Debunking Myths About Renting To Section 8 Tenants
For many people, the term “Section 8” has a certain stigma attached to it. Some landlords refuse to rent to Section 8 tenants at all, even in states where discrimination based on source of income is illegal.
However, not every stereotype about Section 8 housing investing is true. In this article, we’ll review and dispel eight myths about Section 8 families and the program in general.
#1 Section 8 tenants won’t take care of my property.
It’s easy to assume that since Section 8 tenants are receiving subsidized help from the government, they are doing so because they are irresponsible renters. This makes it seem unlikely that they will take good care of your property.
However, this generalization is of course not the case for all Section 8 tenants. In fact, voucher families have a huge incentive to take good care of your property: If they don’t, the family could be evicted and lose their Section 8 voucher. For this reason, many Section 8 families are careful, responsible renters who do everything possible to maintain their voucher eligibility.
Keep in mind that the Section 8 program also aims to serve the elderly and persons with disabilities. While there will certainly be bad apples, it’s simply not the case that all families enrolled in the Section 8 program got there by being irresponsible.
#2 Renting to voucher families will deter other renters.
Some landlords argue against accepting Section 8 tenants for fear that other renters will not want to apply to their properties. This belief is mainly fueled by the stereotypes surrounding Section 8 tenants as unstable and subsidized housing as undesirable.
Despite the stigma that may be associated with Section 8 housing, this belief is largely unfounded. Firstly, Section 8 housing vouchers are assigned to people, not properties. Tenants on the private market can rent next door to Section 8 tenants without living in a property labeled as “Section 8 housing” themselves. It wouldn’t be appropriate to advertise how a tenant’s neighbor gets their income, nor would you typically disclose that information to other renters.
Additionally, there are many known benefits of mixed income housing, wherein affordable housing is integrated into communities with varying rental rates. The presence of affordable units can increase social cohesion and doesn’t have to be a deterrent to other renters.
#3 Rent rates for affordable housing will always be lower than market rates.
This common belief sometimes has truth in it. The Fair Market Rent (FMR) determined for your properties will sometimes fall below typical market rates for the area, meaning that renting the units to Section 8 tenants will cause you to make less of a profit than you would if you were renting on the private market. So if you own particularly high-value properties, it’s true that Section 8 housing might not be a good fit.
However, it is also true that many Section 8 housing units actually rent out at higher than market rates. This is because public housing agencies (PHAs) typically offer generous rent increases each year to compensate for rent inflation. Many participating landlords find the rental income from their Section 8 tenants to be steady, at- or above- market rate revenue.
#4 Section 8 tenants have no incentive to pay rent.
Some landlords wonder why Section 8 tenants have any reason to pay their portion of the rent at all if the government could potentially cover all of it. Why should they rent to tenants who are not motivated to pay rent on time?
As mentioned earlier, Section 8 tenants do have an incentive to pay rent: If they are evicted due to nonpayment, they most likely won’t be able to qualify for the Section 8 program in the future and will lose their voucher. Additionally, a family’s rent is set at an affordable rate for them based on their income (typically 30%), so paying it each month is part of their monthly agreement to receive the voucher. If a tenant loses their job, the PHA can also work with the tenant to temporarily renegotiate the amount they contribute.
#5 I won’t have control over which Section 8 tenants I accept.
This misconception is simply false. As the owner of your property, you always have the final say over who lives in it, Section 8 or not. Any Section 8 tenant who applies to rent from you should undergo the same tenant screening process that your other tenants do, and if they don’t pass it, you shouldn’t accept their application. In fact, if you decide to become a Section 8 landlord, you’ll need to adopt a meticulous screening process that includes consideration of the tenant’s rental history, credit, criminal history, and current living situation. It’s a good idea to visit the tenants’ current residences to see how they treat the properties they live in now. Just remember to screen each tenant the same way. And if you live in a state that protects tenants from source of income discrimination, don’t deny a tenant who otherwise meets your criteria solely for being on Section 8.
#6 Section 8 tenants will attract crime to my community.
This myth goes along with the previous one. As a landlord, it’s your responsibility to screen all tenants and ensure that you choose ones who are unlikely to engage in illegal activity at or around the premises. Additionally, keep in mind that mixed-income housing works against concentrated crime in particular neighborhoods.
#7 Once I start, I’ll only be able to rent to Section 8 tenants in the future.
Since Section 8 vouchers are assigned to people and not properties, you can rent your units to anyone, even if you’ve rented them to Section 8 tenants before. Within the voucher-based component of the Housing Choice Voucher Program, a property is only considered a “Section 8 property” while there’s a Section 8 tenant living there. When a Section 8 tenant moves out, you’re free to fill the unit with any applicant you wish.
Note: There is a second component to Section 8, called the Project-Based Voucher Program. This program is separate from the Housing Choice Program, and it assigns Section 8 status to specific properties rather than tenants. If you’re interested in making your property a Section 8 unit permanently, you can investigate this program.
#8 It’s too much of a hassle.
For some landlords, the bureaucracy and red tape involved in getting set up with Section 8 is too much. They cite the pile of paperwork and the lengthy Section 8 inspection checklist as hinderances to their leasing process.
If navigating bureaucracy will drive you crazy, Section 8 investing may not be for you. However, for those landlords who are interested in the benefits of this program, the key is strong, three-way communication between you, the Section 8 tenant, and the local public housing agency. Some level of patience will undoubtedly be required, especially during the initial month of setup. But the benefits of this program in many cases are worth the cost of this attention up front.
Conclusion
When it comes to Section 8, you are bound to have heard some information about the program that is true and some that isn’t. Participating in this program isn’t right for everyone, but understanding it accurately is the first step toward understanding its risks and benefits.
