Currently, the housing prices in major cities are skyrocketing, leaving most residents with limited rental choices. Moreover, the high cost of living affects most people's income, leaving them feeding from hand to mouth.
Thankfully, to the Section 8 property management, such citizens in the US can now afford decent, safe, and sanitary housing. The program allows low income households that cannot afford the current real estate market price rent to receive a housing voucher.
As much as this program helps the tenants, property managers also benefit. They receive incentives through the local housing authorities, making the property management business lucrative in this part of the world.
But what are the requirements for a property manager to receive the incentive, and does it attract advantages or disadvantages? This guide elaborates more about section 8 property management.
Understanding Section 8 Property Management
Section 8 property management is part of the housing program that allows low income individuals or single family homes in the US to afford decent housing. According to the program by HUD (Housing and Urban Development), landlords can become Section 8 property managers after receiving funds to operate the housing choice voucher program.
Participating landlords receive a housing subsidy from the Public Housing Agency (PHA) that covers part of the tenant's rent. However, the tenant pays the unsubsidized rent directly to the landlord.
For your rental property to be approved as Section 8 property, you must apply for the program with the required paperwork and get approval to undergo property inspection by PHA. After that, PHA will perform additional checks after 1-2 years.
The housing voucher program is either tenant-based or project-based. The tenant-based voucher allows tenants to choose any privately rented home whose owner is registered under the Section 8 housing program. However, the project-based voucher limits the choice of rental communities working with PHAs.
What It Takes to Qualify for Section 8 Property Management Program
Managing Section 8 rentals has many advantages that should convince you to try the lucrative venture. However, before qualifying for Section 8 property management, you must meet requirements that depend on your housing authority regulations.
To qualify for rental assistance, you must be a low-income citizen with less than 50% median income for the county or metropolitan area. Alternatively, you must be a veteran or person living with a disability to receive the housing choice voucher.
However, if you are a landlord who wants to be a Section 8 property manager, you must fulfill the following conditions:
Apply to be a Section 8 Landlord
You can get the necessary paperwork from your local public housing authority. Fill in your personal information on the rental housing assistance payments contract. Also include the rental property details like address, asking rent, number of bathrooms and bedrooms, and available appliances.
UndergoProperty Inspection
PHA will then inspect your property after the approval of your application to ensure your rental property meets the set housing standard quality. During the inspection, the inspectors will be keen on window and door locks, plumbing systems, sanitary facilities, and HVAC systems.
Why Opt for Section 8 Property Management
Even though most property owners fear property management for Section 8, it's a worthwhile investment opportunity you should try out. The advantages of managing section 8 rentals include:
Attracts Consistent Rent
Nothing is as satisfying as getting monthly rent consistently without delays. That's what you get after signing up for Section 8 housing management, which is the federal government’s major program. The public housing authority deposits cash or checks into your bank account or through the property management companies.
On the other hand, renters pay the housing assistance payments on time to avoid losing eligibility for the program. This is unlike market-rate rentals, where tenants can delay rent payments.
Quality Tenants
The housing authority pre-screens all the Section 8 tenants before allowing them to occupy any property. The authority checks on the criminal background of the potential tenant plus their monthly adjusted gross income level. This acts as a security check for other tenants and assures the residential property manager of fewer problems from the renter.
Free Marketing
As a landlord, you’ll not spend money advertising your rental properties if it's under Section 8 property management. This is because the vacant houses are readily available on the HUD website for prospective tenants.
Moreover, the local housing authorities have their websites with section 8 rental units listings. The list contains landlords' or property managers' contact, and the site is free.
Less Tenant Turnover
Another advantage of selecting Section 8 property management is that rental properties are in high demand. The eligible tenants work tirelessly to retain the houses, leading to low turnover rates. With increased demand and less rental turnover, there are vacancies for affordable housing. With low vacancy rates, you're assured of a steady income.
Related Reading: Best Property Management Companies for Rentals
Disadvantages of Section 8 Property Management
The disadvantages of this housing program include:
Annual Property Inspection
After the initial inspection that allows you to become a property manager under the Section 8 housing program, the houses must undergo other yearly inspections. Complying with the strict HUD inspection guidelines can be stressful, and you might lose tenants to other Section 8 landlords. So, you must do whatever it takes to comply with the inspection routine.
Rent Pricing Regulations
The Section 8 housing program also comes with a set maximum monthly rent. The HUD Fair Market Rents Documentation system sets fair market rent for every state or county that every Section 8 tenant should pay. This is per the rental house size. Even though this is a good measure, it can reduce the rent income you raise from the property.
No Security Deposits for Section 8 Property
Additionally, you'll not receive a security deposit from your renters under Section 8 property management. The housing choice voucher program only pays the tenant's rent, not the security deposit.
So, you should do further tenant screening to determine if they can afford security deposits despite being a voucher holder. The security deposits are under local and state landlord-tenant laws.
Tricks to Maneuver the Section 8 Property Management Regulations
Since meeting the set inspection guidelines can be a challenge for a DIY landlord, it's best to do the following:
Hire a Property Manager
The property manager can help you handle the Section 8 tenants, reducing stress. They can also ensure the home is well maintained according to the Housing Quality Standards by HUD.
The Section 8 property manager can conduct routine interior and exterior inspections to ensure housing quality standards are met. Property management companies can also remind the tenant of their responsibilities under the Section 8 housing program and the consequences of breaking the rules.
Insure the Property
Insure the property instead of using money from your pocket to do repairs as per HUD regulations. The landlord insurance program can help the property manager pay for the repair expenses before the rental income reflects on the landlord's account.
So, you’ll undergo the annual property inspections even before a tenant moves in for you to receive the payment voucher.
Bottom Line
If you're looking for a better way to earn a steady income from your rental property, consider enrolling for Section 8 property management. The program advertises the vacant section 8 rentals to potential tenants. It also attracts more renters and reduces tenant turnover rates.
However, act smart since you must meet the HUD inspection guidelines by doing regular maintenance and repairs for the annual inspection. Consider getting your landlord's insurance coverage by Steadily and meet the inspection guidelines without spending money from your pocket. Contact us and sort fire, water, windstorm, theft, and lawsuit damages that might arise from the rental property.
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