As a real estate investor, you’ve probably heard of the government program Section 8, designed to provide affordable housing to low-income tenants. While this approach may differ from the path that most landlords take, offering low-cost housing comes with many benefits, such as reliable rent and reduced tenant turnover. Moreover, embracing the role of a Section 8 landlord demonstrates your genuine concern for low-income communities.
The problem, however, is that Section 8 properties can be difficult to manage. They often come with strict regulations, rental rate limits, delays, red tape, and more.
In this post, we look at how you can play a role in easing the housing crisis for low-income households. Additionally, we also share the best way to mitigate the challenges of renting out affordable real estate: collaborating with a property manager.
What is Section 8?
Millions of Americans face countless obstacles when searching for a home. Not only do they not meet conventional criteria such as having high credit scores, but low-income families often struggle to afford their monthly rent.
To ease this burden, the Department of Housing and Urban Development (HUD) allocates funds to the Housing Choice Voucher, commonly referred to as Section 8. This program is designed to aid underserved groups—such as low-income families, older adults, and people with disabilities—in securing affordable, safe, and sanitary rental properties.
Under Section 8, eligible tenants dedicate only 30% of their income to rent, while the rest is covered by the government through vouchers.
What Are the Benefits of Providing Affordable Housing?
While Section 8 may not yield instant profits for those in pursuit of immediate gains, it proves to be an excellent choice for those desiring stability. Let’s take a look at why offering affordable rental properties is a worthwhile and rewarding option:
Guaranteed Monthly Rent
One of the common concerns among landlords is the timeliness of rent payments from Section 8 tenants. However, given that a significant percentage of the rent is covered by the government, you’re guaranteed a fixed amount of money each month. Even if your tenant is late with their rent payment, you’ll still have the subsidized funds as a safety net. In contrast, with traditional rentals, there is a risk of not receiving any rent at all.
Between having 70% of rent and none at all, the former is always the preferable option.
Low Vacancy Rates
Due to the limited availability of properties, many Section 8 applicants are often placed on waiting lists. This proves advantageous for rental property owners, as it means there will always be a pool of potential tenants, ready to fill your vacancies.
While you or your property manager still has the option to conduct tenant screening, public housing agencies (PHAs) often perform basic background checks on your behalf. While their criteria may differ from yours, these checks encompass critical factors such as age, criminal record, and income. This provides you with confidence that their tenants meet certain standards, reducing the likelihood of potential issues in the future.
Section 8 tenants often have more incentive to care for your property than conventional tenants. Understanding that non-compliance with rules or neglecting their duties could lead to eviction, they are more motivated to uphold their end of the agreement. Eviction is a risk they don’t want to take, as it could further complicate their search for properties that suit their circumstances.
How Property Managers Can Help Manage Section 8 Homes
Providing affordable rental properties presents numerous benefits, but it also entails certain risks. Fortunately, there’s a straightforward way to navigate its challenges: hiring a professional property manager. Here’s a quick look at why landlords partner with property managers to handle their Section 8 homes:
Comply with Regular Inspection Guidelines
To ensure housing standards are met and maintained, local PHAs perform routine inspections of Section 8 properties. These inspections, focused on safety and sanitation, vary by locale, and must be met before the owner can be paid. Failing an inspection could lead to tenant displacement until all issues are addressed.
Hiring a property manager can significantly increase your chances of passing these strict inspections. They stay proactive in managing repairs and maintenance, making sure your property meets all standards and stays in compliance with local regulations.
Conduct Strict Tenant Screenings
Even if Section 8 tenants are screened by PHAs, renting to them without carrying out your own due diligence can be a risk. To secure the most qualified tenants, it’s crucial to enforce the same screening criteria as you would with non-Section-8 tenants.
Property managers, well-versed in screening procedures, are tasked to conduct strict background checks aligned with your criteria. Moreover, their understanding of anti-discriminatory laws ensures that the screening process remains robust but fair.
Determine the Most Strategic Moves
As a Section 8 landlord, you face certain constraints, particularly regarding the rental rate and annual rent increase. Despite these limitations, a good property manager can assist you in maximizing your monthly income.
When contemplating property improvements, your property manager can assess whether or not they’re necessary. It’s important to note that while improvements may raise your home’s value and rent, this doesn’t always hold true for Section 8 properties. Property managers can help you make strategic moves, ensuring you make informed decisions that allow you to maximize your ROI.
Comply with Required Paperwork and Procedures
When you become a Section 8 landlord, you’ll realize how much bureaucracy is involved. There are tons of paperwork to file, as well as procedures that both you and your tenant must follow. Engaging the services of a Florida property manager who’s well-versed in these requirements can streamline these processes.
Making sure that Section 8 tenants fulfill their obligations, whether it’s paying rent on time, disposing of trash, or following the rules, can be a time-consuming task. Property managers assume this responsibility so you can avoid constant oversight. Entrusting this role to a third party not only eases your workload, but also fosters cordial relationships between you and your tenants.
Find Professional Property Managers for Affordable Housing in Florida
If you’re considering partnering with government entities to provide affordable housing in Florida, you’ll need the support of a seasoned property manager. At Luxury Property Care, we stand ready to take on the task of managing affordable real estate. Our devoted team of property managers is well-versed in HUD regulations and is committed to aligning with your goals. If easing the strain of housing for low-income households is part of your 2024 agenda, we are eager to assist you in achieving this and more.