Section 8 Tenant Screening Question

[Tiara Jackson]

We just bought a property in Baltimore and are getting it ready to list for rent. We have our screening requirements outlined that we typically use, which include that the tenant must make 3x the rent and put down a 1-month deposit prior to move-in. This will be our first time accepting vouchers. My question is when we're reviewing an application from a Section 8 Voucher holder, would we verify that they make 3x the portion of the rent they're paying (Baltimore City pays 70%, Section 8 voucher holders pay 30%).  For example, if rent is $1500 per month they would need to make at least 1350 per month and put down a $1500 deposit since Baltimore City doesn't cover deposits? Just trying to gut-check if I'm thinking about this the right way. Also in response to this thread please share any words of wisdom or advice you have regarding accepting Section 8 vouchers. 

Thank you! 

[Erin Dreher]

For screening your tenants you should probably reach out to the local housing office and see what you can require legally. Since its a federally funded program I think there are state laws on what you can require from a tenant. 

In my experience - owners either like Section 8 or they hate Section 8. There are pro's and cons with accepting them. We do work with tenants that use the vouchers and they are not easy to get set up and going in the beginning but after you get them set up they come like clockwork. There is usually a huge lag in time from when your tenant moves in and the housing office processing the paperwork and cutting you a check (2 months). Communication with the caseworkers and housing organization is rather difficult also.

[Tiara Jackson]

Thank you for the reply Erin. I have heard similar feedback. I have been attending the monthly Section 8 Landlord briefings which has been helpful in gathering information and connecting with the people over the Section 8 Administration. I welcome any additional feedback you have on the topic. Thank you! 


Quote from @Erin Dreher:

For screening your tenants you should probably reach out to the local housing office and see what you can require legally. Since its a federally funded program I think there are state laws on what you can require from a tenant. 

In my experience - owners either like Section 8 or they hate Section 8. There are pro's and cons with accepting them. We do work with tenants that use the vouchers and they are not easy to get set up and going in the beginning but after you get them set up they come like clockwork. There is usually a huge lag in time from when your tenant moves in and the housing office processing the paperwork and cutting you a check (2 months). Communication with the caseworkers and housing organization is rather difficult also.

[Erin Dreher]

Good for you! The more you become familiar you become with their policies the better off you will be. It never hurts to make some contacts there also. Each housing organization we work with has different guidelines they operate by and they have very specific rules so that is why I suggested reaching out to them directly to see what they can suggest.

Housing policies may differ between a homeowner with one to three properties and a property management company. They do here in Arkansas. 

[Joe Norman]

Keep in mind that in Maryland "Source of Income" is a protected class, so you can't advertise that you are choosing to "accept vouchers" - that is akin to saying you are choosing to "accept Catholics" or "accept white people". Your marketing and screening should not encourage or discourage the use of vouchers.

That said, you absolutely can screen based on Amount of Income. In the situation you described in your OP ($1,500/month rent, 70/30 split, requiring 3x monthly rent in income) then yes, you would need to confirm that the tenant has a monthly income of at least $1,350.

Good luck!

[Drew Sygit]

@Tiara Jackson

Section 8 can be a great government program to work with if you do it right!

In the past, the Department of HUD targeted S8 rents to be at the lower end of a rental market. In 2022, rising rental rates have forced HUD to significantly increase maximum rents as too many S8 voucher holders can't find rental homes at previous rates.

Positives

1. Rent comes directly to landlord, every month!
2. Landlord can require tenants to be responsible for separately metered utilities, so can avoid waste.
3. Landlord can get annual small increases in rent.

Negatives

Most of us don’t treat something we get for free the same way we treat something we’ve worked hard to obtain.

1. S8 tenants, in our experience, tend to cause more property damage than nonS8 tenants.
   - Make sure you get a security deposit and perhaps do a surprise inspection of their current home.
2. S8 requires an inspection (mostly health & safety) before approving a lease and then annually thereafter.
   - Not something most landlords taking care of their properties have to worry about.
3. There are limits to clauses they allow in your lease. This isn’t really a big deal though.
4. Rent payments can be abated over unresolved maintenance issues and tenants failing to abide by S8 requirements.
5. Many S8 housing commissions will not hold tenants accountable for damages they cause (tenant is supposed to repair or lose their voucher). Instead S8 requires landlords to repair damages to keep S8 payments. Landlord’s only option to collect funds for damages is to take tenants to court.
6. More and more tenants are only having a portion of their rent covered by S8, so landlords need to still screen tenants for portion they must pay.
7. Landlord cannot charge S8 tenants a portion of shared utilities – which can lead to the infamous tales of tenant retaliation against landlord by blasting heat on high with open windows during winter.
8. S8 caseworker response times can be very slow, as they are usually overworked & underpaid.

Again, overall it’s a pretty good deal for a decent landlord that does some decent screening.

[Tiara Jackson]

Thanks Joe, great information as always! I actually was unaware that we could not advertise "accepting vouchers". I've seen it on so many post. Thank you for highlighting that as we do want to ensure we are conducting business ethically and adhering to regulations. I supposed the best way to convey that we are indeed accepting them (if we decide to go that route) would he to advertise on the affordable housing website.


Quote from @Joe Norman:

Keep in mind that in Maryland "Source of Income" is a protected class, so you can't advertise that you are choosing to "accept vouchers" - that is akin to saying you are choosing to "accept Catholics" or "accept white people". Your marketing and screening should not encourage or discourage the use of vouchers.

That said, you absolutely can screen based on Amount of Income. In the situation you described in your OP ($1,500/month rent, 70/30 split, requiring 3x monthly rent in income) then yes, you would need to confirm that the tenant has a monthly income of at least $1,350.

Good luck!

[Ozzy Sirimsi]

I normally add the voucher their income and decide accordingly, not the portion of their voucher. 

Like if they need to cover $300, making $900 is not enough.