Section 8 rentals

The Benefit of Investing in Section 8 House Rentals

Ever since the government initiated rental subsidies for low-income individuals and families through the Section 8 House Rentals Program, property owners have been eager to participate. This is because the participating property owner receives their monthly rent through direct deposit at the first of every month. HUD (Department of Housing and Urban Development) provides the funds for the subsidies.

For most real estate investors, the Section 8 House Rentals Program has improved their ability to generate profits and equity in their real estate property. This is because the program offers convenient on-time payments. There will never be an excuse of a late payment when the federal government steps in to provide the cash.

A Low Eviction Rate

Many renters that take advantage of the program are usually there to stay through the term of their lease. Even if the renter has serious issues including health problems and is absent from work for months at a time, the rental program still provides a rental check. Even in cases where an eviction is necessary, there remains a huge backlog of potential Section 8 House Rentals Program candidates eager and qualified to move in.

Higher Rents

Many property owners enjoy the rental program because every rent payment is guaranteed no matter if the tenant is suffering hardship. In fact, real estate investors can often charge higher rents because the properties tend to be in lower income neighborhoods. The guaranteed monthly rent minimizes vacancy rates to produce better profits and generate more equity for the investor.

The Subsidy

Individuals and families that qualify will receive their benefit through a rental subsidy, often referred to as a housing assistance payment. Typically, the amount of the monthly subsidy will be the total rent charged by the investor minus the tenant’s share of the rent. Sometimes, HUD will adjust the subsidy when the total rent does not include the property’s utilities.

Qualifying Families and Individuals

Families and individuals that are eligible must qualify by meeting low-income standards. A family’s monthly income cannot exceed 80 percent of the area median. In many areas of the country, it is not difficult to find eligible families that meet the standard, or below.

Landlord Expectations

According to the Department of Housing and Urban Development, the investor, property owner or manager must maintain every rental unit. The unit must be kept in sanitary, safe and decent condition. If conditions of the property are found unacceptable, the owner will lose their qualification for receiving housing assistant payments.

The Amount of the Rent

The rent amount must be set at an acceptable rate through the Housing Assistance Payments Program. The amount must be set at the fair market rent (FMR) for the type of housing in that area.

How to Participate

Any property owner that is interested in participating in the rental program must first list their property for rent through the community’s local Housing Authority. Next, the unit must be shown to participants in the rental program, and agree on terms of the lease. Any potential candidate for the unit will bring their RTA (Request for Tendency Approval) that the landlord, investor, or manager will need to complete and submit to the local Housing Authority.

The property owner will then need to schedule an appointment with a home inspector and the potential tenant and meet at the rental property. At that time, the inspector will provide a list of any improvements or repairs that need to be made before the lease approval. After a successful re-inspection, the rent is finalized and the move-in approved.

There is a huge demand from potential tenants eager to rent properties through the rental program. Participating in the program benefits both the tenant in the property owner.