What is section 8 housing?

Section 8 usually refers to the Housing Choice Voucher Program, funded by the U.S. Department of Housing and Urban Development (HUD).

This program does not provide public housing, but rather rent subsidies for low-income Americans. The benefits follow the tenant — the voucher holder — who can take their voucher and apply to any rental housing.

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.

How it works

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.

Once approved, they submit rental applications to us like any other renter. They can use their vouchers for any type of housing units, from large multifamily complexes to detached single-family homes.

Generally speaking, the tenant pays 30% of their household income toward the rent, and Section 8 picks up the balance above that.

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.

Pros
1. Reliable On-Time Payments- You can generally rely on the Government to at least pay their portion of the rent.
2. High Allowable Rent Increases- Most cities allow landlords to raise the rent in the 5-8% range per annum. These are determined by the federal government’s findings of fair market rents.
3. Fill Vacancies Faster- Many landlords choose not to accept section 8 housing so there is always a shortage of available homes. For that reason, you can generally find tenants fairly quickly.
4. Lower Vacancy & Turnover Rates- Because there is such a shortage of properties that accept section 8; tenants typically stay longer.

Cons
1. Red Tape- The bureaucracy can cost time and money, and delay new Section 8 tenants moving in. There are also more steps involved in an eviction process which can cause it to drag on longer than normal.
2. Delayed Initial Payments- when going through a government agency, things can take longer. Be prepared for the first rent payment to be late.
3. Inspections- this is the top reason that landlords choose to not accept section 8 housing. The inspectors have to meet a certain number of requirements when inspecting a house which can lead to costly repairs.
4. Tenant Quality- Generally speaking, lower income tenants sometimes mean lower credit score, lower reliability, and less stable income.

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