Section 8 pricing question

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Section 8 pricing question

Account Closed
Investor · Chicago, IL · Member since 2014 · 169 posts · 29 votes

Hello everyone,

I am wondering if someone can tentatively accept a section 8 applicant based on if the program agrees to the rent being advertised. In other words, if I am asking for $2300/month and a section 8 voucher holder applies, can I start the process and then turn them down if the program says I can only charge $2000/month? I am willing to rent to someone with a voucher but I do not want the government telling me I need to lower my rent in order to do so.


Thanks in advance for your insight,

Tim

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Scott M.
Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
5y

@Jonathan Klemm Your question directed at @John Warren was "What if the voucher doesn't cover but the tenant is more than willing to make up the difference? I would think you can not deny them in that case?"

Accepting a "side deal" to make up rent is against the rules of Sec. 8 and can get both the landlord and tenant kicked off of Sec 8. Regardless of the voucher amount, prior to the tenant moving in Sec 8 will tell the landlord the rent they will pay and the breakdown between Sec. 8 and the tenant.  If that is less then the rent you were seeking you are not allowed to ask the tenant to pay the difference.  Huge no no.  

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    Yes you can but you are not likely to know that info that early in the process.  At that point you will know what the voucher will pay up to.  So if you are renting for 2.3K and the voucher only goes to 2K you can turn them down as their voucher is not enough (just like if income wasn't enough for a market rate tenant).  

    After you fill out the Sec. 8 paperwork and submit to the worker and after a few weeks they will tell you what they will pay.  Just because a voucher is up to 2.3K doesn't mean they will get it.  They may only approve the tenant for 2K even if they have a voucher for 2.3K.  At that point you are free to accept the 2K, deny them or appeal the decision.  The later choice takes times and rarely bears fruit in our experience. 

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  • Account Closed
    OP
    Investor · Chicago, IL · Member since 2014 · 169 posts · 29 votes
    5y

    @Scott M.

    Thanks for the information. I really appreciate it. I just wanted to make sure that I could legally deny an applicant if the voucher won’t cover rent. Their voucher is actually for $2600.

    I’m not sure I’m even going to pursue this though because I did some research and found that the average voucher for my zip code is well below what I’m asking. I’m in a weird zip code because three of the surrounding ones are about $200 more than what I’m asking. Doesn’t seem fair to the applicant to go through the process and then get denied because the city decided it wouldn’t fulfill the full voucher.

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    If this home is in Chicago I would double check with your lawyer.  Don't take legal advice from a stranger who isn't a lawyer over the internet : ) 

    That said, I know of no place that you are obligated to accept any Sec 8 tenant.  But if a place like that exists Chicago would be near the top of the list : ) 

    In some regions and states you are obligated to consider them, meaning you can't deny them based on the fact they are Sec 8 but you can deny them for other reasons and the fact that their voucher would not cover rent is a generally accepted reason to deny.  Just be clear in your denial that you accept sec 8, they just don't have a voucher that would cover the rent.  

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Account Closed the short answer here is that you DO have to be willing to accept a voucher in Chicago as we cannot discriminate based on income. You DO NOT have to accept less rent than a market rate tenant can pay. I have a handful of voucher tenants in my portfolio, but the majority of my portfolio is market rate. The main reason for this is that the section 8 tenants who apply typically move so much slower than the market rate tenants that by the time I even see an application the place is already completely rented out to a market rate tenant. The process is long with the 45 day or so inspection of the unit, etc. 

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Account Closed - Seems like you have a couple of consistent answers above - You have to be willing to accept vouchers but if the voucher doesn't cover the entire rent then you can turn them down because the voucher won't cover the entire rent.

    Is there a reason you looking to try section 8 as opposed to just renting out to the market?

    @John Warren - What if the voucher doesn't cover but the tenant is more than willing to make up the difference?  I would think you can not deny them in that case?

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    @Jonathan Klemm Your question directed at @John Warren was "What if the voucher doesn't cover but the tenant is more than willing to make up the difference? I would think you can not deny them in that case?"

    Accepting a "side deal" to make up rent is against the rules of Sec. 8 and can get both the landlord and tenant kicked off of Sec 8. Regardless of the voucher amount, prior to the tenant moving in Sec 8 will tell the landlord the rent they will pay and the breakdown between Sec. 8 and the tenant.  If that is less then the rent you were seeking you are not allowed to ask the tenant to pay the difference.  Huge no no.  

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  • Sue Hough
    Developer · Chicago IL · Member since 2019 · 150 posts · 125 votes
    5y

    @Account Closed, you can not discriminate based on the fact a tenant has a Housing Voucher, that is highly illegal.  You can go to The CHA Housing Choice website and there is a PDF named CHA’s Rent Determination Standards which will give you a great guide to determining what amount CHA will allow based on the specifics of your property.

    As @Scott M. stated, consult with an attorney very carefully if you feel the tenant may not be able to cover the balance of the rent.  Good luck!

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    To be clear, I didn't suggest to consult with an attorney if the tenant can't cover the balance of rent.  I said it is 100% against Sec. 8 rules to ask or accept the tenant covering rent above and beyond what Sec. 8 says they should pay.  If you are renting a home for 2K and Sec. 8 says the max that this tenant will pay is 1.5K with Sec. 8 paying 1K and the tenant paying 500....thus leaving you 500 short form what you were seeking it is 100% against the rules to ask them to pay the difference.  You either accept the 1.5K rent, appeal the decision (rarely a winning choice) or you deny the tenant.  

    There is nothing wrong with denying a Sec. 8 tenant if they can't afford the rent you are seeking.  

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Scott M.:

    @Jonathan Klemm Your question directed at @John Warren was "What if the voucher doesn't cover but the tenant is more than willing to make up the difference? I would think you can not deny them in that case?"

    Accepting a "side deal" to make up rent is against the rules of Sec. 8 and can get both the landlord and tenant kicked off of Sec 8. Regardless of the voucher amount, prior to the tenant moving in Sec 8 will tell the landlord the rent they will pay and the breakdown between Sec. 8 and the tenant.  If that is less then the rent you were seeking you are not allowed to ask the tenant to pay the difference.  Huge no no.  

     You have to be careful with this, because many people on section 8 are getting unclaimed sources of income. They will try to offer this to you on the side, asking for agreements outside the lease. They often have the children's father living with them (off the lease) and paying them in cash for child support. I was shocked how many section 8 people openly discuss their fraud with a landlord, but I was even more shocked when the section 8 rep didn't care. 

    Section 8 recipients can pay the difference on rent, but it is up to the housing authority to approve the difference based on their declared income. 

    1Reply
  • Mark AinleyBusiness Member
    Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Account Closed if you are in Chicago(CHA) you can ask for the "Rent Burden Sheet" and that will give you an idea of how close the rent determination will be. Yes you can deny the rent determination if it is below the asking rent that was clearly marketed. You definitely cannot accept money on the side and can be kicked out of HUD programs if caught. Unlikely but not worth risk. Also collecting money on the side is unenforceable. You cant evict them and you cant tell section 8 on them!

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  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    5y

    @Tim Coppola Yes! You’re right on.

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  • Account Closed
    OP
    Investor · Chicago, IL · Member since 2014 · 169 posts · 29 votes
    5y

    @Mark Ainley @Joe Splitrock @Scott M. @Sue Hough @Jonathan Klemm @John Warren

    Thank you all for the replies. Some really good information here. I'm going to have to spend some time looking into this. It's kind of frustrating that the program doesn't make it a quicker process for both the landlord and tenants.

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  • Scott M.
    Real Estate Broker · Rochester Hills, MI · Member since 2009 · 2k+ posts · 2k+ votes
    5y

    haha, if you are looking for quick answers you are spot on, this is not the program.  For the most part.  Some offices are excellent, some are terrible but most are just slow. 

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    To your point - it is actually sad the government can't set up an efficient system so we real estate investors who want to help under-served areas (i.e, Chicago) could do it easier.  I see a HUGE long-term need for attainable/affordable housing and for some serious change we need to modify the section 8 process because it's not easy.

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