the other it is right at Market rate...............Yes sometimes it may take longer for them to get out to inspect because of red tape,....but a lot of the time it's been worth the rate.  

In my area the approval process is swift- that is not the issue. The challenges that I have had in my area are the inspections. Generally, section 8 tenants tend to be harder on the property than other tenants, and the inspectors require me to repair the damages that the tenant caused before they will pay rent. There have been several occasions where I've had to replace windows, locks, switch plates, etc, that a tenant damaged, otherwise I would not have been paid rent.