Section 8 property owner - changed PM, no payments from CHA for 4 months

Brian Berry · 2023-02-17T09:01:05-08:00

I am looking for suggestions on next steps. I have SFH in Chicago that is rented to a Section 8 tenant. Chicago Housing Authority (CHA) has always been very reliable in making payments on the first of the month. In October I switched property management companies. Then in November the PM I signed up with switched to another company, and I opted to move with them since they are the person that I interviewed and selected to work with. In November I didn't receive a rental payment, so I called the PM and was told that because of the change of management companies it takes a month or two for CHA to get the new payment account set up. I spoke with CHA and they corroborated that. CHA did state that when they get the accounting straightened out it will be for all the time I was not paid (which I would expect). In December there was still no payment. In January, again, no payment. I talked with both the PM and CHA in January and they both stated that the account still hasn't been transferred and to wait some more. And now here we are in the middle of February and I still have not received any payments. On Tuesday I called CHA, and this time got a very rude customer service agent who told me to email for support. So I sent them an email, to which I received an automated reply saying they would respond within two business days. So far I have not heard anything. At this point I am missing over $7k in rental payments and I'm ready to pull my hair out. Suggestions?Thanks!

Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

3y

Aloha,

As I read your post, it sounds like you changed PM's twice in two months. Did you make crystal clear the full chain of events, including dates of changes, names of each PM co, and preferably to a supervisor in the office after a reasonable initial waiting period? If they managed to make the change to the first company before you contacted them about the second, that would make it difficult for them to track for a while. Be patient.

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Mark AinleyBusiness Member

Property Manager · Roselle, IL (Chicago Suburb) · Member since 2013 · 2k+ posts · 1k+ votes

3y

@Brian Berry I will DM you a video we have of the change of management process but it typically takes 45-60 days from the day the paperwork is submitted correctly. My guess is they’re was weeks that pass before this even got submitted but in the end you will get paid 100% so I wouldn’t worry about that. ask your PM “what day was the change of management paperwork submitted and can I get a copy”.

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Arthur R. van der VantBusiness Member

Property Manager · Chicago, IL · Member since 2023 · 23 posts · 22 votes

3y

@Brian Berry I had a similar saturation with the CHA about 4 years ago when taking over 3 apartment buildings with many Section 8 tenants. In my case it tool 3 months, but once the CHA processed the paperwork, all money was sent. So, be patient and continue to follow up.

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

3y

Don't be patient as we've had issues where someone forgot to file proper paperwork and so, we were not eligible to receive all the missing funds:(

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Brian BerryPro Member

OP

Rental Property Investor · Seattle · Member since 2020 · 37 posts · 26 votes

3y

Update:

At long last, I received full payment on April 21. So it was over 6 1/2 months between payments. This was very frustrating and annoying, but the good news is that I survived it.

For me, this entire experience has reinforced the importance of buying less than you can afford, and having greater reserves than you expect to need.

If this helps, here is a snapshot of this property.

10/6/2021 - Closed on home. The property was a near-turn key. I spent about 3 days fixing things myself (this is an out of state property, but I decided to go out for closing, and fix some stuff myself). New property manager walked through on 10/7. Made a list of what work needed to be completed (replace front door at my request - I loved the original door, but many hours of attempting to make it work made me realize it just needed to be replaced...sad to see it go, refinish floor in 1 bedroom, move stove, paint).

10/29/2021 - The guy in charge of my home left the company.

10/29/2021 - 1/11/2022 - Many emails exchanged regarding progress. Poor response

1/11/2022 - Email from Property Management company stating that the home is ready for marketing. They recommended renting it at $1500/month. Their photos if the home were crap. They had really ugly watermarks on the photos. Yuck. I pushed back on the rent (nothing less than $1800/month, looking for $1850).

2/23/2022 - Identified Section 8 tenant, which was my hope with this property. So begins a new journey.

March 2022 - Inspections, fixes, and reinspection. All good (whew!)

4/19/2022 - Rental amount ($1850 vs recommended $1500 from PM) approved by Chicago Housing Authority. Note: The tenant is renewing their lease, so if I went with the original suggestion, I would be out $8,400!)

4/19/2022 - Tenant takes possession. So just over 6 months from closing until tenant moves in. (note: 6 months of holding costs: mortgage, utilities, etc). Received first rental payment

5/3/2022 - Discovered work that the property management company had charged for, and that I had paid for was NOT completed.

5/26/2022 - HUGE water bill. Over $1,000 for 2 months. Turned out toilets in both bathrooms were essentially running non-stop, plus a couple of other minor issues. The usage was 101,000 gallons for the 2 month billing cycle, of which the home was only occupied for 10 days.

May - August 2022 - Many issues with the PM. Notified (per contract requirements) of intent to sever relationship.

9/23/2022 - Signed agreement with new PM

10/01/2022 - Final direct payment from CHA to me

10/23/2022 - New roof on garage by new PM. Super happy!

10/31/2022 - New PM splits off. All hell breaks loose.

11/1/2022 - 4/16/2023 - Lots of frustration, many emails, no solutions.

4/17/2023 - Payment confirmation from CHA

4/21/2023 - Received payment for all missed months.

TLDR: From date of purchase until first payment - 6 months (no income). Received 6 months payment. No payments for another 6 months (all of the missing 6 months were caught up in the end).

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John Warren

Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes

3y

@Brian Berry thanks for sharing all of this. It is great to hear the other side of things. This really is a business, and too many people think buying an out of state single family will end up being totally mailbox money. You have put in the work to find your team to make things successful.

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Patrick Idowu

Member since 2022 · 4 posts · 5 votes

3y

Quote from @Brian Berry: