Section 8 Increasing Rents

6 Replies

Hello Everyone,

I wanted to ask the BP Community about the process to increase the rents on a unit who has a section 8 voucher. I saw a property and the tenant is getting $900 for a 4 bed 2 bath unit. After doing some research that type of property should get at least $1,100 - $1,300 in the Central Falls or Pawtucket area. Wanted to know what everyone's experience with that is.

For my section 8er in the pawtucket area they had a guideline for applicable rents based on beedrooms. I believe they went up this past august or maybe last august i dont remember when i went but she pretty much told me that written notice would have to be given to both tenant and pawtucket housing authority and also i would need to explain why i wanted to raise the rent to the housing authority not the tenant. 

My tenant lives in a 2 bed 1 bath and i believe i could charge up to 850 based on my area when i last checked so a 4 bed 2 bath should be much much more

@Raymond Hill You can only increase it when the lease renews, and you may have to give X days notice to do so, and notify housing as well. Read your HAP contract (and lease with the tenants too of course) closely.

They do have "fair market rent" limits for # of bedrooms and location. You can ask for more than that, but the tenant will have to pay the difference, and housing won't allow them to pay more than a certain percentage of their income (It might be 33% I forget), so if their part of the base rent (covered by section 8) and any overage exceeds that allowed percentage for the family's total housing payment, I believe they won't get section 8 any more.

For that reason, most landlords either try to max out at the FMR or charge market rent and just don't take section 8.

As far as determining the FMR, you can ask your contact at housing or try to find it online. I don't have a saved source though. I personally got sick of dealing with section 8 a while ago. I have no problem with the tenants - IF you screen them properly like any potential tenant - or the inspections, but the bureaucratic red tape is just a killer.

I can't tell you how many times section 8 withheld their part of the rent because the tenant didn't give them some paperwork they'd requested. So, housing asked the tenant for some paperwork (usually related to a change in income or residents), the tenant didn't give it to them, and as a result my rent doesn't come in. I've had tax and mortgage checks bounce because of that - never again.

@Anthony Thompson @Sherwin Vargas Thanks guys very much for you input. 

I did some more digging and Anthony is right about the X number of days. I believe it is about 60 days notice. In addition, the FMR chart showed rents for a 4 bed to be about $1,500 which I don't think is feasible for any tenant especially in the Central Falls area not sure if Housing is picking up the rest of that or not. But by the looks of things I am unsure if I want to get too involved with that and may fair better to possible have them vacate the unit and find someone willing to rent for 1,100-1,200

I try to avoid it for the reason anthony stated. I only have 6 units so alot easier to avoid. The one person ive had has been living in that unit for 5+ years and havnt given me problems in the time ive owned it (2 years). 

I was going to raise her rent but she wants to move to second floor from the first. Well see how difficult they make that for me! 

@Raymond Hill the challenge you may have is, certain areas just have a lot of section 8 people looking, in fact that may be the majority of the people looking for apartments in that area. Woonsocket and Central Falls come to mind, there may be others. So you may be signing on for longer vacancies if you exclude section 8.

It sounds like the section 8 FMR covers what you want to ask for rent anyway - remember that the tenant will only be paying a small portion of the overall rent amount so it's not a question of what's feasible for the tenant, it's more a question of what is market rent vs. what section 8 will pay. Section 8 deals with the tenant and literally tells the tenant what they can afford and what their portion will be - section 8 covers the rest.

There are pros and cons to the program. But generally if someone's a newer investor I would advise them not to buy a building with all section 8, or buy in an area where they're going to have to take section 8 to fill the units. It's much better to have a building with a few units, and "try out" section 8 on one unit to see if you like the program, but where your other units aren't section 8 and you don't necessarily "have to" take section 8 to fill that unit next time around.

And remember, screen, screen, screen. You should always screen. Thoroughly. But especially for section 8.

It is typically not difficult to increase the rent so long as it falls within the threshold guidelines established by that respective housing authority. Some HA's have less red tape than others as far as efficiency.  Having a direct line to the tenant's case worker makes the process much easier.