The rental business holds substantial profit. People are constantly looking for vacant spaces for household or business purposes. But with all-time demand at a high rise, it is challenging to find an affordable rental space for medium to low-income holders.
Luckily, Section 8 renting house is the cure to the problem of rental space affordability.
If you are a property owner wondering what section 8 housing is really all about, we got you covered. In this article, we have put together all the necessary information to become a Section 8 landlord.
What is Section 8 Housing?
The Housing Act of 1937 is called Section 8 under the authorized name Section 8 Housing Plan. It is a funded program by the US Department of Housing & Urban Development (HUD). It allows a rent subsidy enabling low-income families, older citizens, and disabled individuals to afford houses in the private market.
The HUD offers the facility only to those who satisfy the income requirement, tenant history, residential status, citizenship, and disability cases of the individual or the family.
Who can be the Section 8 Landlord?
Renting a self-owned property comes with ample responsibilities. Section 8 renting houses help the vulnerable people of the society. Hence, becoming a section 8 landlord comes with a few additional responsibilities.
Benefits of becoming a Section 8 Landlord
Section 8 renting house rents are affordable but short in supply. Therefore, becoming a section 8 landlord can be profitable in today’s market.
- Confirm Increase in Annual Rental Rate
A Section 8 landlord can increase the rent annually which HUD thinks is up to the current fair rental amount. In simple words, a 3BHK Section 8 approved home landlord can raise the rent by more than 5% depending on the living cost, location, and availability of utilities.
Calculated income from the business
Once you become a section 8 landlord, the local PHA will provide you with the monthly rent. Hence, you can be free to not worry about due payment, late fine, or tenant’s missing rent.
- Commitment & Turnover
Section 8 Housing has a waiting list. so when there is a space in section 8 houses, there are several potential tenants to fill the space overnight. Landlords do not have to wait for a tenant or deal with a broker on a timely basis.
Section 8 homes are in constant demand. This enables a predictable turnover expense for the landlord.
- Saving Advertising Cost
Once you become a section 8 landlord, your property will be under the control of HUD and several PHAs. The certified tag will find you reliable tenants from approved sources. However, the newly approved landlords might require advertising and marketing their home on free websites hosting only section 8 approved homes. The cost here is minimal with an enormous audience saving your property.
Challenges of a Section 8 Landlord
Pros and Cons go side by side. Being a legally approved landlord too has its exceptional hurdles.
- Expect an initial slow rent payment
The first rent of a new section 8 tenant might face a month or two delays to hit your bank account. The first rent usually comes from the local PHA. And, the time delay is due to the processing and verification of the tenant.
Being the section 8 landlord, it is your responsibility to keep some hard cash in hand and pay for the operating expense and mortgage of the new tenant.
- Limitation to annual rent increase
HUD decides the annual rental hike as per the then real estate market pricing. This stops a landlord from going beyond the rules that HUD establishes. If an owner disapproves the rate or increases rent more than HUD’s mark, it might lead to serious offence.
- Annual inspection on the House Condition
HUD along with the REAC inspectors visits the property when the section 8 tenant moves in. They will also visit for annual checks to make sure the landlord is maintaining the property well and keeping with the HUD’s housing standards. However, if you are a responsible landlord, this might not be a challenge for you.
The Bottom Line
With the exponentially increasing market value, two of the toughest thing to afford remains home and transportation. Section 8 is giving a fair chance to the less fortunate, poor, and disabled people to have a standard lifestyle within affordable pricing.
Your only responsibility will be to maintain proper hygiene and safety for the tenants. Just build a strong security system and check the utility servicing from time to time.
By becoming a Section 8 Landlord, you are helping the less fortunate person or families get a decent home. Becoming a Section 8 Approved tenant or a landlord always ensures commitment. It provides the certainty that you will find a tenant within a short time when one leaves. Another positive side is that landing your home for a purpose where the government is involved will save you from any corruption in your property. This part of real estate is worth exploring an easy way to enter into an investment property. Apply today!