All Forum Posts by: Bradley Bogdan

Christina R. I would love to read that white paper, since Mark Owens has kindly given the thumbs up. Obviously there is a vested interest in the whole issue by the writers, so it is to be taken with a grain of salt, but I'm guessing they very succinctly explain their views of the pros, cons and how the system functions in Baltimore.

@Heather W.

 Not super familiar with the MTW projects, but my understanding is that only a portion of an area's assistance is part of the MTW program and that portion isn't scored under the usual Section 8 performance measures. I'm guessing that the extra flexibility with rents under that program would probably remain the same, whereas the regular Section 8 vouchers not covered by MTW issued in Atlanta would be under the new rules, if enacted. Like I said though, that's just my guess. 

Currently, HUD has only helped PHAs with calculating FMRs over the entire area of their jurisdiction. Its a clunky, complex system that shoots to give you the 40% percentile rent+utilities amount over a 3 year rolling period. Its very thorough, but like most systems, works best for the middle of the range of PHA sizes and extremes in rental variation, as the system doesn't work well in places where there is very limited data (many rural PHAs), markets with rapidly rising/falling rental prices (SF for example), or places that have complex neighborhood divisions and wide range of rental cost within their jurisdiction (generally big cities).

Up to now, HUD has encouraged PHAs to adjust the raw FMR amounts to be more specific and encourage low income recipients to mix into the area more uniformly. That can mean setting FMRs by neighborhood to reflect rental prices or encourage a better mix of tenants across the area (by perhaps offering higher FMRs in an area where there are few voucher holders renting, even if rent prices wouldn't necessarily indicate those FMRs). Currently, they have a fairly narrow band of how far they can adjust the FMR by neighborhood to encourage mixing, this proposed change would really widen that band. Obviously not all PHAs do this for their cities, as its a lot of work and isn't always necessary to achieve the goals of the program, but for instance, Dallas (and I believe Cook County, IL) is currently trying it out. Perhaps someone renting Section 8 in that area could comment.

In general, when PHAs have lowered FMR rates or changed program rules, they tend to grandfather in current rentals or shift any additional costs to the tenant. This is not always the case (as I'm sure the folks from Raleigh will pop in to remind us), but by and large, they do try not to seriously offend or drive away landlords.

If passed, it would be mandatory for large cities to adopt and possible for cities that don't quite meet all the criteria for size or concentration of voucher holders in certain neighborhoods. If you're in an area with substantially less than 100 census tracts within the voucher area, you probably won't see any changes or see this implemented. To give an example of size, Buffalo NY has roughly 65 census tracts (my rough count off the census tract map) for ~254,000 people and is the 69th most populous city in the U.S. I'm guessing that would make is solidly too small to be covered under this proposed rule. That means all but the biggest 30-40 cities or so are probably too small. 

This rule would probably only be negative in the sense that it would reduce the "premium" that exists in some urban zips for Section 8 rents. In theory, there aren't supposed to be premiums in the first place, so we as investors (my family included) have definitely gotten more than the program intended if you're able to charge above market rates for Seciton 8 tenants. In theory, they are hoping to reduce the Section 8 stock in tougher neighborhoods and raise the number of rentals willing to accept Section 8 rates in better neighborhoods by a roughly even amount. Will it work? I guess we'll have to see if it passes.

Originally posted by @Anil Villamkandathil:

Thank you every one the valuable information. You guys rock. 

Here are the events that happened in regards to this eviction and repair.

I talked to my lawyer and he advised me to repair the AC. So I had the AC fixed.

I had the hearing today and we settled the eviction as follows

• Tenant settled with the Section 8 about the fraud case and hence section 8 would pay me in retrospect.
• Tenant would be moving out at the end of the month.
• I have sent emails to the section 8. I hoping to hear back tomorrow.

I will try to write a blog on the whole experience of purchasing this property and inheriting the section 8 and current challenges I am going through.

Thank you again.

 Sounds like things ended up as well as they could. Glad that it looks like you'll be done with the headache soon!

There are no special additional measures to consider when selling a property with a Section 8 tenant over a regular tenant. A couple things to consider when selling an occupied property are:

-Most places/times, if there is a tenant in place with a lease, the full lease term must be honored by the purchaser, unless there is mutually agreed upon cancellation of the lease or there is an early exit clause of some sort in the lease. That can obviously turn off someone looking to by a residence if the lease term extends long into the future. 

-If you only have a rental agreement (month to month), the agreement remains in place until you or the tenant give appropriate notice to terminate the agreement based on your local laws. That means if you have a close date, you can give notice (provided its far enough in advance) for the tenancy to end when the sale closes and allow your purchaser to move in. You can also end the tenancy ASAP to attempt to make the property more attractive to potential owner occupants. 

I just googled their site. They have a neighborhood by neighborhood approach to establishing fair market rents (FMRs). They are located here: http://thehacc.org/wp-content/uploads/2012/10/Paym...

Those are the 2013 numbers, which are now out of date, but should give you a ballpark of what they are today. The easiest way to get a current list of FMRs is probably just dropping by the office. If the FMRs look like they work for your properties, less 10% to account for utility allowances to the tenant, just search the site for the walkthroughs on how to attract Section 8 tenants, or feel free to PM.

Hope this helps!

Originally posted by @Kevin Harrison:

Check with a Lawyer but I assume a simple * and a foot note that exempts voucher holders from this criteria would be sufficient.

 That's exactly how I've seen it done, just an added line or footnote indicating that folks with a voucher are exempt as the voucher ensures their portion of rent meets the criteria. 

As for the criminal stuff, that's always sticky to word unless you're rejecting anyone with any charges ever. 

A few thoughts, as my day job is working with folks on a similar voucher program:

-Credit scores aren't very descriptive, credit reports can be. That said, my favorite landlords are the ones that have a conversation about why someone may have an ugly report. Is it because they walked away from debt because they're a deadbeat (and will likely do so with the rent someday) or is there something like a divorce, injury/sickness or job loss that wrecked their credit. I work with plenty of folks that fall into both categories. 

-ALWAYS SCREEN FOR EVICTIONS. I can count on one hand the number of times I'd personally rent to any of my clients that have a previous eviction on their record. If things have gone south badly enough to have someone file at some point in the past, I'd say that's a 95% chance they'll be a huge pain. Its almost always an indication that they don't have a good skill set for maintaining stable housing. The exceptions I've seen are almost exclusively elderly folks that were evicted after their trigger happy landlord didn't realize they were in the hospital, and instead of filing for abandonment, filed for eviction. Like I said, few and far between (but it does happen). 

-Always meet in person. Many folks with vouchers will have had rough lives or disabilities that prevent them from being social in the ways we might expect from peers. That IS NOT an indication that they'll be bad tenants. What is an indication is the details they share when you're conversing. Do they talk about the fact they like to use their webber grill indoors? Do they talk about the fact that they've withheld rent from landlords? Do they talk about the fact they want to do motorcycle maintenance in the living room? (all things I've heard my clients say in walkthroughs). THOSE are indications that they'll probably be tough to deal with that won't come out on a credit report or application. Now, just because they ask about things that you don't allow in your unit (grilling outside, smoking, etc.) doesn't mean they'll be a pain, use your judgement.

-Don't mandate 3x income for voucher holders. It is one of the silliest ideas I know, and its illegal in some areas (usually covered in an "income discrimination" statute that includes vouchers). The entire point of the voucher is that folks with them don't make enough money to afford rent on their own. The amount of assistance the voucher provides ensures that they will never pay more than ~1/3 of their income towards rent and utilities, even if their income changes. The math is a bit heavy to get into here, but a person who meets a 3x rule when you include the subsidy of the voucher is almost always close to being over income for a voucher. You're cutting out the bottom 90% of folks, which include many excellent tenants. One possible exception is a person with less than $150 of income per month. I've had fine tenants that live meager lives on $0-$150 a month, but life is definitely hard and not glamorous. Make sure someone in that situation has good outside supports (such as a social worker, strong family support, etc) to ensure small bumps in the road don't derail everything. The PHA will actually send the tenants a check every month, if their income is low enough, for them to pay their non-included utilities. People can definitely make it work, but be extra careful to pick out the ones that can. 

-Criminal History. Definitely get one, but much like the credit report, be prepared to take things with a grain of salt. MANY poor folks get tagged with a lot of crimes simply because they're poor and in the wrong places. Now, the felon with multiple armed robberies is not one of those people. The guy who has a drug possession charge from a few years back that he pled no contest to because he couldn't afford bail and needed to get out of jail to get back to his minimum wage job to support his kids, he has a good chance of being fine. 

Bottom line is don't penalize folks with vouchers for being poor in your screening process. That happens a ton already. Otherwise, screen as you would for any other tenant: thoroughly!

Good Luck!

Originally posted by @Missy H.:

Anil, do you have access to the apartment?  If so, take pictures as soon as you can, before she moves out.  You may need it for your next court date. 

If you don't have access, get the AC fixed (you will have to do it sooner or later) and go inside with the repairman and THEN take pictures.

If the court date was May 31st and the judge postponed it to next week, what is the status now?  Did he/she tell you to file another eviction?  The original should still stand if it was a postponement.  Why would you have to file a second eviction?  Section 8 or not, the process is the same. 

 Obviously the process varies widely state to state, and I have no experience with Florida, but it seems that you should be able to continue with the original eviction, as proceedings were just postponed. 

As for whether she lied in court, it is definitely possible to have a voucher revoked, but still have a hearing about the revocation with the PHA after the end date. If a voucher holder plays out all their hearings/appeals, it can drag on for 2-3 months past the end of the voucher. If they end up winning (not that that ever happens), the PHA covers what they would have paid for the interim period as if the voucher was never revoked.

Now, it is my wholly non-legally trained understanding that in the meantime, the tenant is still responsible for 100% of the rent (as they signed the lease and have lost their assistance). The judge SHOULD be more sympathetic to you as she is on the hook for unpaid rent, end of story. That said, he probably doesn't have a great understanding of Section 8 appeal workings and thus probably thinks there a decent chance she could win and the situation is resolved for everyone without an eviction. 

As for the AC, do what you legally have to and nothing more. No sense in giving her ammo for the eviction judge, be that next week or next month. 

Saw this article recently as well. Thanks for posting @Heather W.! Its an excellent read.