Have you ever considered joining the almost three million US landlords renting out to section 8 tenants? Section 8 tenants use housing assistance vouchers to pay for a part of their rent. A landlord may sound like they're losing out initially, but renting out to section 8 tenants can have significant financial benefits.
To qualify as a Section 8 landlord, your local public housing authority (PHA) has to find that you charge reasonable rent. Read the quick guide below if you want to learn how this process works and benefits you.
The Department of Housing and Urban Development's Numbers
At the beginning of every year, the Department of Housing and Urban Development (HUD) calculates the "fair market value" rent price for over 2,500 counties across America. They do this by surveying the rental cost for most of the standard rental units in each county (leaving out the outliers like brand-new units and obscenely large or expensive rentals).
The fair market value of a given area is the 40th percentile cost of rent (in some areas, it's the 50th percentile). This means 40% of rental units will cost less, while 60% will cost more monthly.
If you want to qualify as a Section 8 landlord, setting your rent according to the published fair market value is a good start.
The PHA's Consideration
Next, the local PHA will take HUD's fair market values and develop a payment standard for their area. This is usually within 10% of the fair market value figure. The payment standard is the maximum amount a local PHA is willing to pay per number of bedrooms, but this isn't always the maximum a landlord may charge.
According to Federal housing laws, Section 8 tenants must pay a portion of the rent. Though they have a few special tenant rights, consistent failure to pay may still result in eviction. Ultimately, a reasonable Section 8 rent amount will be slightly higher than the area's PHA payment standard.
How Section 8 Vouchers Work to Benefit You
Becoming a Section 8 landlord has some unique benefits. Firstly, Section 8 tenants have to fit strict criteria before they can qualify for housing assistance. The effect is that the program does a lot of your tenant screening for you.
Section 8 takes care of a few of your landlord stressors as well. You don't have long vacancy periods, and you're guaranteed at least most of your monthly rental, no matter what happens to your tenants. You don't even have to worry about picking the right rental price once you've qualified.
In the current economy, more people are turning to housing assistance as well, which will create a new market for these types of renters.
Making Strategic Decisions With Your Investments
If you have a rental unit available, and you think it fits into what Section 8 wants for its tenants, then applying to be a Section 8 landlord could be a great idea. All HUD requires is that your unit is habitable and has a reasonable rent. This rental rate will be just over the 40th percentile (on average) of your area's rental rates.
This is just one of many strategic decisions you can make for your rental property. If you're looking for excellent investment and landlord advice, Property Management Inc can help you. Find a service that puts clients first today.
