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Are you considering using your rental property as a Section 8 rental? The program has received so many mixed reviews that the decision to become a Section 8 landlord is difficult.
Section 8 has made housing affordable to over 2.2 million people, and landlords with Section 8 properties were paid over $22.24 billion in 2020. It's obvious that there is money in being a Section 8 landlord, but is this the right investment for you? Keep reading for more information.
What is Section 8?
The Section 8 Housing program is funded by the Federal Government. It helps low-income families, disabled persons, and elderly residents to afford housing in the private market.
Participants choose where they want to live, which can be any Section 8 rental in the private market. They use vouchers to subsidize their rent based on what they can afford to pay and fair rent from the area's market. Tenants pay the difference between the actual rent and the amount of the voucher.
Now. How can this work for you?
Consistent Income
One of the greatest benefits of being a Section 8 landlord is receiving consistent income. Landlords who participate in Section 8 receive their money from the local housing authority. They don't have to worry about late or missed payments because the Federal Government is paying them.
One of the biggest headaches of being a landlord can be chasing rent from tenants. Being a Section 8 landlord eliminates the need for this. It also a sure way to make money each month with your investment property.
Tenants are Pre-Screened
Some landlords are hesitant to trust residents in their properties that they do not know. Another benefit of Section 8 housing is the participants have already been prescreened by the government. Criminal background checks and income verifications have already been run and participants have to qualify to receive the vouchers.
It is still recommended that each landlord conduct the appropriate background check before tenants move into their residences.
There are definite benefits to being a Section 8 landlord. There are also some disadvantages.
Rental Pricing Caps
HUD decides on how much rent landlords can allow based on the number of bedrooms in the property for the designated area. Even if you are in an area that justifies higher rent prices, you can't exceed the amount HUD establishes for your rental property. This limits the amount of money you can make from the property.
Difficult Tenants
Let's be honest: Difficult tenants can happen in any rental property. Renting is risky, and difficult clients are just par for the course. Property damage, evictions, and other issues can happen with any tenant, no matter their income.
Ask For Help
The market for Section 8 housing in Memphis is growing as more money is given by the Federal Government to subsidized housing programs. If you have an investment property but aren't sure how to manage Section 8 tenants, consider hiring a skilled property manager to help you.
