If I listed out the things in real estate that (from my interactions) seem to be least understood, Section 8 housing would definitely be near the top of the list. Some real estate investors love Section 8, some hate it, and most are simply confused about it. As a REALTOR® and landlord with several years of experience working with Section 8 housing, I can shed some light on what the program is and is not. (Note, however, that government housing assistance varies from one region to the next, and I can only speak on my experience with the Greenville Housing Authority.)
With that in mind, here are some things to consider, both general and specific, that are helpful to know when thinking about Section 8.
- Not every property can accept a Section 8 tenant. There is a decent amount of paperwork that a landlord has to file in order for a property to qualify as Section 8. The property also has to pass an inspection with various requirements, ranging from windows opening properly to appliances operating correctly. Passing the inspection and paperwork isn’t difficult, but it does take some time.
- Section 8 “vouchers” have a limit as to how much rent they will pay. When assessing an application for housing assistance, the Greenville Housing Authority bases the voucher amount on several factors, such as the household income and the number of dependents the applicant has. The amount of rental assistance provided to the applicant can be $400, $1,400, or just about any other amount you can think of, depending on circumstances. If the amount of assistance provided is on the lower end (e.g., $400 per month), it may not be enough to cover the entire monthly rent, and the tenant may have to pay the rest of the rent out of pocket.
- Section 8 leases last for exactly a year. A lease for Section 8 always lasts for a year, not a day more or less. If the tenant wants to stay longer than a year, then they simply sign a new lease for the same property each year. If they want to break the lease before the year is up, they run the risk of losing their voucher and housing benefits.
- If no one is doing anything illegal, then the government is unintrusive. The Housing Authority of Greenville is pretty hands-off when it comes to Section 8 properties, except when they need to do their annual inspection or when they get a complaint that something illegal is happening. For instance, if a landlord shut off the electricity on her tenant and the tenant complained, you’d better bet that the Housing Authority would get involved.
- Both Section 8 tenants and their landlords have rights. I alluded to this in point #4 above, but if a tenant or a landlord misbehaves, either one can get in trouble. A landlord could get her properties de-listed from Section 8’s approved houses list, and the tenant could lose his voucher and no longer be able to get government assistance. This accountability helps keeps both parties in line (for the most part).
- Section 8 tenants, not the government, decide which property they are going to lease. How does someone who qualifies for housing assistance find a home? The same way as the rest of us, except it’s harder. What makes it harder is that the pool of houses is a lot smaller, since many houses don’t qualify for Section 8. It can be a challenge for someone to find a good Section 8 property, and many tenants that find one will stay there for a very long time.
- Rents can be increased from year-to-year. Scared about the Housing Authority making you keep your rents low while all the rentals around yours have been going up? Fear no more. Rents can often be raised from year-to-year, although there are various factors that determine if and how high they can be raised. Raising the rent doesn’t affect your tenant at all unless you raise it beyond what your tenant’s voucher covers. If you do that, then you’ll likely end up losing your tenant.
- The Greenville Housing Authority pays rents via direct deposit each month. Perhaps the best part of the program for landlords is that the payment comes in every month via direct deposit. No checks, no cash, no hassle. Are there times when they mess up and pay the wrong amount? Sure! But it’s mostly a smooth system with few hiccups.