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TMR BLOG: Pros and Cons of Renting to Section 8 Tenants

Not every person can pay exorbitant amounts of rent to live in the city. This is where the Government’s Section 8 program comes into play. Low-income tenants make use of this program to live comfortably and under budget. However, owners are always conflicted about whether they want to rent their properties to Section 8 tenants or not. There is no clear answer to this since there are several pros and cons of doing so. Have a look at them below, measure the benefits and disadvantages, then make an informed decision.

Pros

Guaranteed rent

The government pays a part of the rental payments owed by a Section 8 tenant. This means that if you choose to rent out your property to a Section 8 tenant, the government will make sure that you receive a part of the rent directly in your bank account in a timely fashion. No rental payment will go unpaid, and you’ll also receive the full payment without any delays.

The remaining of the rent will also be paid by the tenant timely. If a Section 8 tenant does not pay their rent on time, the government can revoke their housing allowance. Since these tenants want to keep enjoying the benefits of this program, they ensure your monthly rental payments aren’t delayed for any reason.

Pre-screened tenants

The biggest problem that owners face is problematic tenants. Often, owners have to forcibly evict tenants because of their behavior, late or missed rental payments, and previous criminal charges. Since owners aren’t always able to run a thorough background checks on potential tenants and screen them properly, tenant turnover tends to be very high. 

Since all Section 8 tenants are pre-screened by the housing authority, owners can be confident that potential tenants are vetted for criminal or rash behavior. The housing authority not only runs background checks but also drug tests. Thorough background checks and reference verification are the best ways to find good tenants who are only looking for a clean place to stay and don’t want to cause any trouble.

Lower turnover

With guaranteed rental payments from the government, Section 8 tenants do not look to change their homes often. They prefer sticking to one property and living there for a longer period. This is a win-win for the owner since they not only get guaranteed payments but also a long-term tenant.

You can spend less on marketing to new tenants and don’t have to conduct the entire screening and lease signing process over and over again. It saves you a lot of time and effort by continuing to rent out your property to a Section 8 tenant.

Cons

Rent control

If your property has been inspected and approved by the government to be suitable for a Section 8 tenant, your property will also be rent-controlled. Since the government pays for part of the rent, there will be a limit to the maximum rent that you can charge. This can be problematic for owners who are looking to charge a lot higher than the market rent. This is one of the biggest reasons why owners tend to rent out their properties to non-Section 8 tenants.

Security deposit

Every owner takes a refundable security deposit before the tenant moves into the property. This security deposit is used to cover the owner if the tenant skips out on rent or causes damage to the property. All liabilities are retrieved from the security deposit, and the balance is returned to the tenant when they move out.

The government does not cover security deposits under the Section 8 scheme. This means that tenants are responsible for this payment. However, since their income is low, owners usually have to make do with a very low-security deposit or no security deposit at all. This can be problematic in circumstances where the tenant causes significant damage to the property.

Frequent inspections

Before your property is approved by the Section 8 authority, they will conduct an inspection to ensure that your property meets all Section 8 program standards. After your property is approved, and Section 8 tenants begin to live there, your property will undergo frequent inspections by the housing authority. If you fail an inspection, the housing authority will require you to repair the property in order for Section 8 tenants to continue living there and you continue to receive rental payments from Section 8 program. 

-The Multifamily Review Team


Hi, my name is Michael Avent. I founded The Multifamily Review in June 2020. I’m a Commercial Agent at Northcap Multifamily located in Las Vegas, Nevada. My vision for The Multifamily Review is to be the most trusted resource for all Multifamily Investors and Industry Professionals. We strive to offer the best and most up to date content to our readers and are always open for suggestions. Make sure you sign up to join our newsletter to stay up to date on our latest blog, ebook, and more exclusive content that’s coming your way! The Multifamily Review team and I look forward to building a deeper relationship with you!

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