Philadelphia PHA (Section 8) Fair Market Rent Determination
I have no experience with the Philadelphia housing choice voucher (section 8) program. But I have done some research. I'm considering partnering with this program for a possible next investment and have come across this just released fair market rent determination guide:
Are these numbers guaranteed? If not, how can you figure out how much you can rent your unit for? I've heard that the PHA doesn't tell you until the end of the process, which can take quite a while. This is all done after you screen your prospective tenant. For example - I am looking at a property with 1 and 2 bedroom units in 19144 and trying to determine what I can rent them for through HCV.
If you have experience with the program here in Philly (Philadelphia) can you chime in? Please don't bother if you are in a different area as I'm aware things are done quite differently here.
@Max Flambert To answer your question the rents are not guaranteed. In like step 3 or 4 of the process, and yes after you find and screen the tenant. PHA completes a reasonable rent evaluation of the area and then negotiates a reasonable rent with the owner. What I usually do is, I complete a market rent analysis of the area and then I'm able to have a range of what the property could rent for. Also PHA takes into account your amenities when determining the rent for the property.
How it works is HUD will cut a big check to the applicable housing authority for Philadelphia. HUD will also generate, by county what FMV rents by unit type are along with utility allowances. The actual rent, if only using HUD funds, will be FMR - applicable UA.
The local H/A may kick in some more money, since they need to allow voucher holders to be competitive when applying to market-rate units. However, it's not going to be a number >>> market-rate rent.
@Max T. so one of the things I never fully understood with PHA rent determination is the role of what the tenant can afford. So whatever fair market value is -- no you are not at all guaranteed to get that. When they say the tenant can only afford x, that is what you are getting. Of course you can then say no tnx but you will be at least a month into the process by that time. It is negotiable to some degree.
Thanks @Sheryl Sitman for your insight and providing me with the PHA document that my screenshot came from.
We marketed our property for $1450 and we have a potential section 8 tenant who may move into our rental. We had to go through the rental offer approval process through PHA and we received our rental offer and it is $1205. We communicated with the employee at PHA and he stated the following: " $1205 would be the total rental offer, and was determined based on the comparable units in the immediate area". So, there is a $245 difference. Can we have this potential tenant pay the $245 difference?
I read somewhere that if a tenant wishes to rent a more expensive place, they can choose to pay a little extra out of pocket to make up the difference. This is called "going up to 40% of your income".
So the tenant would have to go through PHA to make this arrangement.
Can I get your thoughts on this? And is this possible? I read this information online but I would rather have a more accurate measure regarding this.