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Denver Chavez
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Benefits of section 8

Denver Chavez
Posted Jun 24 2022, 20:33

Hi BP community,

So my partner and I are currently renting a single family home for $200 under market rent. Our tenant gets assistance from the MHA. She is a great tenant, pays her half on time every month, and does a good job maintaining the property. Our dilemma is that we are capped on how much we can charge rent because she gets government assistance, so we’re leaving a lot of rent on the table. Is anyone familiar with the MHA and if there are any tax benefits or ways we can creatively offset the loss in rent?

Thanks!

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JD Martin
  • Rock Star Extraordinaire
  • Northeast, TN
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JD Martin
  • Rock Star Extraordinaire
  • Northeast, TN
ModeratorReplied Jun 24 2022, 20:38

I'm not familiar with Memphis Housing Authority but you should be sure you're actually capped. I know out here in East TN you get a voucher which covers $X amount, and if you find a place for more than that you have to cover the difference yourself, the caveat being that the total you pay in rent cannot exceed some percentage of your available income - i.e. they're not going to give you a voucher that you can then use to go live in a palace by paying the difference. 

This is one of the tradeoffs for participating in Section 8. You have to decide whether the government check is worth the less than market rents. I don't participate in Section 8; I'd rather rent to market and I don't want to deal with stupid stuff like a tear in a window screen or a chipped light switch outlet. 

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Replied Jun 27 2022, 09:17

Is your property professionally managed?
I know that with MHA you are capped at how much you can raise the rent per month.

How long has the tenant been in place?
I hate to say it but you may actually want to try to place a new tenant with more current rent.

I love MHA, I find for out of state investors it typically leads to them 1. getting higher than market rent (usually, the current market it is a bit hotter than usual) and 2. it provides an extra set of eyes (the occasional MHA inspection) which helps keep your PM on their toes and gives you extra unbiased feedback. I would advise working with a PM who is familiar with MHA protocols (you can also call them yourselves if you really want to go that route).

Hope this helps.

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