Why landlords dont accept section 8

Though funded by HUD, Section 8 is administered on the local level. Local public housing authorities PHAs review tenant applications for subsidized housing, choose recipients, screen landlord applications, inspect rental properties, and generally manage the rental assistance program. So participating landlords interact with their local housing authority.

Once upon a time there was a second Section 8 program, the Project-Based Program. These benefits tied to the property owner, who partnered with the government to provide affordable housing for low-income families. Only United States citizens and specific legal immigrant statuses qualify for Section 8 supportive housing benefits. In most areas, landlords have a choice to accept Section 8 vouchers or not.

But not everywhere. Some states such as Oregon and cities such as Seattle impose laws that require landlords to accept Section 8 tenants. To deny Section 8 voucher holders constitutes discrimination in these jurisdictions, similar to Fair Housing Act violations. But if you buy rental properties in low-income housing markets, your local laws may require you to accept Section 8 vouchers. As a final note, remember to always keep copies of all rental applications, tenant screening reports, and your own screening notes, even for applicants you reject.

If a declined applicant sues you for discrimination, you need to prove to a judge that you chose one tenant over another for a legitimate business reason. These include insufficient income, poor credit, eviction history, and bad landlord references, among others. Contrary to some internet myths, landlords do not receive a tax credit for accepting Section 8 renters.

Tenants apply with the local housing office in order to get Section 8 approved vouchers. Those prospective Section 8 tenants usually sit on a waiting list to join the program. In some areas, it takes years for the local PHA to even review their application!

Once approved, they submit rental applications to landlords like any other renter. They can use their vouchers for any type of housing units, from large multifamily complexes to detached single-family homes. Or rather, units owned by any private market landlord who accepts Section 8 vouchers in areas where landlords have a choice. Usually not. When you accept a tenant who has been accepted into the Section 8 housing assistance program, expect some red tape.

Your property will undergo an inspection for approval, at the very least. But more on that later. So should I become a section 8 landlord? What are the advantages to signing a lease agreement with Section 8 tenants? It helps if you automate your rent collection to receive rent electronically, direct-deposited into your bank account. You can even buy a rent guarantee insurance policy for a few hundred dollars per year.

Check out Steady or Rent Rescue to buy rent default insurance, that kicks in and pays you the rent if your tenants stop paying. Remember, Section 8 no longer pays all or even most of the rent for the tenant.

Nor does Section 8 pay higher-than-market rents anymore, for the most part. But since the government pays much of their rent, Section 8 tenants tend not to complain as much about rent hikes.

When you accept Section 8 tenants, you can fill your vacancies faster. But there are also extra websites and newsletters specifically for Section 8 rental listings. Because tenants with financial assistance often have a harder time finding landlords who accept vouchers, they tend to stay longer-term.

That in turn means lower turnover rates and vacancy rates. Both of which mean higher profits and better real estate cash flow. While it was more common in decades past, sometimes Section 8 tenants do pay higher rents than market tenants.

There you will find a chart providing the FMR for efficiencies up through 4-bedroom rentals. Section 8 tenants can come with plenty of their own risks and drawbacks. Before you take the plunge and invest time and money into becoming a Section 8 landlord, consider some of these disadvantages. The bureaucracy can cost time and money, and delay new Section 8 tenants moving in.

Worse yet, local housing departments often require extra steps in the eviction process , delaying eviction of non-paying Section 8 tenants. Sometimes your first rent check can take up to two months. Oh, you will get it eventually, but count on covering your expenses out-of-pocket for the first few months.

Did I say inspections? We are talking about a white-gloved, look-everywhere inspection. This is the top reason many landlords do not accept Section 8 vouchers. The simple fact is that lower-income tenants sometimes mean lower credit, lower reliability, and less stable income. They also pose a higher risk to your property itself. Tenants can put the proverbial beatdown on your rental unit leaving you, the homeowner, with the bill.

Brian shared some of his horror stories with me, and pointed out that the less financially invested people are in, well, anything, the less attention they pay. His Section 8 tenants often treated his properties badly, because they had little or no financial investment in it.

What short-term fix-and-flip loan options are available nowadays? We compare several buy-and-rehab lenders and several long-term landlord loans on LTV, interest rates, closing costs, income requirements and more. Keep in mind that Section 8 tenants vary widely in quality by geography as well; I know a landlord in rural Alabama who swears by them, while Brian has nothing but horror stories about the Section 8 renters he had in Baltimore City. Here are some tips for success, when starting out with Section 8 vouchers!

Or however much your property is worth. Because you are handing complete control and possession of your asset worth hundreds of thousands of dollars to these people. Think of tenant screening as a mechanical process — remove any attachment and emotion from the equation. You need a written policy on your tenant screening criteria, that you follow like clockwork every time you collect rental applications.

List out all your tenant screening criteria such as income, criminal history, employment, credit score and credit history requirements, eviction history, landlord referrals, and condition of their current home. Feel free to start with a free tenant background check hint hint! Following a set procedure also keeps you in compliance with landlord Fair Housing laws. Assuming, of course, that your policy adheres to FHA regulations.

Start tenant-proofing your property by painting the walls with glossy, neutral-colored, inexpensive paint.

I personally steer clear of both carpets and real hardwood floors in rentals. However, sturdy lookalikes are perfect, from waterproof luxury vinyl tile LVT to faux wood to bamboo. If you insist on installing carpets, use a thick, higher-grade padding, and lower-grade carpets with darker colors. Use tamper-proof smoke and carbon monoxide testers. If you provide appliances, install second-hand ones with few bells and whistles. The more complex an appliance is, the more likely the tenant is to misuse and break it.

Likewise, remove other unnecessary features. No reason to include garbage disposals they break easily , ceiling fans, window air conditioning units, or anything that is not a required addition. Bare minimum equals less inspection, less maintenance, and less damage to worry about.

Many of the common repairs can even be done cheaply and by you, thus saving money but still maintaining the property in a good strong condition. Your goal is not to harass, but to look for needed repairs and ensure the tenant is complying with all lease agreement rules. Check for running toilets, leaking faucets and anything else that may be literally or figuratively flushing money down the drain.

You will also be able to be sure that the tenant is complying with your lease agreement terms. Are there any unauthorized occupants? Alligators in the bathtub? Start the eviction process as soon as possible; it takes several months or longer, for Section 8 tenants from the initial eviction notice until the eventual lockout. So the tenants will have plenty of time to correct the violation and avoid the eviction.

Often tenants who break their lease agreements will be bounced from the Section 8 program; they have much to lose by not following the rules. Landlord Note : As of early , the federal coronavirus eviction moratorium is still in place, banning most eviction proceedings.

Until the federal and any applicable state- or local COVID eviction moratoriums end, note that you may not be able to evict non-paying tenants.

Above all, know your neighborhood. If you have a great rental in a desirable neighborhood, you may want to rethink becoming a Section 8 landlord. Chances are that the FMR will be lower than what you can fetch on your own. Now that you are armed with the info, the good, the bad and the truth, go forth and choose well!

The Section 8 Housing Voucher program has its place and can be a viable option for many landlords. Comment below: Have you ever worked with Section 8 renters? How did it go? Will you consider working with Section 8 renters in the future? Enjoy this article? Did it raise some questions and ideas that got you thinking? If so, your friends, colleagues, and family members will probably also get something out of it.

Share it with them on Facebook or Twitter. You can also follow us on Facebook and or Twitter for awesome daily doses of, well, real estate awesomeness? I might try it for my next property, see how it goes!

Besides having to do the annual inspections that are stricter than the city inspections just had section 8 make us replace a whole driveway 10k to the owner. No way! I am not piling another on. I hear you Ed! Section 8 definitely adds another wrinkle. I no longer accept Section 8 renters either, although in my case it had more to do with the local Section 8 office. I have a situation where Section 8 paid prorated days of the month up until the unit failed. The repairs were made then the re-inspection took place 3 weeks later delayed due to the sect 8 office was closed for 1 week on vacation then they had scheduled the wrong day.

Thank you, SB. I keep reading that it may take up to 2 months for the landlord to get that first rent check. Does this first rent check cover back rent or do you really lose 2 months worth of rental income?

Hi Jaymes, you get the rent money for the time the tenant occupies the property. But keep vacancy rate in mind as an expense as you forecast cash flow, and feel free to use our rental income calculator to run the numbers.

People are people. Judge each on their merit, not on stereotypes. You may miss out on the perfect renter. Not all Sec. They even paid for the fans and repairs. Because they too wanted to live in a place they could call home.

I also heard that in some states it is illegal to discriminate against those with Serc. I hope others find the joy in knowing you are helping others and having payments paid on time with non-destructive renters. Always, no matter what you think you can tell about a person run a background check. Ask for extra references. Thank you Sarah for your comment. I work with young mothers living in Illinois and they receive their section 8 vouchers, these are potentially great tenants, because they are ending their current leases.

Unfortunately, i n Illinois landlords are not required to rent to section 8 voucher holders, and landlords that do accept the vouchers, may have properties in great neighborhoods but will only rent to section 8 voucher holders in less desirable properties. There should be something to stop this discriminatory practice. Section 8 is simply another form of payment, not a deciding factor. I have worked previously in at a rental company and have seen how people without Section 8 vouchers leave apartments and learned that bad tenants come in all forms.

In addition , the Urban Institute recommends greater investment in actively recruiting landlords to participate in voucher programs, particularly in low-poverty neighborhoods. The vouchers themselves could use improvements, too. In some cases, the lack of housing choice may be caused in part by voucher amounts that are not properly calibrated to local rents. Following a lawsuit, Dallas was the first to try this approach, which led to a greater use of vouchers in low-poverty neighborhoods.

Many advocates in New York City, including those working to address rising homelessness , agree. But Aurand notes that in other parts of the country, the shortage in affordable housing is less severe — the issue is that extremely low-income households cannot afford to pay even relatively low rents.

In those cases, Aurand said, it would be effective to increase voucher funding. Several presidential candidates have announced housing proposals that would fully fund federal vouchers for all eligible households, as would a recently introduced Senate bill.

Improving the voucher system, increasing access to affordable housing, and giving households more choice in where they live would help fulfill the original promise of housing vouchers. Without stable housing, and especially when experiencing homelessness as half a million people do on any given day , it is extremely difficult for people to stay afloat.

She is still searching, hoping her family will find a home using their voucher. That we make it so hard for people like Sofia is an indictment of a system ostensibly meant to help her. Sign up for the Future Perfect newsletter. Our mission has never been more vital than it is in this moment: to empower through understanding.

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By choosing I Accept , you consent to our use of cookies and other tracking technologies. The majority of residents here receive vouchers that subsidize their housing.

Michael S. Vouchers can help the poor find homes. Why discrimination against voucher holders is a big problem. Reddit Pocket Flipboard Email. Housing vouchers, explained Federally supported vouchers were introduced with the Section 8 program in President Lyndon B. Johnson signs a bill to create a new Cabinet post for the Department of Housing and Urban Development in September The Alfred E.

Future Perfect Are we turning the corner on Covid treatments? Sign up for the newsletter Sign up for The Weeds Get our essential policy newsletter delivered Fridays. Thanks for signing up! Check your inbox for a welcome email. The safety inspections are also a sticking point. HUD requires landlords who accept federal housing vouchers to submit their units to regular inspections and to make improvements when necessary.

Landlords say the process can be time-consuming and costly. If a landlord fails to make required improvements, the local housing agency can stop issuing payments.

But it often leaves voucher recipients in the lurch. When the inspector found mold in their home and her landlord failed to address the problem, the agency stopped paying the rent. Shanna, unable to make up the difference in rent, was evicted.

She and Lavi had no place to go and nowhere to put their furniture. Local housing agencies are trying to make the program more appealing to landlords. Over the past couple of decades, more than a dozen states and nearly 90 cities and counties have passed so-called source-of-income protections, which forbid landlords from denying tenants based on that information, and Senator Kaine reintroduced a bill that would outlaw such discrimination nationwide.

Both Washington, D. Last year, Tiana Martin, a federal employee, experienced this disconnect. Latrobe has since edited its website, and the firm that owns the building claims the agent who texted Martin was misinformed, according to a statement provided to Washington City Paper.

Martin found a willing landlord in a different D. The stress of dealing with her living situation is taking a toll. She was recently hospitalized for a thoracic aneurysm, which her physicians said was stress-related.