Section 8 rentals help?

Question

I wanted to get some thoughts about this.I wanted to buy a 2 flat in the south side of Chicago,not in the best areas ,but pretty decent.Ive seen properties sell for $30,000-$90,000(fixed up) and was maybe thinking of buying a bulding ,get it up to code and rent both top and bottom to section 8 tenants? has anybody had experience in this part of relastate.i look at it as an investment.And I think i have to right to choose who i want living in my place.While the govement pays me.I figure hell mortage with insurance for a $50,000 is around $400-$500 a month with a good credit score.. and avage rent for a 3brd flat in the area is around $850-$900 a month ..tp floor and bottom floor.How does this sound??? need advice and opinon.Thanks 
x

Bill Gulley · Answer

God post Chris, I'll throw this out as a past Commissioner of a large PHA.

HUD doesn't nor any PHA decides rents for any specific dwelling but to the beds.bth and amenities as the link will show that Chris provided.

Tenants, all over the country may pay more than the voucher entitlement so long as the rent does not exceed 33% of income as qualified for the household. This is HUD, now if there are local rent controls in place, that's another issue. If you are being told the tenant can't pay more, that isn't correct so much as the total or voucher allowance is high enough to exceed the 33% of qualifying income, the can only earn so much to qualify under Sec 8, so they are already at the threshold. But, I guess you can say higher rents aren't allowed in an area, LOL.

You can select your tenants, you should have a written guide for your selection process, don't make it so tight  you can't use judgment. Be consistant in you process....the key is fair and consistant.

Your property will be inspected prior to approval into the program, they will let you know if repairs are needed. After that the property may be inspected by the local administrators, but many don't unless there is an issue.

Some of the best tenants ever may be on Sec 8, honestly, there are others, just as anyone else.  Your lease must be approved and no part of any lease payment may be credited to any purchase agreement. HUD does allow lease-options, vouchered funds may only pay rents, amounts paid toward any option must exceed the rent for the property and all payments must meet qualifying payments.

You will get your rents, some areas cut checks bettehan others and govt. checks can be delayed, but you'll get it. Just have some reserves so that rents are not required for that current mortgage payment. The number of vouchers will be reduced as vouchers are retired, as clients become disqualified for various reasons, so there is political hit.

IMO, managing an apt with Sec 8 can be an adventure. You can get that little old lady who seemed great at application but if you put a mom with 7 year old twins above her, you may have complaints. You need to be careful in your application process but give yourself room for making selections with common sence as to who you put folks next to or over or under.

All the HUD guidelines are online, you can find the requirements, so can the tenants. If you do many vouchers, you will get a rules and regulations type, they know what the deal is. They will also talk amongst themselves, so be aware of tenant interaction. But, if you run a good ship you should not have a real problem. Need to know when to brush stuff off.  :)

Chris Martin · Answer

For the most part, Section 8 maximums are based on HUD Fair Market Rent (FMR) calculations. Here is an example HUD FMR for my area. The algorithm on how they calculate their numbers is on this page. Click on this link to get the main FMR numbers by geography, by MSA or by county.

If you google HUD statistics by MSA you can also find some other good sources.

Individual voucher amounts depend on other variables like voucher holder's income and expenses, if utilities are included in rent, familial dynamics, etc.

David B. · Answer

Hey Brent , I own and manage quite a few section 8 Multiunits and SFH on the south side of Chicago.  Everything that Brooks stated is spot on.  But I will add that it also depends on the potential tenants voucher size ( 2 bdrms, 3 bdrms ect.).   The section 8 process can be a nonevent if your property is in good condition or you choose good tenants.  I have over ten section 8 tenants and all of my tenants are very tidy and respectful.  This may be an anomaly but big time screening helps create it.  Two of my 2 flat section 8 tenants rents are $928 and $1000.  They are both single men veterans with one bedroom vouchers living in two bedroom apartments.  This can be a very lucrative strategy for you.

Brooks Conkle · Answer

@Gil and others - I'll explain how it works in Alabama (I assume on a national level).

1. Section 8 decides what to pay for rent for a particular house based on the area.

2. Each potential tenant has a voucher that will show what amount Section 8 will pay for specific houses (i.e. a 3/2) for that tenant.

3. You are able to rent your house for up to what it's rated for.

4.  After the tenant is approved you find out how much of that rent is paid by Section 8 (70%, 90%, 100%).  This is based on their income.  It's not a bad thing if the tenant pays a larger portion.  It means that they have a steady job and will one day completely be out of the program.  If they lose that job, Section 8 will pick up the tab until they can get a new job.

Good luck all!

Dawn Anastasi · Answer

Some places allow the tenant to pay more, some do not.  For example I was renting out a place for $1100 per month and the Section 8 office determined that I should only get $960 per month and does not allow the tenant to pay anything out of pocket.  So I found a non-Section 8 tenant and rented it out for $1100 per month.  I'm not losing $140 a month due to the agency's policies.

Account Closed · Answer

Hey Brent,
With section 8 the goverment decides your rent due to the area and every year they come out and inspect the property and make a list of repairs you must do.  But section 8's can be a easy stream of income if you know the game and play it right, as the goverment checks don't bounce....well not yet at least :)
Brian wish you the best.

Karim Shah · Answer

@ David Barlow. Please can you explain how you use one bed vouchers for a two bed flat for the veterans. Are you providing them with a room and they share the kitchen and bathroom?

Tom King · Answer

simply awesome, you guys I mean.  Great answers and advice thank you thank you thank you

Tom King · Answer

@Brooks conkle .  Awesome points, very glad to have read your statement.   I find myself trying to wrap my head around the aspect of the vouchers here.   You state here "2. Each potential tenant has a voucher that will show what amount Section 8 will pay for specific houses (i.e. a 3/2) for that tenant."

I already understood that individualized vouchers stated bedroom eligibility but you are saying that they actually state, how much Sect8 will pay for the particular bedroom specification on the card, for that particular card holder?  
That would lead me to my next question,  how does Section 8 determine not only median rents of an area, on top of max rent on an individualized basis?    interesting.

Brent Bastian · Answer

Hey david ,where would i find funding ,what is the best place to get $$ for investment properties,I have god credit ,and just got a good job with decent pay.I want to start this procces before December.

Section 8 rentals help?

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