“The only man who never makes mistakes is the man who never does anything.” ― Theodore Roosevelt

I know of a lot of property owners who are afraid of renting to Section 8 tenants. The Section 8 program can be defined as:

“The Section 8 program is financed by the U.S. Department of Housing and Urban Development (HUD) to provide rent subsidies in the form of housing assistance payments (HAP) to private Landlords on behalf of extremely low, very low-income individuals/families, senior citizens, and persons with disabilities.”

CURRENT RENTAL AMOUNTS Section 8 pays rent based on the amount of bedrooms, as opposed to square feet or amount of bathrooms. It is also based on the zip code of the housing provider. The current limits, in my opinion, allow for a good return as a landlord:

Studio Unit- 2184.-2796. per month

1 bedroom unit- 2460.-3216. per month

2 bedroom unit- 3120.-3948. per month

3 bedroom unit- 3996.-5280. per month

4 bedroom unit- 4416.-6036 per month

5 bedroom unit- 5078.-6940. per month

Payments go all the way up to 8 bedroom units with rental amounts as high as 9657. per month. I once had a client who had a commercial building in Long Beach he used as his office, but upstairs was a 7 bedroom unit he rented to a Section 8 tenant.

WHAT’S THE DOWNSIDE? A lot of people believe that Section 8 tenants are going to be management intensive, because they are home more often. In some instances that may be the case but, consider that the amount paid by the tenant is based on their income in comparison to the AMI ( Area medium income), so many Section 8 tenants are employed, but their income is below their housing needs. You as the landlord, get to decide to accept the tenant or not, so you can screen each applicant just as you would normally do. Tenants pay a portion of the rent, up to a maximum of 40% and the rest is deposited into your bank account by Section 8. Based on my experience, the deposits have been very punctual. Tenant incomes can range from 0% of AMI all the way up to 80-120% of the AMI for qualification on to the program. Section 8 will require a physical inspection, where you may be asked to perform repairs on your unit. These repairs, in my experience, have been minor and are usually health and safety items you would have done anyway.

LANDLORD DUTIES. There are no additional landlord duties, but the main thing is to screen your Section 8 tenant as you would any tenant. I like to go to the place where the tenant lived previously. This gives me a good idea with regard to how the tenant treats their residence.

“If you want something you’ve never had, you must be willing to do something you’ve never done.” –Thomas Jefferson

What we at PRS PROPERTIES CAN DO. We are always available to chat. We can supply you with rent and sale comparables in the area of your properties. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.