Any Section 8 Experts Out There?
We have rental property in two counties in Southern Indiana. The two counties include 4 cities. I am so confused. It seems like everyone has different guidelines or "preferences" for people eligible for Section 8 vouchers. I guess I thought Section 8 was federal with same guidelines.
We are new to the landlord biz but have bought 20 single family homes and 4-4plexes all this year. Some have section 8 tenants and when something becomes vacant - we get calls. From what I am gathering the amount they will allow a lease to be for a particular person will depend on their own income. Also the amount allowed for an apartment is more than a house because of the utilities that a house will require. Also I have been told if you charge more than the person is allowed even if the tenant is willing to pay the extra money "under the table" - and Section 8 finds out you will be blackballed and they will lose their benefits.
Can anyone give me any guidance here so I can better understand?
Thanks,
Betsy
Betsy-
Congrats on all the properties purchased. I am new at this myself along with my husband. We are in the New Orleans area also and I have heard the same thing about Section 8. I am sorry to change the subject but I would love to talk to you about how you guys were able to purchase so many properties in such a short time. We have two rentals and are eager for more but don't know how to move forward as fast as you and that is exactly what we'd like to do. If you don't mind you could PM me so we could talk I'd appreciate any info or advice you'd be willing to pass on.
Christine
Betsy,
The Section 8 program is a HUD program that is administered by local county (or larrge city) housing authorities.
The maximum allowable rent the Housing Authority will approve for you to charge is determined by a market rent survey for your local housing area. The maximum amount of your rent that the Section 8 tenant will be required to pay is determined by the tenant's income. If the tenant has no income, then HUD pays all of the rent.
Contact your county housing authority. They have landlord orientation packages and sometimes classes which describe the Section 8 program.
Christine,
In another post in this forum, Betsy says that she bought 20 properties in a package deal from a single investor.
Every area has their own Section 8 offices, each with variations of rents allowed, etc.
The webiste for AZ, CO, KS, MO & NC is:
www.socialserve.com
In NC, the general guidelines are based on the number of bedrooms. Once you have an individual with a Section * Voucher that is interested in your peroperty, you will sign a contract, and Section 8 will perform an inspection. It is at the inspection that they will determine what Section 8 will pay you monthly.
Go to :
http://www.socialserve.com/landlord/HelpfulLinks.html?ch=&city_id=5271
At the bottom of the page, you will see the range based on bedroom count. Note that they DO have a cutoff rate. For example, they will not allow a 1 bedroom to be leased for >$841. Additionally, you may have your 1 bedroom advertised for $840, but upon inspection Section 8 may tell you that they will not pay more than $600. The tenant may then pay $240 out of their pocket.
I hope that makes things a little clearer. Contact your local Section 8 office, and I;m sure they can give you more details / explanation.
Good Luck!
Betsy, you can review some guidlines and the Fair Market rents on this page:http://www.huduser.org/datasets/fmr.html. However I do not know if the naximun allowance includes or excludes the utilities. I don't know if someone can clarify this.
Thanks,
Al
Hi Betsy. I've been renting to Section 8 for a while now, but let me warn you that my experience is limited to Georgia.
1. Section 8 gives families Vouchers according to the number of rooms the family will need. More people = More rooms = More money. I have rented 3 bedroom units to families with 2 bedroom vouchers because they were close enough to the desired rent. Most section 8 offices have a chart listing how much they pay per size. NOTE! Not all section 8 departments pay the same!
2. Taking "under the table" payments is tantamount to defrauding the government. Believe me when I say you don't want to be the subject of a lawsuit where some hotshot attorney general uses you as an example of his ability to "clean up fraud" and guard against "landlord abuses". This is how lawyers become governors. Most likely the Section 8 person will be viewed as the "victim" and not receive any punishment at all.
please see this post for more information.
[addsig]
NewKid
Boy that is some kind of package deal. Thanks for the heads up.
Christine
I thank e1 for their input here. I'm still confused because it sounds to me like what I'm dealing with in Indiana is different.
In the 4 little cities I have rental property there are 3 different housing authorities and another community service entity authorized by the state - so we are dealing with 4 entitites. From what I can gather each one has different requirements -ex. 1 won't take anyone into their program who is not currently working and worked solid for the last year (exceptions to that are mental and physical disability). Another housing authority would put someone in their program who is unemployed and homeless ahead of someone who just needs some assistance. Also for example - a 2 bedroom voucher for someone who wants an apartment will pay more than for someone who wants a house because they have determined that utilites for a house will be more than for an apartment. Someone called me that has a 2 bedroom voucher and wants a house. They are only allowed for the lease to be $460.00 a month. You can't live in a hell hole for that. I was told that if that particular person had more income the rental rate could be higher but since they don't that is all it can be.
It is very confusing. None of these authorities have any classes or orientation packages - I had already checked on that.
While I always agree that two wrongs don't make a right - just like most governmental programs it seems to be this one is ripe for abuses from tenants, from landlords and from the housing authorities who administer the money.
One housing authority asked for us to report if anyone was living in the houses/apartments other than who was supposed to be there. They know my husband and I are active in our own management. How in the world can we report that? If we do then the tenant grapevine in these small communities will blackball us and no Section 8 person will choose to rent from us. So we just keep our mouth closed.
I really appreciate the feedback and the links sent to me. I have got to keep learning here because I want to understand the system.
This can be helpful:
Q: Can an owner charge tenants fees in addition to rent?
A: Under certain circumstances, owners of certain vHUD-subsidized multifamily housing
may charge tenants for items other than rent. Some of these items include:
•Charges for late payment of rent;
•Pet deposits; and
•Fees for damage caused by a tenant’s carelessness, misuse, or neglect.
For specific information on allowable charges in addition to rent, please refer to HUD
Handbook 4350.3 Rev-1, Chapter 6, Section 3.
As I said, and now you have confirmed, the Section 8 program is funded by HUD, but administered by the local housing authorities.
The local authorities set their own requirements for qualification. With future HUD cutbacks in Section 8 program money, the local housing authorities will get more restrictive on admitting new participants to the program.
NewKid,
Do you know specifically about HUD cutbacks coming on section 8? If so where can I get info regarding that?
Thanks,
Betsy
Alvaro,
Where can I get a copy of the handbook you refer to??
Thanks,
Betsy
honesty is the best policy.
dont contribute to those who abuse the system just for the sake of "yee ole mighty buck". Those programs are to help those who need it, not for those cheating the system to live cheaply.
hopefully you have a clean conscience, 34 units all together, keep it legit and sleep well
John
Greetings,
If I understand correctly, HUD has some general section 8 rules which all controlling entities must follow. Then these local entities have their own set of rules i.e. Landlord cant charge additional money for rent So if the rent rates in a certain area are say $800 for SFH but section 8 will only pay $600 then the owner cannot ask for an additional $200 from the section 8 tenant?
If the above is true for all regardless of local rules, then this seems to contradict what I have witnessed and learned in couple of investor oriented seminars.
I personally know people on section8 that DO pay extra money to make up the rent in that market. Are you saying that this is illegal or it differs from locale. thanks.[ Edited by mistahkg on Date 11/17/2004 ]
I can only speak about what I've learned in Southern Indiana. It seems that they have a maximum amount they will pay for say a 3 bedroom voucher. However the amount that the lease can be between the owner of the property and the Section 8 tenant varies from tenant to tenant based on what their income is. They allow less on a house than an apartment because they know the utilities will be more in a house. They will not let the stated lease be more than they calculate for a particular person. Again say the person can only have a lease for 500 for a 2 bedroom house - if I would normally get 600 for the house I can't charge more than 500 to that particular person. If I make an agreement on the side with the person to pay the extra 100 a month, I am in violation of the program and will lose my section 8 tenants.
If the person is on sometype of disability (mental or physical) where they have little or no income, then Section 8 will pay up to whatever the maximum rent is for that size. You have to sign a form and state what other properties are renting for in the area and say that you are not charging more than FMV.
It is very confusing. I'm getting a new tenant in a 3 bedroom home and they will allow the rent to be over 750 a month but only because she works in a doctor's office and makes pretty decent money. On this property based on her income - she will pay about 450 of the 750 per month and Section 8 will pay the rest.
I have another tenant in a 2 bedroom apartment. Her lease there is 550 a month. She wanted to move into one of our houses and I was willing to rent her a 3 bedroom for 600 because she is a good tenant and keeps a great house. Section 8 said that in the house her lease could not be for more than 500 because her income would not cover the increase in utilities so we couldn't do it. She was willing to come up with the extra money on her own but we both decided it was not worth the risk.
In New Orleans people investors who are looking to sell their rental property will advertise what they say you could get if it was Section 8 as opposed to what it is currently rented for. Leads me to believe that in New Orleans they pay higher than the average rent.
See why I'm confused.
Hi Betsy,
The section 8 program is a very efficient way for the government to provide housing to the needy. While every housing authority has their own specific rules, the basics are the same: The housing authority guarantees the rent that the tenant cannot afford. Tenant pays based on percentage of income, housing authority pays the rest up to allowed amount as long as the rent is comparable to the unassisted market. I recommend spending some quality time in the offices of the authorities you would deal with and talk to the section 8 coordinator, if you can. There are many published documents they can provide for you. Also HUD's site http://www.huduser.org is a good place to search for specific info or cited documents. You can also look at the following general list of frequently asked questions about the program. This list was provided to landlords at a local outreach in Pennsylvania: http://www.marketvisionpartners.com/LVLF2003/p3.html
The list is general enough to cover the program on a national scale.
Renting to the needy is a specialty and will require you to screen people carefully and hold them accountable. Many of the participants are the working poor who will pay on time and are reliable. Unfortunately, HUD (by way of Congress) forces housing authorities to give a high percentage of vouchers to the very very poor, of whom many really cannot function on their own. You, as a property owner, need to set up the same rules for HUD participants as for non participants, i.e. source of income, good credit, good character. It is important for you to document that you have identical screening rules between your HUD participants and your general public applicants to demonstrate that you don't discriminate. This documentation can be in the form of a "procedures manual." I know several owners who ALWAYS perform house-keeping inspections to any seriously interested applicant. This means that in addition to checking credit files, you will be visiting their present unit. This will automatically eliminate a number of bad bets, since they disappear when they discover this requirement. If you do institute this policy, however, it must apply to every single individual you ever screen, HUD tenant or not, or it is discrimination.
Best of luck to you. It is rewarding to provide homes to people.
rrgirl
bellybean - I would be worried that my tenants would just never report any repairs if they had to pay the first $25. Or do you catch the repairs during an inspection?
Well, that has happened once. Our tenants called us almost every week for one frivilous thing after another. As soon as I told them they'd have to start paying that $25. each time, we never heard from them again for the rest of their tenancy- even when the a/c broke (in Florida). Why should it matter if I fix the a/c now or a year from now? You usually have to rehab a place when a tenant moves out anyway so we'll just fix things after they've moved if they don't want to pay $25. You could just do inspections if you were worried about things. I tell you, it's the best thing we have in our leases. We've had other nuisance tenants who think you're there to fix any whim request they have (for instance, our latest nuisance tenant kept bothering us to repair the shower head that leaked at the junction when the shower was running. When the shower wasn't running- it wasn't leaking. And the leak was 4" away from the wall so it was only leaking into the tub along with the rest of the water) I told him "sure, we'll fix it but I'll need $25. first". All of a sudden it's not a problem and doesn't need fixing. If a tenant is good and the repair requests are legitimate I usually don't ask them for the $25. I just make a note on their record and depending on how they leave the place when they move, I either waive the $25. or deduct it from the deposit. I really only enforce this clause in the lease with nuisance tenants. It works.
Section 8 runs differently depending on the housing authority. Why do you not contact each housing authority and ask them these questions as they are the only one that can give you a true and reliable answer.
That said, some section 8 users get full rent couchers and others have to contribute, per my understanding
say person A has a voucher for $800 and they are to contribute $200 per section 8, then they can rent a place that is $1000. I know is some instances if the person finds a cheaper place they adjust the figures as person A must contribute to the rent. I also know that you could not then charge person A more than the $200 that is their share or section 8 really frowns on that and if you and the tenant have a problem they you would be in some serious issues.
Contact eahc program and ask them for some paperwork on how the program runs.
My understanding is that the landlord cannot charge more for rent on the lease than Section 8 will allow for that particular person. Anything more that they pay under the table is a violation and you and they are subject to being thrown out of the program.
That is what makes it so confusing and subject to abuse. I think they should be a certain amount in an area for certain number of bedrooms period. Then it is divided up between the tenant and Section 8 based on their income. Not that the total rent a landlord can charge is based on their income.
I like having Section 8 tenants but I am to the point that I only like them when Section 8 pays all of the rent. I'm having trouble from some of my tenants on collecting the part that they have to pay. One tenant just lost her Section 8 because her gas was cut off. Now how in the world is she going to be able to come up with the entire month's rent if she couldn't keep her gas on???
Another tenant that Section 8 was paying 100% changed last month to where tenant has to pay 262 of it. Well today is the 18th and I'm still waiting. Yesterday she said she got laid off this week. I honestly think she did it on purpose to go back to 100% or either her boss is going to start paying her under the table.
Oh well trials and tribulations of being a landlord - haha
I have a section 8 tenant who wanted to pay the difference between the section 8 payments and the rent under the table. The difference was only $100. So I agreed to simply charge her $100 a month for the rental of all appliances (refrigerator, dishwasher, and over). This seems like a legal compromise. What do you think?
I have a section 8 tenant who wanted to pay the difference between the section 8 payments and the rent under the table. The difference was only $100. So I agreed to simply charge her $100 a month for the rental of all appliances (refrigerator, dishwasher, and over). This seems like a legal compromise. What do you think?
Kiya,
That sounds like a great idea as long as it wasn't included on the form that says you will provide those things as part of the lease.
Betsy
Don't know that Sec 8 sees it the same way though.