How do housing vouchers count towards a monthly 3X income?

Rental Property Investor · Seattle, WA · Member since 2016 · 36 posts · 6 votes

Hi there BP! I currently have a rental listed for $1,700 and I am looking to have income of 3X the rent. I have an applicant with a rental voucher for up to the full amount of rent, so 1700 plus additional income of 1788 for a total income of $3488. With the recent fair housing laws you cannot discriminate on income so I want to be careful with this situation. 3488 is only about 2X rent. How does the housing voucher count towards the 3X rent?

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Patti RobertsonBusiness Member

Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes

Hi @Reinhard Kurzen - I just wanted to chime in. I do a lot of SEC 8. I want top rents, and in order to get them I have to have a tenant with income. I also use 3 X the rent for non-SEC 8 tenants. For SEC 8 tenants, I reduce that to one times the rent. If they have less than that they tend not to qualify for the rent I want. When the housing authority gives them a rent range or max rent allowance, it includes rent plus utilities. If you are already at the max of their allowance, the property won’t be affordable for them, and SEC 8 will come back and tell you they will pay a lower amount than you want. When they give you a rent range, understand that a single family home is on the low end of that range, a townhome is in the middle, and an apartment is on the top end of the range. This is because the utilities for each unit type have to come out of the budget before rent can be computed, and the more exposed walls, the higher the utilities estimate.

I wrote a blog with some SEC 8 tips that you can find on my profile if you’d like more info.

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Reinhard Kurzen
OP
Rental Property Investor · Seattle, WA · Member since 2016 · 36 posts · 6 votes
7y
The property is on Renton, WA just south of Seattle.
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Bryan Devitt
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
7y
3X is because you're worried they might not be able to pay the rent, if they have a voucher that will pay rent then what is the worry? there might be many more worries if they are only left with $400 a week (paying utilities mostly) but live in an area that costs $1700 a month but the concern on paying rent is gone at least. I do not deal with vouchers but that is my thinking at least
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
folks I know that do a lot of section 8 are not that concerned with total income more concerned with their basic credit and if they have been evicted in the past.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Plus if they make 3X they probably make to much to get section 8 there are income limits.
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Brian Hughes
Seattle, WA · Member since 2017 · 275 posts · 223 votes
7y
I am not an expert by any means, but I do have rentals in south seattle and burien; near renton and I have looked into this a couple times when I had sec8 recipients inquiring about vacancies.
The way that the housing authorities require you to verify income is that you can only verify income against the tenant's portion of the overall housing payment. That means for example if you are asking $1700 in rent plus $100 utility surcharge, and they have to buy electric service separately at on average $100 a month, their total housing cost is $1900. If they have a voucher for $1700, that means they are paying $200 on their own.
In this example, that would mean you can only require they have verifiable income of $600 monthly in addition to the voucher. That income can be ANY legal and verifiable source of income, including wages, SSI/SSD, food stamps, settlements/child support etc. Somewhere they have tables for expected/allowable utility costs you can consider when doing this calculation.
Yes, this does mean there are scenarios whereby it is possible that you can be in a situation where you cannot verify ANY cash income at all or the income you are verifying may come from a flaky deadbeat former spouse who you cannot run further background checks against. That is the thing that has always scared me about the whole process.
The good news is you can screen all applicants the same in other areas, so make sure you have credit/civil/criminal (not in seattle)/references criteria that you are comfortable with even if your applicant is fully subsidized.
If your particular applicant has $1700ish income on their own they are probably among the stronger sec8 applicants around; might be worth giving them a shot if the rest of their background check comes back decent.
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Reinhard Kurzen
OP
Rental Property Investor · Seattle, WA · Member since 2016 · 36 posts · 6 votes
7y
@Bryan Devitt, you are right, and the rent is guaranteed. Thanks!
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Reinhard Kurzen
OP
Rental Property Investor · Seattle, WA · Member since 2016 · 36 posts · 6 votes
7y
@Jay Hinrichs they have not had an eviction but there was a bankruptcy just over 7 years ago so technically "off" the record now.
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Reinhard Kurzen
OP
Rental Property Investor · Seattle, WA · Member since 2016 · 36 posts · 6 votes
7y
Thanks everyone. Just a little worried because there is no job, only social security, workers comp and the housing voucher.
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Patti RobertsonBusiness Member
Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
7y
Hi @Reinhard Kurzen - I just wanted to chime in. I do a lot of SEC 8. I want top rents, and in order to get them I have to have a tenant with income. I also use 3 X the rent for non-SEC 8 tenants. For SEC 8 tenants, I reduce that to one times the rent. If they have less than that they tend not to qualify for the rent I want. When the housing authority gives them a rent range or max rent allowance, it includes rent plus utilities. If you are already at the max of their allowance, the property won’t be affordable for them, and SEC 8 will come back and tell you they will pay a lower amount than you want. When they give you a rent range, understand that a single family home is on the low end of that range, a townhome is in the middle, and an apartment is on the top end of the range. This is because the utilities for each unit type have to come out of the budget before rent can be computed, and the more exposed walls, the higher the utilities estimate.
I wrote a blog with some SEC 8 tips that you can find on my profile if you’d like more info.
757-472-2547
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