In 2020, nearly 600,000 people in the US were homeless. The good news is that there's something you can do to help.
Section 8 housing is for low-income families and individuals. These rentals can be part of a Housing Choice Program, where the voucher-holder can choose anywhere to live. Section 8 rentals can also be properties specifically maintained for Project-Based Voucher holders.
As a real estate investor, you can easily market your properties to Section 8 tenants. As a result, you'll get the benefits of fewer vacancies, more reliable income, and lower turnover. Plus, you'll be doing something good for your community.
Does Section 8 real estate sound good to you? Then keep reading this guide to find out how to start investing in Section 8 housing.
How to Become a Section 8 Landlord
The Section 8 approval process is similar for Project-Based investors and Housing Choice landlords. You'll first need to fill out an application on the Department of Housing and Urban Development's (HUD) website.
Once your application gets approved, it's time for your first inspection. The public housing agency (PHA) near you will visit your property in person to evaluate:
- Livability, including that the HVAC, locks, and plumbing are working
- General safety
- Building quality
You'll negotiate Section 8 rental prices upon passing the PHA's inspection. Once your rent is approved, your job is pretty much finished. HUD will even provide the lease agreement for you.
Pros and Cons of Section 8 Rentals
As with any tenant, there are some risks to renting to Section 8 voucher holders. However, there are also some significant rewards, making Section 8 investments worth the potential headaches.
Learn more about the pros and cons of being a Section 8 landlord below.
Pro: Reliable Rent
HUD pays a portion of all Section 8 tenants' rent. However, the amount HUD pays exactly varies based on the income status of the tenant, with the lowest income tenants receiving the highest HUD supplementary payments.
Unlike regular tenants, you'll never have to stress about not receiving a month's rent.
Con: The Bureaucracy
Evictions and move-ins can be delayed due to Section 8 red tape. For instance, your properties must undergo frequent inspections. If your properties aren't up to HUD's standards, you'll have to invest in annual repairs.
Worse, Section 8 landlords often have to wait up to two months to receive the first rental check from HUD.
Pro: Lower Turnover and Fewer Vacancies
Section 8 housing is hard to find because it's in such high demand. Voucher-holders know this, making them much less likely to end their lease once they move in. That means fewer vacancies for your property.
Even better, when you have a vacancy, demand for Section 8 housing means your investment won't sit idle for long.
Ready to Start Section 8 Investing?
Investing in Section 8 properties can be risky but it's also highly rewarding. You get the benefits of reliable monthly rental payments, lower turnover, and fewer vacancies.
Need advice before you get started with Section 8 rentals? You've come to the right place. Get in touch with Columbia Property Management today!