Renting out to Section 8 HUD Tenants

10 Replies

Hey everyone, I have a few questions about an investment opportunity I am looking into. The specs are: it’s a 2-family property: 1 unit is a 2 bed 1 bath and the other unit is a 3 bed 1 bath.

HUD is 2700 for a 2 bedroom and 3375 for 3 a bedroom. The wrinkle in this deal is I am going to be living in the 3 bedroom unit so my questions are;

1. Can I rent out one section of my duplex to HUD tenants?

2. If I only want to take 1 bedroom, could I rent out the individual bedrooms to HUD tenants within the same unit as me.

Hey Robert - so I have been renting about a dozen units to tenants with section 8 vouchers here in NY for roughly ten years.

Section 8 is a federal program so I'm assuming the guidelines are national but obviously you have to check.

#1 Yes.  I have done this in the past.  I have a two unit building that I lived in and rented the other unit out to a tenant with a section 8 voucher.  It is a little bit of a pain, but, doable. Sometimes you have to lock off certain areas of the house if the tenant has young children and there are usually two scheduled inspections per year plus one random plus any reinspections if and when they do find some required repairs you have to do.  (They will find something 85% of the time - job security, maybe?)  So you will have inspectors coming to your house.  But, this could be a good thing - if you are planning on buying more properties and renting to Section 8 tenants it is good to get to know the inspectors.

#2 - I have never heard of this. With the HUD Section 8 program the prospective tenants are given a voucher for a one, two or three bedroom unit. I have never seen or heard of someone having a section 8 voucher for a room. And, usually on the paperwork (Request for Tenancy Approval Form) it tries to clarify that you do not in fact live in the unit.

#3 Those are some GREAT rents!  Keep in mind that a section 8 tenant has a maximum amount on their voucher for their rent.  It goes by zip code market rent and their income.  It is usually pretty competitive but I have many times had to agree to lower the rent after I went all the way through the application and inspection process. (Be careful because a lot of times that amount includes utilities and if you don't include them in the rent then you have to call their worker to get the max amount without utilities.  Then get your direct deposit set up and wait for the beep on your phone around the 3rd of the month from your bank!

I would google Section 8 administrative agency in your county.  Here in Western NY we have 2-3 local agencies in each county that administer the program locally for the tenants/landlords/inspectors. They will be able to give you the details. 

Good luck!

Be careful in your analysis using the numbers on the HUD website. There is much more to the rent approval process than looking at that number. For one, that number includes utilities. For another, there are other factors that can limit the rent amount. I have a blog on SEC 8 that covers this computation if you want to learn about it.

What everyone else said, and don't go by the HUD website rent amounts by zip code - I have NEVER seen them offer the maximum rent listed on those charts. I'm working in Cleveland with about 4 PHAs, mostly Cuyahoga Metropolitan Housing Authority.

@Robert Chaiton I have section 8 tenants. As others mentioned, you will NOT get those rents you're quoting. I just rented out a 3br in Aurora. $1850 Section 8. PM's are the best place to get section 8 rents from. Look at as well.

@Robert Chaiton I agree. You are not getting those numbers. Rented a 2 bed for section 8 in Aurora as well and they maxed out at $1,850 minus utilities. Denver is not that much different from Aurora. I have a four bed in Denver and I think their max is something like $2,750. 

Never heard of Sect 8 renting by the room.

@Robert Chaiton Everyone here has offered good perspective on Section 8 and I would agree. Boston will have higher section 8 rents than Denver, but the fact that those prices include utilities hold true. I just increased my section 8 rent in Boston to the market level for my 4 bedroom. My housing authority contact said $3131 was the max, but minus utilities I now have the rent at $2880. 

I would definitely re-evaluate your projected rents.

"HUD is 2700 for a 2 bedroom and 3375 for 3 a bedroom."

Those are HUD FMRs? I think you want to see what a tenant brings for a voucher for a 2 bed. Then they need to make up the co-pay.