Section 8 is a Housing and Urban Development (HUD) assistance program for low income families that grants housing payment assistance to families based on their ability to pay for housing expenses.
Section 8 programs are administered by a Public Housing Authority (PHA); either the State, the local city housing authority, or the county housing commission. The Landlord gets paid directly by the PHA for the major portion of the rent each month. The assistance program contracts are administered in one year terms. So to avoid mid-term moves for Section 8 tenants, my advice is to make your lease agreements with annual renewals rather than converting to month-to-month. This will help reduce your turn over rates, and keep your properties fuller longer.
In order to be approved and accept a Section 8 tenant, your rental property must meet HUD inspection guidelines which will verify that the property is in livable condition and that all utilities are in working order. You should get a copy of these requirements from your local PHA and make sure you are familiar with all areas included in the inspection. It makes a good impression if your property passes inspection the first time. However, don’t be discouraged if an issue arises that requires extra work before it gets a final approval. The agency will give you 30 days to correct any issue. Keep in mind, however, that the PHA will not pay for any rent days until the property “passes” inspection. Thus, you should work that into your tenant’s move in time-line, and it is STRONGLY suggested that you Do Not let your tenant move in until you have passed inspection and have a signed Housing Assistance Program (HAP) contract from the PHA.
- Do screen the tenants; they are responsible for the terms of the lease not the Agency.
- Do review the inspection guidelines and be familiar with all requirements.
- Do get a security deposit for as much as your state will allow. Many times this is one or one and a half times the amount of the monthly rent.
- Do make your rental contracts one year long with one year renewal extensions rather than converting to a month-to-month. Thus, you will be less likely to have to deal with mid-term move-outs.
- Don’t let the tenant move in until you have a signed HAP contract.
- Don’t wait until the last minute to get your property ready for inspection.
- Don’t assume that since you have a contract with HUD that they will pay for damages caused by the tenant. They Won’t!
- Don’t include the tenant’s utilities in the rental amount, the PHA will not pay you dollar for dollar for utilities and you will lose money.