Triplex in CA - Section 8 Tenants

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Triplex in CA - Section 8 Tenants

Rodney Manning
Rental Property Investor · San Jose, CA · Member since 2017 · 3 posts · 0 votes

I am in currently in contract on a triplex where two of the tenants are section 8. This wasn't disclosed until I received the estoppels today. Upon reviewing the disclosures I have a a couple questions regarding the Section 8 program as I've never dealt with it, and as I've only done SFH before I've never taken over a property with tenants in place.


1. The seller's agent in the private comments section of the listing stated that the rent on one of the units was going up by $175 effective August 1st, but the estoppel states it is only increasing by $85. My offer was originally based on the higher number, so I'm going to try and either reduce it or get some money back at closing. This tenant, 15 years at the property, is one of the section 8 tenants. As they are month to month when I acquire the property can I raise the rent again as part of a new lease, or do I have to wait a year until 2021 because of the section 8 adjustment? 

2. What is the process for updating the rent due with section 8? Do I just follow the normal notice of rent increase, or will I, or my property manager if I go that route, have to send something to the housing department? Based on the FMR the unit is undervalued, so there is room to increase.

3. The second Section 8 unit is also under the current FMR. They are currently month to month, but have lived in the unit for 7 years. It looks like the next reexamination is due 9/1/20. Can I give them a notice of rent increase, effective 60 days out, along with a new lease, or do I have to wait for the reexamination to state that I'm raising the rent?

During this whole mess it seems like a golden opportunity to have stable rent coming in, so I'm not looking for them to vacate. The numbers make sense even without these increases, but I want to make some improvements to the property (I like providing a nice property for people to live in) and the increases will help cover that as well as become more informed regarding renting to section 8 tenants.

If anyone has a website, or some other point of reference on this please point me towards it. Thanks in advance for taking the time to read this, and provide some advice based on your experience. 

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Chad HalePro Member
Property Manager / Investor · San Jose, CA · Member since 2013 · 779 posts · 301 votes
6y

@Rodney Manning is this triplex in San Jose?  If yes, please understand  the ARO rules.  You can’t simply ask a tenant to vacate and then raise to market rates.  You have to rerent at the rate of the last tenant if you have them move out. If they voluntarily move out, then you can go to market rates.   There are other nuances to understand when and how rents can be raised.  Ignore this if not located in San Jose.

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  • Jhanel Wilson
    Rental Property Investor · Philadelphia, PA · Member since 2016 · 63 posts · 58 votes
    6y

    I rent in philly, we have to submit rent increases 90 days before recertification. And that is the ONLY time we can ask. Go on the website and see if they have a form to fill out. Or if there is someone you can email.

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  • Chad HalePro Member
    Property Manager / Investor · San Jose, CA · Member since 2013 · 779 posts · 301 votes
    6y

    @Rodney Manning If your triplex is in San Jose, you will want to be sure to follow the city ARO rules.  Which by the way have prohibited all rent increases through the end of 2020.

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  • Rodney Manning
    OP
    Rental Property Investor · San Jose, CA · Member since 2017 · 3 posts · 0 votes
    6y

    @Jhanel Wilson I'll have to look up the local regulations. If they're similar to toura then I'd be out of luck until next year.

    @Chad Hale thanks for the tip regarding the city ARO rules. This is our first multi-family, so still getting used to things. It looks like AB1482 is in effect so we'll only be able to 5% + CPI, although that may be negative so we'll see where that ends up. 

    As the tenants are month to month I may just give them notice to vacate spread out over time, so that I can fix up the units and rent at market rate (either local or section 8 again).

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  • Chad HalePro Member
    Property Manager / Investor · San Jose, CA · Member since 2013 · 779 posts · 301 votes
    6y

    @Rodney Manning is this triplex in San Jose?  If yes, please understand  the ARO rules.  You can’t simply ask a tenant to vacate and then raise to market rates.  You have to rerent at the rate of the last tenant if you have them move out. If they voluntarily move out, then you can go to market rates.   There are other nuances to understand when and how rents can be raised.  Ignore this if not located in San Jose.

    1Reply
  • Rodney Manning
    OP
    Rental Property Investor · San Jose, CA · Member since 2017 · 3 posts · 0 votes
    6y

    @Chad Hale the unit is not in San Jose. The idea would be that once they move out that I'd update/remodel the unit, and then rent it out again. My understanding is thst since I'll be doing a remodel, then I'll be able to raise the rents. If I didn't do the imrpovements then I'd be limited to a 10% increase by price gouging restrictions during the state of emergency under ca code 396. I am not evicting anyone, just not renewing their lease, so I wouldn't fall under those restrictions either.

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  • Chad HalePro Member
    Property Manager / Investor · San Jose, CA · Member since 2013 · 779 posts · 301 votes
    6y

    @Rodney Manning  ok not in San Jose, likely a lot simpler.  Just make sure you are aware of any local laws that might apply.

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