More than 2 million people across the country take advantage of federal assistance to rent their homes. Thousands more sit on waitlists because of the lack of housing options.
The ready pool of Section 8 tenants makes the program appealing to many landlords, but there are definite pros and cons to participating in the program. It’s not the right choice for every property or landlord, so let’s take a look at what you should know before diving into Section 8.
What Is Section 8?
Rather than live in subsidized government housing, people can take advantage of the Housing Choice Voucher program or Section 8 to get vouchers that cover a portion of their rent elsewhere. They can choose a place to live that meets their needs with the rent partially covered by the Saratoga Housing Authority in our area.
Subsidies are paid directly to the landlord from the SHA, with the tenant paying the difference between the voucher and rent amounts. To be eligible, tenants must cover 30 percent of the rent and have an income of less than 50 percent of the area’s median income.
Most regions have long waitlists, although the SHA is opening up applications for a short time soon. This will add to the current pool of tenants.
Pros of Section 8 Tenants
While these tenants fall into the low-income category, the program subsidies make them more appealing as tenants than they might be otherwise. These cover up to 70 percent of the rent and are paid directly to you so you don’t have to chase the money down from the tenant.
That said, you do want to do your standard screening and tenant background check on any applicants. You might find quality tenants that you would have denied due to income restrictions that can qualify with Section 8.
Section 8 calls for fair market rent, which allows you to raise the rent easily. Since the subsidy covers most of the cost, Section 8 tenants don’t complain much about rent hikes.
The waitlist of tenants gives you plenty of options if you do decide to accept Section 8 renters. Lower vacancy rates mean better cash flow, which means better ROI on your property. These renters often become long-term tenants as well since it can be harder for them to find a new place to live.
Cons of Section 8 Tenants
As with any government program, expect there to be red tape. This includes the approval process and extra steps to provide eviction protection.
You should also expect a delay in getting your first rent check. Normally, you would collect rent before the tenant moves in, but Section 8 doesn’t pay until after that. You also have to collect any security deposit from the tenant.
Plan for inspections, which might order repairs for things you would normally let slide. The program has very strict standards, so it’s common to fail an inspection and be shelling out for unplanned repairs. You’ll have an inspection to join the program, then expect another every year or two.
Considering Section 8?
Section 8 tenants can be a boon, particularly if you struggle to keep your properties occupied. Section 8 comes with pros and cons that should be carefully considered before jumping in, as the reliable government money comes with strings attached.
Need an easier way to get great tenants for your rentals? Contact us to learn about our affordable tenant placement package that includes marketing and tenant screening.