Section Eight Housing Or Hud Subsidized Housing - Is It For You?

If you are a landlord, you may have some interest in this topic. First some information about me, the author. I am an Oregon landlord so my perspective and interpretation is Oregon based. I have been renting various properties for 25 years. My experiences have been in multiple metro counties. I am not attempting to guide your choices simply offering some of my thoughts and feelings. First off, I believe section "8" has been good for my business and many others, but I have had some bad times too. Let us start at the beginning, you advertise your vacant rental and a prospective tenant contacts you asking, "Do you take section 8", or they say do you accept housing vouchers? Of course, you have no idea what they are up to and say "no", wait just a second, not so fast. The tenant is offering you a one-year lease. If you have a vacancy problem one year is good. They are also offering what may be above average rent that is good too. Most if not all of the rent and checks will come from the government. That"s good too. Have you ever had a tenant tell you they can"t pay the rent because they lost their job, family split up, got robbed, car problems, health issues, got arrested, etc. The list of excuses is endless and absolutely none is the landlord"s problem unless you don"t get paid rent.

Therefore, let us say when the phone caller asks and you answer "yes", I will consider section 8. Follow with; why don"t you tell me about your situation? Where do you live now? Why are you moving? You should listen carefully and ask leading questions, this is probably when you will decide if this tenant is for you. Tenants receive housing assistance for various reasons, some are elderly with low income, some are disabled, and some will be single parents with 1, 2, 3, or more children. Many are second generation, where the mother herself grew up in a family receiving assistance. Tenants tell me they are getting pregnant so they will continue to qualify for the program. Obviously such a give away program is bloated, has a waiting list and deserves scrutiny. But we are not getting into that argument right now. In Oregon the next step is to get the required paperwork from the tenant, they will have a case worker but you will most likely have a hard time speaking in person to the case worker, and even when you do they will not be forthcoming about the tenant. They will talk about the section 8 program rules and likely confuse you with non-answers that leave you with more questions. My advice here is to forge ahead knowing that the rent will be dependable. After completing reams of paperwork, a housing inspector will contact you setting an appointment to inspect the house. This is very very important, you must prior to the inspection correct all safety and housing issues with your property. The inspector and maybe the caseworker will make available to you a checklist of what they look for and inspect. Some items they will checking are window latches, door locks, smoke detectors, hand railings, broken glass, weather stripping, peeling paint, heating, cooking. This list can be quite extensive and will vary by property. My experience is that all the requirements are justified and that as a fair and quality landlord, you will already have addressed every single issue. That being said, most of my inspections fail for little things I have missed. My last inspection had two failures, #1 the furnace door sheet metal was a little bent and kept falling off (very simple fast fix) #2 the bathroom window latch could be jiggled open (fixed with a thumbscrew clamp on frame $2.00) I remember once failing because the basement stairway railing had too big of gaps between posts (must be under 6") and required buying and installing 2x2"s in gaps. In many cases your rent will be started as of the day of your passing inspection, this is why it is so very important to fix things first. Waiting a week for re-inspection may mean losing a weeks rent. All landlords know that getting their daily rent is the bottom line.

So you have your tenant, you passed inspection. The tenant has paid you the security deposit.
Did you get a Security deposit? Not always, years ago in our county the tenant did not pay a deposit, instead housing agreed to pay up to two months rent towards any damage the tenant was responsible for. In some cases two months rent is more than a deposit. That"s the good side; the bad side is that housing holds all the money and we already know that they are not responsive and definitely lean towards protecting the tenants. I once made a claim for damages and was turned down because of a bookkeeping error on their part. My only recourse was to sue the county and absorb my attorney fees for a huge net loss. In my opinion, getting a deposit from the tenant is a good thing, but you have no choice and will have too follow the rules for where you are a landlord. Even though this is federal HUD, money each county runs their own show with their own little differences. Your rent will be retroactive to the day you passed inspection unless the tenant is still receiving assistance at their current address, in which case your rent will begin the day after the previous landlord rent ceases. In no case will section 8 pay double rents. You can make the new tenant pay rent for this empty time but housing will not be involved. You will need to negotiate with the tenant at the very beginning how much they will pay for the time you are sitting with an empty rental unit. Several times I have been able to lose only two weeks rent by insisting the tenant pay the difference until housing comes on line. Many organizations have one time "emergency money" available to low income tenants just for this situation. You need to know that you can not "NO" make a side deal with tenant where they pay you additional rent each month, you must only receive what housing has determined is fair rent as per their inspection.
Don"t even think you can charge the tenant some side deal like $100 month for the garden, and believe me many tenants will offer a little extra on the side to entice you to rent to them. These same tenants will rat you out in a heartbeat, and I don"t even want to know the fines and jail time for defrauding the federal government.

OK, your tenant has moved in, and you still have not received any rent. Hopefully you did get $500 security deposit. I make part of the deposit nonrefundable even (non housing) because I know I will incur costs every time when the tenant moves out, and most don"t question your policy when they are trying to impress you to let them move in. The case worker and all involved move exceeding slow, it is quite possible you wont get any rent until the second month, when you will get a big check retroactive to the beginning. In the coming months checks will arrive like clockwork and if the first falls on a weekend they may send them early. Your tenant on the other hand will also be making a small rent payment to you. The tenant portion of the rent is determined by their need and their income (if any). Most of my section 8 tenants have paid $100 to $200 on a $1,250 rental. If the tenant does not pay you, you may declare them in default and evict them; however, you will lose the housing portion too. I have never done this (do the math) you still need to do your due diligence like you would for any potential tenant or you will suffer the consequences.

County housing administrators reserve the right to re-inspect any time they feel like it. I once had a house inspected four times in six weeks because they lost track of what they were doing. Just put up with it knowing your hard-earned tax dollars are going to a good cause (subsidizing your tenants). After the first year, you have the option of renewing another one-year lease or going month to month. Once a year when you renew the lease you will be able to ask for a rent increase of about 5% and of course there will be another inspection to make sure the house is still in ok shape. Unlike when you first start out, you can make repairs before the inspection but you don"t need to, if your property fails they will give you thirty days to make corrections before canceling rent.

Being a landlord has its difficulties, some people are not able to cope with the business.
Renting to section 8 tenants may not be for everyone either. I have tried to outline just a little of what to expect. I would not, nor should you rate section 8 tenants above or below others, I have certainly experienced the best and worst of each and after 25 years still cannot spot one or the other on the street, in a grocery store, or in my child"s classroom. John 2010