Investors should consider taking advantage of the housing choice voucher program offered by HUD. The purpose of the program is to assist low income families and elderly or disabled people with clean safe housing by subsidizing their rent. Tenants are given vouchers by the local housing agencies to find their own housing. It can be a single-family home, apartment, townhouse or condo. The housing must meet the safety and health standard guidelines under the Section 8 housing voucher program.
To find Section 8 tenants, you can get on the list by contacting your local housing authority. There is no charge to get your property on the list. You must comply with the guidelines. The housing authority will come out and inspect your property. You need to make sure you don’t have any peeling or flaking paint, roof leaks, broken or cracked windows, smoke alarms are working, water heaters are strapped, and you must have GFI outlets in bathrooms and kitchens with no exposed or missing outlet covers or switch plates. Rents must comply with HUD’s fair market rent guidelines published once a year in October. You can check the HUD website for more information. Typically, the rents must be plus or minus 10% of the local fair market rents for your area.
Once your property is approved, you and the tenant must enter into a written lease. You will also need to enter into a housing assistance contract with the local housing authority for the same term as the lease. Then each month, you get your money from the housing authority, and the tenant pays their portion.
Why Renting to Section 8 Tenants is a Good Strategy?
• Your rent is guaranteed by the local housing authority. They generally pay 60% to 70% of the tenant’s rent, and the tenant pays the balance.
• Tenants pay their rent in a timely manner because they don’t want to lose their subsidy and eligibility.
• You are allowed to collect a security deposit and damages against the tenant if they damage your property. Some local housing authorizes will assist you with collecting damages.
• You have less vacancies and a large pool of tenants to choose from.
• Section 8 tenants generally stay longer because they are happy to find housing in a clean and safe neighborhood.
• You can evict tenants for any legal reasons.
• You are not obligated to renew their lease after the term expires.
• You may be able to qualify for a local abatements from your city or tax write offs for providing low income housing to the community. Check with your city authority to see if you qualify.
Investors should take note of HUD voucher programs because they are a great way to keep your property rented and a sure guarantee that you receive your rent on time. Also, you are providing a service to the community by offering low income housing that is safe and affordable to families and seniors that may not be able to afford to live in the neighborhood under other circumstances, and you are helping to diversify the community.