High Payoffs from Low Income Housing

Vacancies in rental units and nonpaying tenants may become a thing of the past for real estate investors who register with a low-income housing assistance program called The …

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Vacancies in rental units and nonpaying tenants may become a thing of the past for real estate investors who register with a low-income housing assistance program called The Housing Choice Voucher Program. This program provides a growing market of thousands of potential tenants to landlords, which may be particularly helpful in rough rental markets with high vacancy rates. Additionally, the program guarantees payment from the government of a portion of the rent, typically 60 to 70 percent.


The program, more commonly known as “Section 8” in reference to the part of the U.S. Housing Act that authorized it, is composed of two units: project-based vouchers and tenant-based vouchers, according to the Minneapolis Public Housing Authority (MPHA). Both are regulated by the U.S. Department of Housing and Urban Development (HUD).


![filekey=|609| align=|left| caption=|Eligible families receive public assistance for only a particular unit|]Project-based vouchers are linked to a specific structure, such as an apartment, duplex or house. Eligible families can receive public assistance while living in that particular unit, but the voucher doesn’t follow them if they move to a different unit, according to the MPHA.


Tenant-based vouchers, on the other hand, are linked to the specific tenant or family. Tenants pay a portion of the rent and the local public housing authority pays the remainder with money from HUD, according to HUD’s website. Tenant-based voucher lists are often thousands of families long, with a three to five-year wait list, according to a press release from the New York City Housing Authority.


Tenants generally pay about 30 to 40 percent of the total rent, with the specific percentage determined by their income, according to HUD’s website. The total rent is determined (and capped) at the federal level by HUD and is called the “Fair Market Rent” for the area. Landlords can find more details on this at the U.S. Department of Housing and Urban Development’s list of fair market rents.


Rental property owners can apply for registration as Section 8 landlords. The process requires a fair amount of paperwork, according to the website for Florida’s Broward County Housing Authority (BCHA), but it also provides a number of benefits to landlords:


1. It guarantees the rent. The local housing authorities pay their portion of the rent predictably each month, and if a Section 8 tenant experiences a loss of income, most have a financial safety net, including an increased portion of the rent subsidy from the local housing authority, according to the Orange County, Fla., government’s website.


2. Landlords are still encouraged to choose their own tenants. No landlord is required to lease to any person who holds a voucher, according to the BCHA, although, of course, they are still required by federal law not to discriminate against race, color, sex, religion, national origin or familial status. The landlord may screen tenants holding vouchers and request in writing the name and address of the tenant’s former landlord from the housing authority, according to the Orange County, Fla., government’s website.


![filekey=|610| align=|right| caption=||]3. Landlords retain the ability to evict Section 8 tenants for not paying rent, damage beyond normal wear and tear, illegal use of the unit, etc. However, the landlord is required to submit a copy of the initial eviction notice to the local housing authority at the beginning of the eviction process, according to the BCHA. In some areas, the housing authority may assist landlords in collecting damages or unpaid rent, according to the Orange County, Fla., government’s website.


4. The property is inspected by the housing authority initially and annually by the local housing authority, according to HUD’s website, to make sure that it is “decent, safe, and sanitary.” While some landlords might feel this is intrusive, for a non-local real estate investor who is using a property management company to maintain a rental unit, this may provide a helpful tool to make sure the property management company is doing its job.


5. Being a Section 8 approved landlord provides access to tenants who might not otherwise be able to afford the units. This contributes to a low vacancy rate for landlords participating in the program and may have the additional intangible benefit of giving a landlord the opportunity to truly assist those in need.


6. Local housing authorities may also provide benefits to Section 8 landlords. In Orange County, Fla., landlords get a break on the paperwork, only filling out a Request for Tenancy Approval and the lease (which would have to be filled out for non-assisted tenants as well). As noted above, the housing authorities may provide assistance in collecting damages or unpaid rent. Additionally, some local housing authorities assist landlords in advertising their units to potential tenants, such as on the Orange County, Fla., government site. The Housing Authority of Portland provides landlords with low-cost training opportunities on issues such as lead paint and landlord/tenant laws, as well as a newsletter, a customer service team, a reference service and a fraud investigator.


For more information on the program, visit: the U.S. Department of Housing and Urban Development’s homepage.

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