Rental - Can advertise only to Section 8 Tenants?

20 Replies

Hi my BP family!

My Rental strategy going forward is to rent strictly to section 8 tenants. I do mention that section 8 tenants are welcomed on my rental listings but my question is, can I mention something like “Section 8 tenants preferred”. Can I specify the Bedroom voucher requirements?


Thank you! 

can I mention something like “Section 8 tenants preferred”.

The more "flags" you put on your ads = More trouble.

There's nothing magic about Sec 8 tenants - It's just another source of income.  In most cases, you still need to collect a co-pay and may have to deal with inspections.

Screen them like anyone else and use the same standards for all.

Good advice from @Steve Morris above- when you start adding specifics to you listings, expect calls from fair housing testers- you definitely don't want that. 

Why focus on section 8? I've been doing this for a while and I've had some great section 8 tenants and some not so great ones. That said, you screen every tenant exactly the same way, if they quality, they qualify. Don't overthink it. 

@Manuel Salce , as others have mentioned, targeting Section 8 tenants only would be discriminatory and definitely a fair housing violation. A HUD housing voucher should be viewed as income that would count towards your "standard income qualification" for potential tenant applicants. HOWEVER, if you were to choose to advertise your rental on a site like "GoSection8.com" you might attract more applicants that have housing vouchers versus private market tenants. Good luck!

To all of you stating that it would be a fair housing violation, what is the basis for that? Can you cite a regulation?

Stating “section 8 preferred” is seemingly a discriminatory preference against full rent payers. But full rent payers aren’t a protected class from a discrimination standpoint. Discrimination is only illegal if it disadvantages a protected class. Further, such a statement would seem unlikely to have a disparate impact on a protected class.

In general, stating a preference to aid a disadvantaged population is not prohibited.

There may be local ordinances that exist that would be in violation, (such as preventing discrimination based on source of income) but I’m not seeing why “section 8 preferred” is considered an across the board national violation.

@Manuel Salce , I'm not a lawyer and I haven't asked my lawyer (I might now), but I only take Section 8 tenants and state it in my ad.  I also only advertise on Gosection8.com.  

As I read the protected classes, I don't see anything referencing income source:

  • race.
  • color.
  • religion.
  • national origin.
  • sex.
  • disability, and.
  • familial status

So I don't think it is a fair housing violation.  I know a ton (in fact, almost all of my landlord friends) will  not take Section 8 and many of our rental listings here even say so ("Section 8 not accepted").  So it stands to reason that if someone can deny a person for having it, I believe they can also deny someone for not having it.

I require the person's voucher to be for as many or more bedrooms than my house.  I make this clear in my initial listing and on my application info so the applicants don't apply for a house they won't qualify for.

Like the others have mentioned, having a consistent process/checklist for every applicant so that you treat them all the same is critical. 

P.S. I think it's a great strategy to go all in on Section 8, especially now.  I have and I love it.  Here's a blog post I wrote about why: 5 Reasons Why I Love Section 8 Rental Properties

Income source is a protected class in some states. I don't believe this is discrimination on a federal level, but may be depending on state. 

For context:

I am in a class C market but I renovate all of my homes to turn them into a class A property. 

Section 8 rents are higher than the average non-subsidy rental prices in my city. With section 8 I also have some revenue security. I would prefer that with these challenging times.

I was raised by a single mother, we didn’t have section 8 but we were in a part of a very similar subsidized rental program. I am the man I am today because I had a safe and secure environment. My mission now as a land lord is to provide this environment for other families in a market full of slumlords (while also making a profit).

@Manuel Salce my listings legally (under federal fair housing) say "Section 8 not allowed", so it is logical that you could rent only to section 8. Keep in mind that some states have additional protected class, which include income. My state does not. 

The best way to turn an A class property back into a C class is renting to Section 8. The entire advantage of Section 8 is getting higher than market rents for C or D class properties. I get wanting guaranteed income, but renovating to A class standards is where you lost me.

Originally posted by @Joe Splitrock :

The best way to turn an A class property back into a C class is renting to Section 8. The entire advantage of Section 8 is getting higher than market rents for C or D class properties. I get wanting guaranteed income, but renovating to A class standards is where you lost me.

I guess I don't understand how you can turn a C class property into an A class with renovation only... I thought property class was as much to do with neighborhood?  

 

Originally posted by @Jennifer Donley :

@Manuel Salce , I'm not a lawyer and I haven't asked my lawyer (I might now), but I only take Section 8 tenants and state it in my ad.  I also only advertise on Gosection8.com.  

As I read the protected classes, I don't see anything referencing income source:

  • race.
  • color.
  • religion.
  • national origin.
  • sex.
  • disability, and.
  • familial status

So I don't think it is a fair housing violation.  I know a ton (in fact, almost all of my landlord friends) will  not take Section 8 and many of our rental listings here even say so ("Section 8 not accepted").  So it stands to reason that if someone can deny a person for having it, I believe they can also deny someone for not having it.

I require the person's voucher to be for as many or more bedrooms than my house.  I make this clear in my initial listing and on my application info so the applicants don't apply for a house they won't qualify for.

Like the others have mentioned, having a consistent process/checklist for every applicant so that you treat them all the same is critical. 

P.S. I think it's a great strategy to go all in on Section 8, especially now.  I have and I love it.  Here's a blog post I wrote about why: 5 Reasons Why I Love Section 8 Rental Properties

This is state dependent. In Virginia, for instance, as of July of this year, source of income can no longer be used as a criteria for tenant selection, much like felony status is protected nationally.  

Originally posted by @Rachel S. :
Originally posted by @Joe Splitrock:

The best way to turn an A class property back into a C class is renting to Section 8. The entire advantage of Section 8 is getting higher than market rents for C or D class properties. I get wanting guaranteed income, but renovating to A class standards is where you lost me.

I guess I don't understand how you can turn a C class property into an A class with renovation only... I thought property class was as much to do with neighborhood?  

 

 They probably mean an A class quality in a C class neighborhood. It is tough to have an A class property in a C class neighborhood. Also remember when people rate the class of their own investments, they have a tendency to over-inflate the rating. If it really was really an A class, you could get far greater rents from non-Section 8 tenants. All of which would have high credit scores and rents would be guaranteed as much as if the government paid. They would also take better care of the property. That was kind of the point I was trying to make in my post, but you said it better and more directly, haha. 

Average Market rate is $1,200 (all utilities)

Section 8 $1,277 (I just have to cover the water bill)

Median income in my zip code is about 25k.


This is my train of thought in choosing section 8: I feel confident I'd be able to find a non-section 8 tenant that meets the 3x earning rule but in this high risk market I would rather get steady income. After getting feedback from everyone here, I do have to refine my screening process. If I can get quality tenants that will take care of the property then I think this equation will work. Thoughts?

Originally posted by @Manuel Salce :

Average Market rate is $1,200 (all utilities)

Section 8 $1,277 (I just have to cover the water bill)

Median income in my zip code is about 25k.

This is my train of thought in choosing section 8: I feel confident I'd be able to find a non-section 8 tenant that meets the 3x earning rule but in this high risk market I would rather get steady income. After getting feedback from everyone here, I do have to refine my screening process. If I can get quality tenants that will take care of the property then I think this equation will work. Thoughts?

 I think Section 8 can work for you, but still screen the applicants. You are not screening for income, but you can still look at credit report, talk to two previous landlord references and you can even request to visit them at their current home to make sure they are keeping the property in good condition.