Being a Landlord is nothing more than running a business, and those who run it know it's not all about making a profit. Owning and renting a property comes bundled with responsibilities, consistent involvement, and, of course — some unavoidable risks.

But, as in any business, there is always a safer way to deal with things. This is also the belief of those landlords involved in the Section 8 Housing Program, who see this opportunity as a stress-free way to manage tenant relationships and a potential source of rental revenue.

Understanding both sides

The main purpose of the Section 8 program (also known as the Housing Choice Voucher) is to help low-income tenants find affordable housing in the private market.

Established by the Department of Housing and Urban Development (HUD), the program has served its purpose over time, with 2 million people in 1.2 million households in the US benefiting from it.

Renting through Section 8 - What’s in it for the tenants?

It is noteworthy to mention that The Housing Choice Voucher is not for everyone. Only tenants who meet the criteria set by the Secretary of HUD can be considered for this program.

The requirements concern the income level of the family or the individual, their residence status, eviction history, cases of disabilities, citizenship, and more.

Related fact: The income limits set by the Department of Housing and Urban Development are categorized into the following – 30%, 50%, and 80% of the area’s median income level. Therefore, to be eligible for the HCV Program a family must have an annual income within these limits

By participating in this program, tenants will be exempted from a large part of the rent, paying only 30%-40% of it, depending on the case, and leaving the rest to the Government.

Once a tenant gets a Section 8 Voucher, it can still be used even when moving to another city or state with the only condition being that there must be a public housing authority (PHA) in the community.

But what exactly influences the value of these vouchers? The tenant's contribution must be the greater of any of the following — 30% of adjusted monthly income, 10% of the gross monthly income, the welfare rent, or the minimum amount established by the PHA.

Let's talk about some numbers. For example, a family with a 2-bedroom apartment in Arizona with a fair market rent of $970 and a gross income of $25,000 per year could use the following formulas to determine the value of their voucher:

1. $25,000 gross per year divided by 12 months means $2,083 per month, and 10% of this results in $208.
2. Starting with a $25,000 gross income per year, and taking into account an example of $9,000 deductions added to it, the gross income will be $16,000 annually net earnings - which translates to a $ 1,300 monthly net. Therefore, 30% percent of this amount is $390.

In this scenario, because $390 is more than $208, the family's rent contribution will be $390 per month, meaning that the Government will cover the rest of the payment.

Therefore, the difference between $970 (which is the fair market rent in this area) and the $390 (family contribution) results in $580, which will be covered by the Section 8 Voucher Program.

Landlords' perks of accepting Section 8 vouchers

Although it seems that most benefits are tied to tenants, landlords also have something to gain, and many of their reasons for accepting housing vouchers relies on the safety of not being involved in renting something on their own.

When a third entity is involved in the process of renting and managing monthly payments, the duties of landlords are significantly eased.

But the reasons why they choose to list their properties in the Housing Choice Voucher Program do not stop here:

Guaranteed rental payments - One major benefit of accepting Section 8 tenants is that (70%) of the rent is paid on the same date each month, with no delays. If you previously found it difficult to collect rent from your tenants, this program will ensure you a constant monthly income.

Reduced vacancy rate - With waiting lists at their full capacity in many cities, you are unlikely to ever have an issue renting your property through the Section 8 program. This is especially beneficial in cities where rentals stay vacant for very long periods of time, and apartments and houses are not accessible for many families or individuals.

Free advertising - Along with guaranteed rental payment each month, you can also take advantage of free advertising for your available rental units. Your Local Public Housing Agency will make sure that your property is well promoted and reaches the people who are looking for it.

Your future tenants will be checked - There is a screening process used by housing authorities that involves checking the criminal record, income, employment, and eviction history of your future tenants. It may not be much, but at least this will be one less concern for you.

Long-term tenants - Because most tenants applying for the Section 8 program end up on waiting lists that can take 1-2 years before finding a home, the chances of them looking for new accommodation in the near future are quite slim.

Related fact: While length-of-stay for a typical U.S. renter is somewhere between 2-3 years, tenants with Section 8 vouchers stay an average of 6.6 years.

One step ahead of the other landlords - Accepting Section 8 vouchers will give you access to an extra number of potential tenants, inaccessible to other landlords in your area.

How Do You Get in the Housing Choice Voucher Program as a Landlord?  

If you are okay with accepting housing vouchers from potential tenants, all you have to do is wait for them to find you, after which you will have to fill an application to the Local Public Housing Agency (PHA).

Related fact: In most states, landlords have the freedom to choose whether or not to accept Section 8 vouchers. However, there are certain states such as Oregon and Washington where the law requires landlords to accept these vouchers on the grounds that refusal constitutes discrimination.

However, if you want to rent your property especially to tenants with Section 8 housing vouchers, you could do a few things to speed up the process.

You can either go directly to the local PHA in your area and follow all the steps recommended by them before any tenant will reach you, or list your properties on www.Gosection8.com.

To register your properties in the Section 8 housing program with the help of a local Public Housing Agency you should:

• Contact your local PHA.
• See all their requirements and check if your property fits. If there are any aspects that your unit does not tick from the 'must-have' list, you should change this before moving on to the next step.
• Complete an inspection for your rental unit (this should take place a few days after the tenancy approval). During the visit of a Public Housing Authority staff member, your property must pass certain points to complete the rental process successfully. Usually, they will check the sanitary facilities, illumination, electricity, water supply and a few other things.
• After your rental unit passes the inspection, you will have to go through a series of signings and exchanging of documents to make the monthly payment by voucher possible.
• Now you're all set up to start finding your tenants. The PHA office will be with you at this stage, helping to promote your property and making sure that potential tenants meet all the necessary criteria for renting your unit.

The ‘Go Section 8’ website provides property rental listings directly to Public Housing Authorities and will make your properties visible to many tenants daily looking for Section 8 rental housing in their area. Here's what to do if you choose this option instead:

• Post your property on their website provide information about your unit exactly as you would do on any other rental website — upload pictures and give all the details about your address, unit capacity, utilities, parking lot, monthly rent and deposit amount required, and anything else related to your property characteristics.
• Wait to receive a message from a tenant interested in your property and contact the Department of Housing and Urban Development to review their application in order to see if they can afford your rent out your unit.
• Schedule the inspection and wait for your property to be checked by an authorized inspector.
• Sign a rental agreement with your tenants and the final Section 8 contract received from the Housing Authority.

Is This the Ticket to Hassle-free Renting?

The advantages of registering a property in the Section 8 Program may be quite satisfying for some landlords.

In brief, if landlords choose to approve housing vouchers or even register their properties in the Section 8 program earlier, the Government will pay a part of the rent (meaning that there will always be a guarantee of monthly income), they will get access to a rich base of long-term tenants, free advertising, and a reduced vacancy rate.

All this is ensured as long as the tenant remains eligible and the landlord meets all Housing Choice Voucher Program requirements.

But... is this really what a landlord needs to get rid of the worries involved in renting out their properties? Despite all the tempting advantages, many landlords avoid getting involved in the Section 8 program, especially those owning high-value properties in expensive areas.

Still, have second thoughts? Have a look at the most common reasons why landlords do not want to get involved in the Section 8 housing program.

Price limits for your properties - If you own a luxury unit or something that could easily sell above the average market price, you certainly have no reason to get involved in Section 8. In general, Section 8 landlords receive less money for their properties because local authorities set an average price for those looking to rent a place with housing vouchers.

The eviction procedure could take an eternity - Unlike regular rentals, evicting Section 8 tenants could take much longer because you will have to deal with a lot more bureaucracy to get everything in place. And if you are thinking of becoming an 8 Section landlord just to leave all responsibilities in the hands of your local housing authority, better think twice.

The pre-rental inspection will not be the last - For the most part, if you are not a fan of constant visits that involve a thorough inspection of every nook and cranny of your property, you should reconsider your decision to become a Section 8 landlord.

Even if none of these inspections will go unannounced, they are still time-consuming events that will need some preparation on your side beforehand.

The tenant pre-screening will not reveal everything - Indeed, the public housing authority will have a criminal background check on your tenants, along with a few other essential aspects, but this will not be enough. There is a chance that you will encounter certain disagreements in your tenants-landlord relationship.  

Richard Mews a real estate investor and landlord expands on this, "The public housing authority has its own application screening the procedure, which includes a criminal background check, drug testing, and income verification. It's useful to know that the applicants have fulfilled certain criteria to be eligible for Section 8, but each landlord should perform their own tenant screening procedure as well."

Considering that these people applying for the Section 8 program are part of families with a very low income, it is likely that they will not be able to pay the rent on time every month, even if they are only partially in charge of it.

The Verdict

The Section 8 program can bring advantages for both landlords and tenants. With a Housing Choice Voucher, tenants can rent houses and apartments in safe areas that they could not have afforded without help and use their remaining income for other necessities.

Landlords have more tenants to choose from and the guarantee of monthly payments, making it easier for them to rent out their properties. Although this may be true, accepting Section 8 vouchers are not beneficial to all landlords.

Some of them prefer to stay away from the program because they do not want to limit the rent of their property, be surprised by unpleasant tenants, or are simply afraid that the Housing Authorities could interfere too much in their business.

Nonetheless, circumstances may vary from one landlord to another and the nature of their properties. That being said, if you are in a position to decide whether to become a Section 8 Landlord, you should first do a deep analysis of how this change could affect your rental real estate business in the long run.

Check out our guide "How to Become a Landlord" if you are a new and aspiring landlord!

Tip: Require a security deposit. Richard Mews states, "Requiring a security deposit is a smart method to ensure that the renter has a stake in the property's upkeep. The security deposit protects you against financial loss in the event of damage to your unit beyond regular wear and tear, as well as missing rent payments. If a renter is unable to pay a security deposit, support programs may be available to aid that family. You may also enable the renter to contribute toward the security deposit rather than demanding it upon lease signing, but you must still collect and retain the deposit. Allowing the tenant to use the deposit to pay for repairs or late rentals while they are still occupying the unit is also a bad idea, since you may wind up with no deposit after the lease expires."