What is Section 8?

Section 8 of the Housing Act of 1937 is a government code which authorizes the payment of rental housing assistance to private landlords. It allows for a portion or all of a tenants rent to be subsidized by the department of Housing and Urban Development (HUD). If pays out on behalf of approximately 3.1 million low-income households nationally.

The program itself operates through many names, the largest of which, the Housing Choice Voucher program. This program pays a some portion up to all of the rents and utilities of about 2.1 million households.

The Housing Choice Voucher Program provides “tenant-based” rental assistance which means the tenant can choose where they wish to live. This means a tenant who is unhappy with the condition of their residence can easily switch to a better unit if need be.

The maximum allowed voucher is determined by the median rental price of comparable sized units in the area.

What’s the benefit?

You as the owner are guaranteed a portion or all of the rental payment up to the value of the voucher. The rent is typically paid by the 15th of the month with the remaining gap between voucher and rent paid by tenant. This mitigates some or all risk associated to payment.

What is the drawback?

There are a couple of drawbacks to the section 8 program, depending on your investment objective.
• Section 8 seldom covers all payments. Usually the tenant will be responsible for 20-30% of the gross rent.
• There are caps to what you can charge. This is subsidized housing and section 8 expects you to subsidize a portion of rent as the landlord
• Tenants are hard to come by. SR Management Group LLC knows the system and how to locate these tenants.
• HUD has stringent inspection requirements to have a unit qualify for section 8.
• HUD will do a yearly inspection on the unit to make sure there is no perceived deferred maintenance. If they ask you to fix it the repairs must be complete or assistance payments will cease. If a landlord refuses to comply the voucher will be terminated and the tenant forced to move.

This seems like a lot of work!
It is. Dealing with Section 8 housing vouchers is not an easy feat. The complexities and rules of the program deter many landlords from pursuing this option. SR Management Group LLC has developed a system to help its clients navigate this cumbersome process so you don’t have to. The advantages outweigh the complexities if a tenant can be secured for an individual looking for safety of payments.