Rental Property Investor · Tampa, FL · Member since 2018 · 64 posts · 16 votes
I have a few properties- some I’ve rented to section 8. All of my properties are above the standard for a rental- falling into a luxury product. I have had issues with a few of my section 8 tenants in the past. Right now there is a housing shortage in Fl and I am having a lot of ppl that are coming to me with vouchers for less than what I would typically rent my home out for. Example: I have a four bedroom and their vouchers for a 3. They are willing to pay the difference if I am willing to accept.... when I read the HAP agreement it states that I’m allowed to charge them reasonable rent however, is it a violation if there is a verbal agreement for the difference? Are you allowed to have two separate leases? This may sound like a stupid question however, I am having a lot of section 8 candidates tell me this is common practice with landlords and tenants. I figured, I would ask you all...
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
5y
@Joyce Jackson I have no doubt that some Section 8 landlords charge a form of “under the table” rent. However, both of the things you asked about (e.g. charging additional rent above what the Housing Authority is aware of; and having two leases - one the HA is aware of and one they’re not) are specifically prohibited.
The HAP contract that you will have to sign as a Section 8 landlord will require you to certify, among many other things, that: 1) You provided the lease to the Housing Authority, and 2) You will not receive any payments from the tenant (or any other source) above the rent for the unit. (By that they mean the rent that is stated in the lease you provided.)
If a landlord is found to be in violation of this, it’s considered a breach of the HAP contract and can result in immediate termination of the HAP contract, suspension of payments, as well as being kicked out of the Section 8 program.
(Not to mention that the same HAP contract also makes it a violation for the tenant.)
So not only could a landlord get kicked out of the program and have their payments stopped, but they’d also ultimately be stuck with a tenant who in all likelihood could no longer afford the rent without the Section 8 assistance. And to top it off, the HAP contract actually states “The owner must immediately return any excess rent payment to the tenant” (if you did violate the HAP contract and collect anything above the stated rent).
Hardly seems worth the risk, in my humble opinion.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
5y
I asked on here about this a while ago. Apparently it is very common, but if caught you are in violation of the agreement for the section 8 voucher and may have penalties and have to return that money. The government considers it like you are taking advantage of a poor, disadvantaged person, not that you are giving them an upgrade at cost.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
5y
@Joyce Jackson I have no doubt that some Section 8 landlords charge a form of “under the table” rent. However, both of the things you asked about (e.g. charging additional rent above what the Housing Authority is aware of; and having two leases - one the HA is aware of and one they’re not) are specifically prohibited.
The HAP contract that you will have to sign as a Section 8 landlord will require you to certify, among many other things, that: 1) You provided the lease to the Housing Authority, and 2) You will not receive any payments from the tenant (or any other source) above the rent for the unit. (By that they mean the rent that is stated in the lease you provided.)
If a landlord is found to be in violation of this, it’s considered a breach of the HAP contract and can result in immediate termination of the HAP contract, suspension of payments, as well as being kicked out of the Section 8 program.
(Not to mention that the same HAP contract also makes it a violation for the tenant.)
So not only could a landlord get kicked out of the program and have their payments stopped, but they’d also ultimately be stuck with a tenant who in all likelihood could no longer afford the rent without the Section 8 assistance. And to top it off, the HAP contract actually states “The owner must immediately return any excess rent payment to the tenant” (if you did violate the HAP contract and collect anything above the stated rent).
Hardly seems worth the risk, in my humble opinion.
Rental Property Investor · Saint Louis, MO · Member since 2018 · 229 posts · 279 votes
5y
@Joyce Jackson, I have a portfolio of Section 8 properties, it's the only thing I do.
It is illegal to have the tenant pay more than the approved amount from the Housing Authority, as others have indicated. I'm sure a bunch of landlords do it.
However, in addition to the practice being illegal, you lose one of the benefits of Section 8, which is that if the tenant doesn't follow your lease or damages the property, you can go to the Housing Authority to repot them and get assistance. If you're taking money "under the table," the tenant can then report you for the contract violation.
So, bottom line, I don't do it. Ever. I have potential tenants tell me all the time that it's fine, their old landlord did it, their caseworker said they can do it (I highly doubt this), their friends do it, and on and on. I still don't do it.
Lastly, one of my top requirements for Section 8 tenants is that their voucher has to be for at least as many bedrooms as I have in the house. Otherwise, I run the high risk of getting less in rent.
I have great Section 8 tenants but am in B and C areas and screen meticulously. It can be done but it takes some work to learn the ins and outs of the program so that you can attract and retain only the best tenants out there.
JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
5y
The tenant is allowed to pay the difference, but is not allowed to spend more than 40% of its income on housing and utilities. The additional payment can't be done under the table. THAT is illegal.
Rental Property Investor · Tampa, FL · Member since 2018 · 64 posts · 16 votes
5y
@Denise Evans- perfect response, Thank you so much ... so if they would like to qualify for the home the acceptable rent must be disclosed to their case worker. If they still qualify good to go.
Rental Property Investor · Tampa, FL · Member since 2018 · 64 posts · 16 votes
5y
@Jennifer Donley- this is exactly what I was thinking. The few homes I have with section 8 are in the higher paying zip codes. So for these size homes, the rental payment would be right on board with the regular payment standard plus guaranteed however, I feel after reading your post that considering the offers for under qualified individuals puts myself and family at unnecessary risk. Thank you for sharing so much detail. I appreciate your advise.
Rental Property Investor · Tampa, FL · Member since 2018 · 64 posts · 16 votes
5y
@Kyle J.
I agree- we want to have the most diverse yet stable platform of tenants possible and section 8 -we’ve determined must be included in that however, there’s no need to take the risk that you mentioned. As I stated there is a housing shortage in Fl and I’m sure we can find quality tenants that qualify for our size homes. I’m concerned about the number of people that must live in the home to qualify for a four or 5 bedroom. Which is why I started to entertain this option but now that I’m aware of the risk.... 👎 nope.
JD, CCIM , Real Estate Broker · Tuscaloosa, AL · Member since 2014 · 1k+ posts · 1k+ votes
5y
@Joyce Jackson, under Fair Housing laws, you are allowed to limit occupancy to 2 persons per bedroom (unless unusually large or unusually small) and not fear violating Fair Housing laws regarding ethnicities that culturally house more than two children in a bedroom and children under age 5 sleep in the marital bed. That being said, you probably have to allow at least two people per bedroom.
Under the Voucher program, the allowable bedroom count is arrived at by allowing one bedroom for the adult couple (or single head of household) of the family, and then two children per bedroom except that after the age of 5, sexes must have their own bedroom. So, with a single mother, plus one 7-year old boy and one 6 year old girl, that would total up to 3 bedrooms. Or, a couple (1BR) with 2 boys over the age of 5 (1BR), 2 girls over the age of five (1 BR), and another boy and another girl, both under the age of 5 (1 BR), that would add up to 4 bedrooms needed as far as calculating what a voucher will cover If a live-in aide is required because of age or disability, that person is allocated their own bedroom as far as count goes.