The Pros and Cons of Section 8 Rentals

Embarking on renting to Section 8 tenants is one of those decisions that property managers should undertake only after thoroughly researching all the implications of renting to this very specific demographic. Following are some of the
primary pros and cons to consider when evaluating whether or not Section
8 rentals are for you.

Pros: Government subsidies mean that your rental income is more assured than in other cases.
Since Section 8 tenants are by nature low-income tenants, many landlords
are rightfully concerned that renting to this sector will result in
difficulties with rent collection or, even worse, default altogether.
The truth of the matter, though, is that in many ways Section 8 rental
income is among the most reliable. Under Section 8, tenants are
responsible for approximately 30 percent of their rent, while the US
government picks up the balance of the rental payment. This US
government balance is paid directly to the property landlord.

Cons: Renting to Section 8 tenants puts your property under greater scrutiny due to government rules and regulations.
Be aware that before approving one of your units for Section 8
occupancy, the US Department of Housing and Urban Development (HUD)
will determine your unit’s Fair Market Rent
(FMR). Once the FMR is determined, you are obligated to cap your
Section 8 unit’s rent at that rate and are not allowed to accept outside
payments that will result in a rent higher than the FMR.

In addition to FMR restrictions, Section 8 properties are also subject to a full premises inspection to ensure HUD’s Housing Quality Standards are met and stringent HUD-mandated eviction rules and
regulations.

Pros: Because you have access to a specific demographic, Section 8 tenants may resolve persistent vacancy issues.
In many cases, Section 8 housing wait lists are thousands of families
long or, in some states, closed altogether due to over-extension. This
means that there is no shortage of Section 8 families available to rent
out your units. For landlords that have difficulty renting out units,
Section 8 may be a great solution to generate increased rental income.

Cons: Other tenants may be somewhat hesitant to rent from a Section 8 property.
The truth of the matter is, many people associate Section 8 housing with
run-down properties that cater to an undesirable demographic.
Obviously, this is not necessarily true. For the most part, the proof is
in the pudding. If you are concerned that Section 8 units may
discourage other renters from living on your property, exert even more
effort than usual into making sure that your property is top-notch. Keep
all public areas of your property spic n’ span; stay current on
maintenance and upkeep; put some extra effort into making your property
aesthetically pleasing with landscaping and gardening; and enforce
property rules and policies regarding noise and unit upkeep.

Of course, landlords of any stripe should be diligent about the issues above, but putting a little extra effort forth in this specific scenario will only work to your advantage.

As with so many other aspects of property management, gaining a good grasp on the issue at hand is 90 percent of the battle. If you are considering incorporating Section 8 rentals in your property, be sure to
not only do some online research on the topic, but also talk with other
landlords who rent to Section 8 tenants and address any questions you
may have to the appropriate state and federal agencies.