Finding affordable living accommodations is a sticking point for landlords and tenants alike. If renters can't pay landlords don't make money, if rents are too low, landlords can't upkeep properties.
The solution, at least from the US government's point of view, is to subsidize renters to keep the markets stable while uplifting the disadvantaged. The program designed (and later refined) to accomplish this is Section 8 (of the 1937 US Housing Act).
Offering one or more properties to people receiving Section 8 benefits can be a great way to help a community while staying fiscally stable.
However, like any government program, there's a series of rules and regulations to be aware of first.
Section 8 for Landlords
One of the main reasons to engage with the Section 8 program is the reliable income stream. Within the rules for housing, tenants agree to at least a one-year lease.
Though moving is allowed within the Section 8 program, it requires dispensing or transferring leases before doing so. Renters are also required to pay 28.5% percent of their income in rent at a minimum.
If you've ever looked at an ROI calculator for properties, you'll know this is the number you want to see in regards to rent costs. However, vouchers cover the difference between this number and whatever rent is valuated to.
Understanding Voucher Types
There are four types of vouchers used in the program. Two apply on an individual basis and two are project-based.
If a landlord rents individual properties, only the Tenant-Based Housing Choice Voucher (HCV) applies. These vouchers apply to the individual or family unit and move with them, allowing them to chose housing that fits their needs.
Both Project-Based Vouchers (PBV) and Project-Based Rental Assistance apply to a property. Here, the location receives a subsidy or a voucher applies to units within a larger housing area.
For most landlords, the PBV is the most advantageous program, but it comes with additional stipulations.
Obligations
For both the HCV and PBV, a residence needs to meet certain requirements that fulfill Section 8 rules aimed at providing clean, safe, and affordable options to those eligible.
An inspection of each unit used is required. A PHA or public housing agency handles the inspection. Since PHAs are local organizations, the administration of vouchers has some wiggle room.
With a PBV, the PHA contracts a housing unit or project to allow a minimum of 20% for voucher eligible families and individuals. These contracts stretch up to 20 years before renewal, so they represent a solid long-term plan for a landlord or developer.
Once under a contract with a PHA, supplemental payments sourced from the Section 8 voucher amount will be deposited, ensuring a steady and regular payment schedule.
Eligibility
One of the key Section 8 eligibility requirements centers on rental history. Approval is only for those with solid rental histories, providing that much more peace of mind that rents will be paid.
Effective Management
There are a few hoops to clear before a landlord is eligible to rent to Section 8 applicants, but the benefits are worth it.
For the most part, helping low-income families and disadvantaged renters helps everyone. In practical matters, renting is still renting and can take a lot of work for those who haven't done it much. Hiring an experienced property management firm smooths out the process.
