Section 8 Housing – A Landlord’s Perspective

The Section 8 housing program is a noble initiative instituted by the federal government to help the less fortunate find dignified housing to rent. It grants eligible families a voucher that pays the partial rent. About 2.1 million people benefit from the Section 8 program, with a median rent of $4,164 annually. However, plenty of off-putting stereotypes abound about the Section 8 scheme and its users, which dissuades landlords from pursuing it.

So, is section 8 a good or bad thing, and are the stereotypes justified? That’s what we explore in this article, so keep reading to learn more about the Section 8 housing program, its associated myths, how it can benefit landlords, and how landlords can join the program.

What’s Section 8 Housing?

You know how food stamps work: People earning low wages receive a helping hand from the government, enabling them to purchase essential commodities. That’s how Section 8 housing works. Sort of.

The Housing Choice Voucher Program, as it’s known in full, is a federal government program aimed at assisting the elderly, disabled, and low-income families in affording decent living arrangements in the private market. Under the Section 8 program, an eligible family will search for an appropriate housing unit, and if the landlord agrees to the agreement, they can start receiving assistance. Families pick their choice from apartments, townhouses, or single-family units. The federal government channels money to the local public housing agency (PHA) to manage. Your PHA will be in charge of disbursing the cash. However, the government only pays part of the rent, typically 70%, and you cover the balance.

To qualify for a Section 8 voucher, you must earn less than half of the median income in your area. By law, the PHA must reserve 30% of the vouchers for families earning less than 30% of the median income in that area. It is one of the more popular housing assistance programs. Of the 5.2 million households that receive rental assistance, 2.2 million are under the Section 8 program.

What are the stereotypes around it?

While Section 8 is a noble program, it is rife with challenges. It has negative connotations as people have constructed several negative stereotypes about it:

1. Devalues the neighborhood

Perhaps the most prevalent stereotype, with a hint of racial discrimination. Landlords liken voucher holders to residents from ‘the projects.’ To landlords, Section 8 tenants do not have the civility to live in more upmarket residencies. Therefore, landlords fear Section 8 voucher holders will likely bring undesirable activities from the projects, such as selling hard drugs, devaluing the property and the community. What they don’t understand is the government vets voucher holders. They must not hold a criminal record to obtain a Section 8 voucher.

2. Waste of government resources

There’s a widespread belief that the Section 8 program is a waste of resources as it primarily serves lazy people who don’t work hard enough like the rest of the population. The truth is that most of the Section 8 recipients often work multiple jobs to make ends meet. Moreover, most of them are minority single mothers who are historically the lowest paid, even for similar work. Additionally, most people don’t know that the program also targets senior citizens and differently-abled people.

3. Voucher holders are difficult tenants

Many landlords are reluctant to rent to section 8 tenants as they view them as difficult tenants. They blame it on their poor upbringing. However, researchers from Johns Hopkins conducted a study that refutes these claims. They concluded that most landlords couldn’t differentiate their negative perceptions and personal prejudices from actual incidents, so it was a case of unwarranted bias against Section 8 tenants.

What’s the procedure to get section 8 approved for your apartment complex?

It’s easy to get you approved for Section 8. First, visit your local PHA’s website or give them a call to find out the minimum requirements your apartment complex needs to meet to be eligible. In California, for instance, you can join an online seminar to learn more and ask questions. If the apartment does not meet some must-haves, make the appropriate changes. Fill in the forms and provide the required documentation and proposed rates. The apartment complex will then undergo an inspection by a PHA staff member to check whether the water supply, electricity, illumination, ventilation, and sanitary facilities are in acceptable condition. California now conducts remote video inspections, with the tenant providing the physical presence as a proxy inspector. After passing the inspection, you will complete the final documentation and exchange several documents. After that, you can now admit Section 8 tenants and receive a monthly payment from the PHA and the tenants.

How can Section 8 be good for the landlords?

Section 8 offers tangible benefits, including:

Guaranteed rental income: Even if the tenant falls on hard times, you’re guaranteed a considerable percentage of the rental income because the government pays 70% of the rent every month.

Wider access to potential tenants and free advertising: As soon as the PHA accepts your application, they will place the property on their website. There is often an army of people on their waitlist looking for accommodation.

Vetting of tenants: Before someone becomes a Section 8 voucher holder, the government will conduct a series of tests on the applicant, such as income level, employment history, criminal record, and eviction history, so you won’t have to conduct those.

Low vacancies and long-term tenants: It’s difficult acquiring a Section 8 voucher and even harder to find a landlord. Applicants are typically on waiting lists for more than a year, so they will likely live there long-term (average of 6 years), and there will be plenty of takers if they leave.

Better profit margins: While this applies to fringe cases, you can get a better deal with a Section 8 than in some C and D neighborhoods.

Regular rent Increases are allowed: The program provides for rent increases and hence you can keep increasing the rent every year. There is no limit on increasing the rent. The increases are governed by the local laws. Thus in California they can be 5% + CPI as long as there is no local law for rent control. In California a 60 day notice is required for the rent increase as opposed to 30 days in open market. A common myth is that it’s hard to increase the section 8 rent. But that’s definitely not true as we have increased rent on our section 8 tenants! Click here to see what Santa Barbara county’s PHA say about increasing section 8 rent.

Old Money Capital and Section 8

At Old Money Capital, we do not possess a negative view of Section 8 or similar housing assistance programs. One of our properties has Section 8 housing tenants and they are some of our best tenants! They keep their apartments clean because the government inspects their apartment every year! They also pay their portion of the rent on time. If they failed to pay their portion, the assistance might go away from them. We believe in equal opportunity to everyone and we also believe in giving a safe and clean housing environment to everyone.

Conclusion

Section 8 has acquired an unfavorable tag in society, with many landlords opting to avoid it. The unjustified stereotypes have done nothing to allay those fears, although most are easily debunked. Most people don’t realize the program helps the disabled and senior citizens. Moreover, landlords can benefit from the program because it offers guaranteed cash flow, long-term tenants, low vacancy rates, and free advertising.

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