Section 8 Coincidence or Not?

16 Replies

I recently bought a townhome in a suburb of Minneapolis - 2Bed/2Bath. The going rate in the marketplace is about $1,600/month for rent. Once I listed this property for rent I received 50+ inquiries. To reduce the volume of inquiries before my first open house I raised the monthly rent to $1,700/month. Traffic did not slow down!; however, I started to receive inquiries about whether I would accept Section 8. 

The Section 8 requests did not come until I moved the rent higher to $1,700/month and more expensive! Is this a coincidence or is there something I don't know? 

@Joel Geisel maybe section 8 pays more than the open market will bear in the area. So, possibly you are getting a greater number of sec 8 inquiries relative to other inquiries after you raised it. It’s possible! A couple of our properties are in areas where Sec 8 pays a premium rent.

Originally posted by @Joel Geisel :

I recently bought a townhome in a suburb of Minneapolis - 2Bed/2Bath. The going rate in the marketplace is about $1,600/month for rent. Once I listed this property for rent I received 50+ inquiries. To reduce the volume of inquiries before my first open house I raised the monthly rent to $1,700/month. Traffic did not slow down!; however, I started to receive inquiries about whether I would accept Section 8. 

The Section 8 requests did not come until I moved the rent higher to $1,700/month and more expensive! Is this a coincidence or is there something I don't know? 

It's because Section 8 folks know that even if the total rent is higher, their portion that they need to pay will never exceed a certain amount. Also, I would check the payment standards in your area and also make sure $1,700 accurately reflects market rent for your unit.  Section 8 will generally pay the lesser of the payment standards and what the market rent is.

Possibly just a coincidence. Also keep in mind an inquiry is not a qualified applicant. I pre-screen  before individual appointments to show. For open house, pre-screening is helpful but not essential. Your section 8 tenants will take longer to get into the property since you need to get the section 8 inspection.  

Section 8 pays up to a certain amount, so it could be that $1700 just hit the sweet spot. Your listing should state whether you take Section 8 or not, so this shouldn't even be a question you get or it should be easy to answer. 

My guess is the reason you are getting so many inquiries is because your listing doesn't have any prescreening statements in it. You are wasting your time. You should be listing things like "No section 8" or "Applicants must have monthly income that is 2.5X rent" or "No dogs" or "No felons" or "We require landlord references and run credit reports". It is your business, so you pick the standards. The point is you need to weed out people who don't qualify by listing qualifying standards upfront.

Also be aware that moving from $1600 to $1700 may (or may not) reduce the number of qualified prospects. Sometimes the people willing to pay more for a property are less qualified. High risk applicants pay higher rent, just like they pay higher interest on credit cards or pay more for used cars.

@Joe Splitrock

Joe, I'd be careful about advising people to put "no section 8" as you can't do that everywhere.   Minneapolis has an ordinance about disqualifying section 8 and you could be fined/charged.

Originally posted by @Bruce Runn :

@Joe Splitrock

Joe, I'd be careful about advising people to put "no section 8" as you can't do that everywhere.   Minneapolis has an ordinance about disqualifying section 8 and you could be fined/charged.

  I was thinking the same thing. I think initial Section 8 requires a 1 year lease so you can state a different lease length and they will not be able to meet Section 8 requirements for example.

Roy Nash

 

@Roy Nash

That doesn't cut it.  You'd have to apply based on a hardship and have to prove it.   Just advising there are a lot of places you just can't say that and experts should be careful with advice.  I can speak to that rent would be substantially in a MPLS suburb would be way above the section 8 limits and in all likelyhood they could qualify for it.  

I've been telling people for years that when you advertise for Section 8 tenants it is a SELLERS market. You will get tons of inquiries.......I'm glad some of y'all are starting to listen.

No it's not a coincidence.

Originally posted by @Bruce Runn :

@Roy Nash

That doesn't cut it.  You'd have to apply based on a hardship and have to prove it.   Just advising there are a lot of places you just can't say that and experts should be careful with advice.  I can speak to that rent would be substantially in a MPLS suburb would be way above the section 8 limits and in all likelyhood they could qualify for it.  

 I was merely giving examples of how you prescreen in your advertising. Some places may not allow you to discriminate against felons, source of income or someone may not like any of the other examples I gave. They are just examples, not a comprehensive list or guide. Always follow local, state and federal rules for advertising and tenant screening. In most of the country you can advertise "no section 8". The fact that people are asking "do you accept section 8" lead to me to believe the location does not require you to take Section 8. Of course if you are required to consider Section 8 applicants in your locality, the answer is yes. 

New landlords spend far too much time collecting inquires from people who are not qualified. Using prescreening in your listing saves everyone time.

@Joel Geisel I am not surprised.  While I do not do Section 8 rentals, I can tell you that the more over priced the rental is, the worst the tenant inquires are.  I can always tell when I am over priced by the inquires, if I am not getting any decent applications (bad credit, rental assistance, no rental history, etc).

Additionally, just cause you have a ton of inquires, its the amount of applications that matter.  From my experience, less than 25% of initial contact convert to showings, and of those showings, less than 25% (likely around 10%) turn into applications.  

Thank you for all of your replies. 


To follow up, I did a lot of pre-screening (over the phone and email) prior to doing an open house last Saturday. I ended up having 5 applicants, all of which are reasonable and I would rent to any of the 5. My primary reason for increasing the rent on my listing was to fend off as many people as possible to save me time. Most everyone requested to have a personal showing which would require a full time job for me. I learned that increasing the rent $$$ on my listing does not reduce the number of inquiries. My next round I have experience of which credentials I need to show in the listing which will help reduce traffic and narrow in on the best applicants for the property. 

Originally posted by @Joel Geisel :

Thank you for all of your replies. 

To follow up, I did a lot of pre-screening (over the phone and email) prior to doing an open house last Saturday. I ended up having 5 applicants, all of which are reasonable and I would rent to any of the 5. My primary reason for increasing the rent on my listing was to fend off as many people as possible to save me time. Most everyone requested to have a personal showing which would require a full time job for me. I learned that increasing the rent $$$ on my listing does not reduce the number of inquiries. My next round I have experience of which credentials I need to show in the listing which will help reduce traffic and narrow in on the best applicants for the property. 

 Still too much time invested IMO in screening

Before they get a walk through or speak to me I simply text a link to cozy background check

Text is generated from Google phone number which automatically goes to voicemail 

They can choose if they pay Cozy $39.

If they pass that is the first time I talk to them.    I only need one person not 20